Every so often someone makes headline news by saying that a college degree just isn’t worth it anymore. Could this possibly be true? Just how does the return on an investment in a college degree compare with some of the alternatives? In fact, if one looks back over 10 years and considers how the returns have stacked up, the average return on earning a bachelor’s degree has held up well, even beating gold’s historic 10-year performance as an investment.
We started by looking back to 2002 and what it cost on average for students to earn a four-year degree from Minnesota’s Private Colleges, after any scholarships and grants. The average net tuition back then was $42,000 for a four-year degree.
So imagine four twenty-somethings making four different choices 10 years ago. One spends $42,000 to earn a bachelor’s degree, one invests what she would have spent on that degree in gold and one invests it in stocks. The fourth succumbs to temptation and puts that same amount into buying a fancy Cadillac DeVille. The chart below shows the average returns over the last 10 years for those four options — and the table below details our methodology.
Some general observations:
- While we know a car is guaranteed to lose value from the minute you drive away in it, how did the other three options compare? As the chart shows, over the last 10 years, the returns on a private college degree exceeded the returns on traditional investment options of gold and stock indexes.
- Of course the return on an investment in a college degree cannot be measured in salary differentials alone. There’s plenty already written about those other, non-financial benefits, ranging from better health to higher volunteer and civic participation.