Page 17

2015 Winter Magazine

For more information: The College Board, “Trends in Student Aid” trends.collegeboard.org/student-aid The Hamilton Project, “Major Decisions: Graduates’ Earnings Growth and Debt Repayment” www.hamiltonproject.org/papers/major_decisions_ graduates_earnings_growth_debt_repayment/ U.S. Department of Education www2.ed.gov/offices/OSFAP/defaultmanagement/ cdr.html The Hamilton Project, “Regardless of the Cost, College Still Matters” www.hamiltonproject.org/ papers/regardless_of_the_cost_college_still_matters/ Payscale, “2014 ROI Report” www.payscale.com/ college-roi/ Payscale reports that the investment in a Linfield College education provides an above-median, 7.5 percent annual rate of return. That’s the Power of a Small College. Monetary Lifetime Costs and Benefits of Attending College Fall 2014 l i n f i e l d m a g a z i n e - 1 7 for-profit schools, the rate was 19.1 percent. But only 7.2 percent of students from private schools defaulted in 2010-11. And at Linfield, the default rate was an even lower 2.8 percent. Is a private college education still a good investment? A study by The Hamilton Project estimates that over a lifetime the average college graduate earns roughly $450,000 more than does the average high school graduate. This $450,000 difference is called the “college wage premium.” Its estimated value over time is shown by the red line in the accompanying figure. The figure’s blue line shows the estimated average cost of obtaining a college education over time. Note the red line lies above the blue line by about $350,000 in recent years, indicating that the college wage premium is more than three times greater than the average cost of obtaining a college degree. This shows that an investment in a college education provides a sizeable, annual positive rate of return. Payscale Human Capital is a compensation research firm. Its 2014 ROI Report presents estimated annual rates of return to degrees obtained from 487 private colleges. For these schools, the median annual rate of return is around 7 percent. By comparison, Tuition and other costs of four years of college Average lifetime difference in earnings between college and high school graduates Note: Average lifetime differences in earnings are calculated by summing the difference in mean earnings for college-educated individuals and individuals with only a high school diploma at every age. Costs include tuition and fees for four years of college as well as students’ foregone income. All future costs and benefits are discounted 5 percent per year to age 18. Sources: Tuition data are from NCES. Earnings data are from CPS for the non-institutionalized population and U.S. Census for the institutionalized population. Graphic used with the permission of The Hamilton Project $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2010 dollars Winter 2015 l i n f i e l d m a g a z i n e - 1


2015 Winter Magazine
To see the actual publication please follow the link above