The cost of attending a college or university has been heavily criticized, with extra digs at the retail prices of textbooks and other course materials. In the view of one economist, though, that expense represents an investment that will pay off handsomely in the end.
David Howden, professor of economics at St. Louis University at its Madrid campus, and academic vice president of the Ludwig von Mises Institute of Canada, an economics education organization, sifted through data from the U.S. Federal Reserve related to student-loan debt and adult employment.
Some 70% of college students graduate with loans, to the tune of $29,400 on average, Howden noted in an article for the Mises Institute. Most students also “lose” the job earnings they would have received during the years they were in school. The total cost, he said, is around $300,000.
“But the decision to not pursue a college degree and enter the workforce directly also comes with a cost,” he said. “It seems like a good deal at first, but for most it means fewer opportunities, less promotions down the line, limited access to higher-paying jobs, and, ultimately, lower lifetime earnings.”
How much lower? Howden calculated that today’s college graduates will bring home some $800,000 more by retirement than those who didn’t pursue higher education. That’s an average figure.
To Howden, that’s a pretty good return on investment. “It may seem onerous to pay back student loans, but the alternative is monetarily far worse,” he said.