Students who begin college but do not finish make more than $100,000 over the course of a their lives than those who obtain only a high school degree, according to a new study from The Hamilton Project, a division of the Brookings Institution.
Previously, Michael Greenstone and Adam Looney, the authors of the study, found that those who attend and finish college earn on average $570,000 more over the duration of a lifetime than the average person with a high school diploma only. But even completing some college increases earnings by more than $8,000 a year, even if the student drops out, their new study found.
The question of whether or not a college education is worth the expense has been of increasing import recently as student loan defaults are growing, with $3.5 billion in government and private student loans defaulting in the first three months of 2013, according to CNBC. Former Secretary of Education under President Reagan William Bennett and David Wilezol released a book earlier this year entitled "Is College Worth It?", concluding that college is likely a good investment for those who complete a degree at a well-regarded school in a STEM (science, technology, engineering or math) field.
Greenstone and Looney noted that according to April 2013 Bureau of Labor Statistics data, the unemployment rate for individuals age 25 and older with just a high school diploma was 7.2 percent, while for individuals with an associate’s degree, the rate was 5 percent. For graduates with a bachelor’s degree or higher, unemployment was only 3.6 percent.
But their study found that even taking into account the cost of education, lost earnings while in school and opportunity costs of not working, it was still worth it to attend even part of a two- or four-year program. The study examined alternative investments and concluded that some higher education was a better investment than other potential investment opportunities.
"The annual rate of return of an investment in some college was 9.1 percent," concluded Greenstone and Looney. "This rate of return is more than 3 percentage points higher than the average stock market returns and 7 percentage points higher than the returns from investing in Treasury bonds."