College skepticism is everywhere these days. Megan McArdle had a Newsweek cover story arguing that the benefit was decreasing, especially for workers on the margins. Silicon Valley billionaire Peter Thiel is literally paying kids to drop out.
But as I’ve written before, college still has a crazy-high return on investment. How high? Well, Michael Greenstone and Adam Looney at the Hamilton Project, who have done the best work on this, have calculated the costs and benefits of going to college from the 1970s to the present. They find that the benefits have gone up steadily each year, while the costs have, contrary to popular belief, not risen quite as fast:
This means that the annual return on investment has stayed relatively constant for the past 35-odd years at around 17 percent, far more than any conventional investment:
Most strikingly of all, the above graphs don’t include financial aid, which has skyrocketed over the past few decades. That suggests that the return on investment has actually gone up.
Today’s jobs report drives the point home. The unemployment rate among those with a bachelor’s degree or higher is 4.1 percent. The rate for high school graduates is 8.7 percent, and for dropouts it’s a staggering 11.3 percent (though this group saw most of the gains this past month). Assuming the returns stay as high as Greenstone and Looney calculate, getting more people into college could push the overall unemployment rate down considerably.