The college pay-off: $300,000 in 40 years

Earning a bachelor’s degree boosts annual earnings by $20,000 a year compared to high school graduates’ pay, estimates Skidmore economist Sandy Baum.  Subtract inflation and calculate the cost of attending a state university (including the cost of not working for four years) and the real net value is about $300,000 in 2008 dollars. That’s a lot less than the million-dollar college bonus that’s been touted for years, but it’s still a good investment, Baum says.

Those who go on to earn a professional degree do very well.

The average holder of a bachelor’s degree earns about $51,000 a year, Baum calculates. But those who’ve gone on to earn MBAs, law degrees, or other professional degrees earn about $100,000 a year.

College can make a bigger difference for the poor, who otherwise might be stuck in low-wage jobs.

Of course, a technical degree is worth more on the employment market than a fuzzy studies degree.  And it helps to go to a college or university with a good reputation: Don’t count on a big salary jump when you finish your Miscellaneous Studies degree at Warmbody College.

About Joanne


  1. Andromeda says:

    Does your cite cover that last sentence? Because what I’ve seen before is that, except perhaps for very low-income students, where you go to college does not impact lifetime earnings, once you correct for the differences in student bodies; the kid who got into both Warmbody U and Snooty Little Liberal Arts College has the same earnings potential with either degree. Warmbody U’s alumni earnings are less just because most of them were never talented enough to go to SLLAC in the first place.

  2. Soapbox Diva says:

    The only relatives I have that make six figures do NOT have a college degree. I make less than $35,000 with a master’s degree and I am not alone. My salary is a lot lower due to moving back to my hometown. Location and other life decisions have a bigger impact than a degree. Children of families with the right connections can get any degree they want, usually fluff, and still do better than most. This report confuses correlation with causation.

  3. I think JJ was perhaps more referring to the “Miscellaneous Studies Degree” than to “Warmbody U”

    I think also the degree with which one applies oneself to college makes a big difference. I have a number of students who cheerfully quote “D is for Diploma!” to me when they earn a D. It makes me cringe, because a D is not just a hallmark of low test scores; in my experience, D students tend to be the ones who choose not to take advantage of potential internships, who do not go to invited speaker’s talks, who do not do independent research in the department – people who, in general, seem not to give too much of a fig about the fact that all of those things could lead to them having a better shot at a job.

    Just like any job (and I do think college is a type of job), there are the people who just put in their time, and the people with ambition. Over the 10 or so years I’ve been teaching, the people with ambition, by and large, have wound up either in interesting careers or in a good grad school (which then leads to interesting career prospects). The people who put in their time wind up spending lots of time searching unsuccessfully for a job, and a number of them are still working retail or some other unrelated-to-their-majors job.

    It’s not just a money thing – it’s an “interest” thing. You can work hard in college, go for an advanced degree, and get an interesting job. Or you can put in your time, maybe drop out early, and wind up stocking shelves at the Lowe’s. And that’s fine, except that you’ve taken out massive student loans or drained a lot of money off your parents to wind up doing a job you could probably do with a high school diploma…

  4. superdestroyer says:

    Directional State is probably a better name than warmbody U. If you attend those schools, one can make good money by picking a technical profession with a normally distributed income pattern. the best example is goig to Pharmacy School where you can earn six figures and live anywhere. However, you are never going to be the CEO of a company and after working for decades, the pay is not much better than starting.

    If you go to Ivy Covered Elite College, you can try for the log-normal career fields such as media, entertainment, or Big Law. You have a chance of making millions but you also stand a chance of not making much. I think people get family connections or networking mixed up with long-normally distributed career fields.

  5. Soapbox Diva says:

    Location and life decisions often times override degrees and career fields. I do agree the field of study is important, but towns and rural area have less options than many people realize. Towns and even small cities can be very political with a small set of people holding the power.
    In order to move back and live in my hometown near frail parents and sick family members, I had to leave the science field where I made more money. I turned down much higher paying jobs in order to live where I do. I do have an interesting job and I am happy, but make far less than what this report would indicate.

  6. I agree with you. The level of education you have and where you live all play key factors in your income. I lived in Phoenix, AZ for over six years and even though the cost of living was low so were the annual incomes. I was a social worker and got paid much less than I would have if I had stayed in Phila., PA. Then I focused my attention to education and eventually got my Master’s Degree in Early Childhood Education and started teaching child development at the college level. I loved it and now I home school my 2 yr old son who knows the alphabet and can spell several words and has a love for the piano and I have my own blog at about child development/parenting/education and website where soon in 2009 I will sell DVDs on parenting and children’s books and supplemental educational books. Thanks for listening.

  7. Roger Sweeny says:

    The fact that people who finish college make $300,000 more than people who don’t does not mean that going to college is what made the difference. People who finish college are very different from people who don’t. They are, on average, better organized, harder workers, more able to defer gratification, and smarter.

    People who get into selective colleges make more than people who go to Warmbody U. They are the people who were better organized, harder workers, more able to defer gratification, and smarter in high school. That’s why they got into Selective U in the first place.

  8. here are some numbers from WSJ suggesting that considering ‘college graduates’ as a single entity makes not so much sense (starting wages, 4-year degree, $thousands) engineering 50, computer programming 47, maths 46, econ 43, accounting 42, mgmt 41, finance 38, business 36, history 34, foreign language 34, sociology 34, psych 32, elem teach 30, art 28, philosophy 28. If everybody has $50,000 in debt, and it takes $30,000 to have a middle class life, how long before their loans are paid off?

  9. The kids who most benefit from an elite college degree are those who come from low-to-moderate income families who can make social connections they otherwise wouldn’t. My DH is one of these. He came from a modest background and would never have been able to get his foot in the door without the connections he made in college and graduate school. By contrast, I know a bunch of people who grew up wealthy who’ve been able to rely on their family connections despite their own unimpressive academic credentials.

  10. Chartermom says:

    The study seems very limited in that it only looks at level of education and not job skills. For example, how much does a high school graduate who is a trained electrician earn compared to someone with a bachelor’s degree?

    I would think the real issue is not the college degree but the job skills. And unfortunately our school systems use studies like this to justify training everyone for college and neglecting vocational studies.

    I also wonder if this emphasis on college prep makes those who don’t go to college feel like failures which makes them even less likely to succeed. After all if everyone tells you that without a college degree you are condemned to stay at the bottom, then why try?

  11. I have a B.S., M.S., M.F.A. and Ph.D. I am living proof that most college degrees (excluding job specialties like nursing or law) have no longer any direct correlation with income. OR better stated, education no longer equals the monetary value of income, as it used to. I earn $24,000 as an adjunct college professor.
    Education is about one’s values, one’s love of knowledge, and a battle against ignorance, and it should be viewed as such NOT in relation to income potential.
    The cited study that averages incomes is bogus due to poor methodology and founding premises.

  12. Devilbunny says:

    To amplify superdestroyer, fields like pharmacy are the sort of thing that kids with no family resources should be steered to – they can’t afford one misstep, or one closed door, and it’s crucial to be in a field where you’ll always have a good job. There was an interesting This American Life a few weeks ago that recounted the tale of one activist’s campaign to make the lives of children in Harlem better – by recognizing that their parents, aged 20 or so, probably weren’t going to make the jump out of poverty and that acting otherwise was to condemn the newborns to the same fate. People want to short-cut the process of moving up in the world, but it really takes 3 generations or more to go from the bottom to an upper-middle-class life. None of my grandparents had a college education; both grandfathers did the sort of low-level clerical work that was one step above the farm. I’m a doctor, as is my wife, and even that is a field that I chose, in part, because it’s almost impossible to fail if you can jump through the early hoops.