What is the Value of a College Degree?

With college graduates being steeped in deeper debt than ever before, it’s not unreasonable for people to be questioning what the true value of a college degree is in this day and age. However, some research into debt and university costs presented by an article in Liberty Street Economics indicates that the value of a bachelor’s degree today is still at approximately the same record-high value it’s been at for the past decade.

The authors of the article, Jaison R. Abel and Richard Deitz, use a statistic called “net present value (NPV)” to describe the dollar value of a bachelor’s degree. While the NPV of a bachelor’s degree has fallen slightly since its peak in 2000, it is still among the highest levels it’s ever been at, and significantly higher than where it was in the 1970s, 80s and early 90s.

Meanwhile, the amount of years needed to recoup the cost of a bachelor’s degree has been on a downward trend since the early 1980s, when it peaked at around 23 years. Today, it takes about ten years for the average graduate to regain the amount of money spent on a college education, slightly up from the low point of eight to nine years hit in 2000 and 2012. This means that despite the challenges of the job market perceived in college graduates today, they’re actually getting back the money they spent on their degree in near-record time with the value of that degree at a near-record high.

These numbers show more reason to believe that things are looking up in financially for recent college graduates who are still experiencing sticker shock over their student loans.