Is College Still a Good Investment?

Recent research from Vanguard compares the impact of student loan debt and mortgage debt to the economy.  Vanguard’s concludes that student loan debt poses much less risk to the economy than mortgage debt due to the much lower amount of student debt.  It is also much harder to “walk away” from student loan debt than to default on a mortgage.

Recently the value of a college education has been questioned because of the drag of student loan debt on a person’s life and the number of new college graduates who are having trouble finding employment.  Vanguard’s article reinforces the value of a college education in three ways.

First, Vanguard researchers looked at the homeownership rate for three types of 30 year olds.  Bachelor degree holders with no debt, bachelor degree holders with student loan debt, and high school graduates with no debt and no college degree.  They show that the bachelor degree holder with student loan debt is 1.7% less likely to own a home than a bachelor degree holder with no debt.  The most significant finding was that the high school graduate with no debt was 12.9% LESS likely to own a home at age 30 than a college graduate with student loan debt.

Second, the median household income for people with a bachelor’s degree was $80,500/year while the median household income for high school graduates was only $39,800/year.  

Third, the U.S. unemployment rate for bachelor degree holders was 4.2% while the unemployment rate for high school graduates was 8.9%.

College costs have been increasing at a faster rate than the overall inflation rate and student loan debt is higher than it has been in the past.  This has caused some to question the value of a college education.  Is a college education worth it?  Vanguard’s research answers that question with a resounding YES!

Read the Vanguard White Paper