The True Cost of College: -$500,000

We love to poke holes in the idea that going into debt to get a college degree is always “worth it” but according to this article in the Upshot, new income statistics show that the pay gap between bachelor’s degree-holding people and everyone else is bigger than ever. The numbers come from the Economic Policy Institute’s analysis of Labor Department statistics, and report that “Americans with four-year college degrees made 98 percent more an hour on average in 2013 than people without a degree” (up from 89% in 2008, 85% in 2003 and 64% in the early 1980s).

And while the average student loan debt for someone graduating with a bachelor’s degree hovers around $25,000 — a harrowing amount, to be sure — it doesn’t compare to the potential amount of lost wages:

According to a paper by [M.I.T. economist David] Autor published Thursday in the journal Science, the true cost of a college degree is about negative $500,000. That’s right: Over the long run, college is cheaper than free. Not going to college will cost you about half a million dollars.

Mr. Autor’s paper — building on work by the economists Christopher Avery and Sarah Turner — arrives at that figure first by calculating the very real cost of tuition and fees. This amount is then subtracted from the lifetime gap between the earnings of college graduates and high school graduates. After adjusting for inflation and the time value of money, the net cost of college is negative $500,000, roughly double what it was three decades ago.