San Fran Fed Asks "Is It Still Worth Going To College?"

Tyler Durden's picture

The last time the intellectual titans of the San Fran Fed, which have made a living out of asking probing, kindergarten-level questions and then spending tens of thousands of taxpayer funds to answer them, performed in depth inquiry into a topic was about a month ago when it asked "How Important Are Hedge Funds In A Crisis." To its dismay, it found the answer to be "very." Today, the intellectual titanism continues when the regional Fed, which Janet Yellen called her home for so many years, asks (and answers), "Is It Still Worth Going to College?"

Its findings in a nutshell:

Earning a four-year college degree remains a worthwhile investment for the average student. Data from U.S. workers show that the benefits of college in terms of higher earnings far outweigh the costs of a degree, measured as tuition plus wages lost while attending school. The average college graduate paying annual tuition of about $20,000 can recoup the costs of schooling by age 40. After that, the difference between earnings continues such that the average college graduate earns over $800,000 more than the average high school graduate by retirement age.


Although there are stories of people who skipped college and achieved financial success, for most Americans the path to higher future earnings involves a four-year college degree. We show that the value of a college degree remains high, and the average college graduate can recover the costs of attending in less than 20 years. Once the investment is paid for, it continues to pay dividends through the rest of the worker’s life, leaving college graduates with substantially higher lifetime earnings than their peers with a high school degree. These findings suggest that redoubling the efforts to make college more accessible would be time and money well spent.

So the answer, in a nutshell, is "yes"... as one would expect of course: because in a world in which marginal revolving debt demand is virtually zero, and in fact declines on many months of the year, the only source of consumer credit - that opiate for the Keynesian masses and certainly for their shamans - for the past five years, is simple: car loans and, to a far greater degree, student loans.

Oddly enough, having perused the paper several times, and having done a word search for both "loan" and "debt" (both of which return no hits), we find zero mention of one particular hockeystick. This one:

Perhaps for the San Fran Fed to be taken seriously one of these years, it will actually do an analysis that covers all sides of a given problem, instead of just the one it was goalseeked to "conclude" before any "research" was even attempted.

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FredFlintstone's picture

The bad assumptions help to assure the outcome of the analysis that yes, keep taking out loans and keep going to college.

Stuck on Zero's picture

Stupid government always tries to "help" by increasing the demand instead of increasing the supply.  The result is massive debt loads.


Itchy and Scratchy's picture

Think hot babes in short skirts.

Georgia_Boy's picture

Registration not required to approach them, people!

tomcat1762's picture

What if instead of paying for college a kid gets an apprenticeship job and earns money instead of paying for college.  Is that worth it?

ebear's picture

Take it a step further.

Learn a trade, via apprenticeship or simply on-the-job training, then after working for a few years and saving up, go get the college degree if you decide that's what you really want.

Then, if college doesn't work out, you will be debt-free, plus have a trade to fall back on.

To illustrate:

I went to sea when I was 19, took the money I'd earned and applied it to a degree in electronics and computur science.

My best friend went up north, worked as a cook for a year, then applied his savings to a college course in photography.

By the time we arrived in college, we both had enough life experience to understand the value of working hard, setting personal goals and, most of all, being self-reliant.

And here's a fact.  Given the choice between someone who went straight to college from high school, and someone who worked their way towards it and is a few years older with a broader outlook on the world, guess who gets the job?

I've been hired several times over people with more education because of that fact.  Another bonus - once you've done this, you won't be nearly as apprehensive switching jobs, or even careers, and you may even take the leap into self-employment.

My advise to young people: finish high school (if you can hack it) then go out in the world.  Don't rely on mommy and daddy - they'll be there later if you need them, but chances are, you won't.  Take on a challenge.  Do something difficult, and do it well.   After that, the rest will come easy.


PS: if it's a job in a remote location that covers room and board, take it!   Those jobs pay well and you'll save money very quickly.

FredFlintstone's picture

Good advice. I don't know how youth make it these days with being spoiled and babied. I told my kids: BA, BS, be out. Meaning you get your degree, you are on your own...You ain't coming back to live with us even for a day. And I think mine are a little spoiled. Made them pay half of college expenses.

MeBizarro's picture

Have you paid attention to what large US multinationals have done the past 30 years in terms of their budgets for human training and investment in their human capital in general?

Kirk2NCC1701's picture

Not when "College" fees are simply migrating to Wall St portfolios.  We all know that it's not the college Operating Expenses (profs, service staff, property maintenance or taxes...) that have mushroomed.  But we do know that a whole parasitic and overpaid subset of Office Managers and Directors have climbed on board, and that it's these guys who are sending the Big Bucks to the Big Boys on Wall St.

With more and more people sliding down the food chain, being a sheeple no longer requires an elite education, but "A lead education".  They lead, you follow.

Plan of baah accordingly.

Gaius Frakkin' Baltar's picture

Let's not forget about grown men chasing balls and the grown men who have to watch them. Good GOD, the resources wasted on the monkey ball games.

Cacete de Ouro's picture

Is it possible to get a freedom of information request on the catering expenses of the 12 Federal Reserve Banks?

The reason I ask is that I recall that the Australians happened to get a pretty detailed list of the wine collection of the Australian Reserve Bank that was used for wining and dining functions by the Reserve Bank staff and their guests from other central banks (and commercial banks etc). As I recall, it caused some outrage in Oz due to the very fine wines that they maintained in their cellar. I also recalled that the Reserve Bank justification was something like "well, we need to have good wines for our guests". True, but not very palatable for the average citizen.

So, why not look at the wine lists of all the Federal Reserve banks via an FOIA request?

Ok, I hate bad wine as much as anybody; it at least has to be of a certain standard so that it's not muck or vinegar, but at the same time doesn't need to be mega wine for central banker soirées that are in theory bank rolled by the Fed. Just some generic Bordeaux would do.

FredFlintstone's picture

I doubt FOIA would extend to the Federal Reserve.

wagthetails's picture

makes sense to me, if i was a creditor, i'd focus on extending debt that can't be elminated in a bankruptcy.  well played gov't.  since they own something like 110% of the mortgage market, i wonder how long before they include that debt as debt outside of bankruptcy laws. 

Kreditanstalt's picture

Stuck in the 1950s...

How many people slip comfortably into career-type employment by one or more "big companies", stay there earning big bucks for up to 20 years, and then "retire" anymore...?

LawsofPhysics's picture

How many CEO positions are there at such companies?

I Write Code's picture

Twenty year ROI to break even?  LOL.

But that was the last twenty years.  What about the next?  Today's degrees cost more, and today's jobs pay less.  Rots of ruck.

pitz's picture

The H-1B visa has destroyed compensation for domestic STEM graduates.  A freakin' San Jose police officer earns more than most Silicon Valley tech sector engineers, with a mere fraction of the training and overall responsibility.  Last time I looked at the post-graduation statistics of schools like Cornell and UC Berkeley in STEM, particularly the IT/Electrical Engienering/Computer Science fields, only 1/3rd of the graduates (probably the foreigners) were even able to find post-graduation employment. 

TrustbutVerify's picture

Imagine how much better deal (cheaper) college would be if "they" lowered the cost by eliminating at the worthless politically correct and/or otherwise puff classes.  

Dr. Engali's picture

Imagine how much cheaper colleges would be if they didn't have guaranteed flow of debt slaves enrolling that the current system provides and actually had to compete for hard money.

Smiley's picture

If you can afford to go to college, as in actually PAY FOR IT, you probably do not need to go.  Specialized skills sets are in short supply, and Dunderhead Degrees do not net jobs like they used to.  Tech schools and private skills training facilities are going to be the wave of the future in education.  Listening to entrenched tenured pricks pontificate gibberish for the sake of 'diversity' is freaking lame.

Tachyon5321's picture




Colorado School of Mines

Instate $16,485

Out of State: $32,415


University of Illinois

In: $15,258

Out: $29,640



In: $9,992

Out: $28,794


Boston College: Flat rate - $45,622

Standford: Flat Rate - $43,245

Harvard:: Flat Rate - $42,292









IridiumRebel's picture
Columbia University (NY) $49,138 4, National Universities Vassar College (NY) $47,890 13, National Liberal Arts Colleges Trinity College (CT) $47,510 36, National Liberal Arts Colleges George Washington University (DC) $47,343 52, National Universities Carnegie Mellon University (PA) $46,962 23, National Universities Wesleyan University (CT) $46,944 17, National Liberal Arts Colleges Tulane University (LA) $46,930 52, National Universities Bucknell University (PA) $46,902 32, National Liberal Arts Colleges Oberlin College (OH) $46,870 25, National Liberal Arts Colleges Union College (NY) $46,785 41, National Liberal Arts Colleges
Cacete de Ouro's picture

At least with the Colorado School of Mines they might find some gold.

Instate? Out of State? WTF is that all about?

Why would any out of state US citizen go to a qualifying state college (all other things being equal) if they can spend the same rate to go to a prestigious Ivy League university?

Tachyon5321's picture



The average college graduate paying annual tuition of about $20,000 can recoup: Phony analysis here why.

Every major university limits the number of instate students they take so they can charge out-of-state student double the Fed's average rate.

If every major in state university took every in-state student that applied the system would go broke in one years. The state universities make all their money by over charging out of state students.







wcvarones's picture

Next Fed research topic: Does correlation still equal causation?

youngman's picture

It is if you are going to graduate with an engineering degree...but for many its just a 7 year party....I used to say Med school too..but after Obamacare you do not want to be a doctor...

Son of Captain Nemo's picture

Next to Russia and China announcing their newfound partnership sans the dollar less than a month ago, now this from Germany!....

Expect shit to hit fan in Eastern Europe with this little care package.  Congratulations Germany for finding your spine... Now all you need to do is follow up this announcement that all the American military bases will be closing and the U.S. Army and Airforce leaving for good!

Fuck the EU/USA/NATO!!!



MopWater's picture

Even the most drunk "business" degree student will tell you a 20 year ROI is pathetic.


insanelysane's picture

It seems to me that the San Fran FED is promoting income inequality; "...leaving college graduates with substantially higher lifetime earnings than their peers with a high school degree."

How un-American of them!  Just shocked.

NickVegas's picture

Is that 800 trillion with a T on y axis?

NoWayJose's picture

How many of the hated 'top 1%' did NOT go to college.  A college education is a pre-requisite for entering the top 1% (with just a few well known exceptions).  Of course, if you are happy with achieving the 'middle 50%', then you may not need college.  You could apply a similar argument to 'Should I get a job' or 'should I stay on welfare, disability, and long-term unemployment.

Bemused Observer's picture

And how many college grads get anywhere NEAR the 1%? As opposed to how many end up in debt-hell? A scratch-off lottery ticket has better odds of paying off.

Screw these people and the crap they're selling! Let business train these workers at their own expense if they want certain skills. Why the hell should anyone have to PAY for training that those businesses will render obsolete 2 years after you graduate?

Madcow's picture

GovCo does everhything it can to trick people into believing in the future - so the bankers can steal their money - 



Dr. Gonzo's picture

"Ruined my life!" is the phrase that sticks out in my mind from one of my friends who works at a meat packing plant while his wages are garnished for his entire life to pay off a 4 year degree he never completed. Yeah. He's made numerous poor decisions in life like many other young people.... The U.S. College System preys on schmucks like him. Easy money for them. Guys like him are their life blood but they never advertise these people's life stories...Only the guys that land a good job.   

Chief Wonder Bread's picture

Yeah and to add insult to injury, in the statistics he is classified as someone without a college degree who therefore deserves his ruined life and low wages.

Another thing is that the propaganda piece from the SF Fed is 20/20 hindsight. It assumes that the past will exactly mirror the future. Man, is the average clueless herd member going to be in for a surprise.

FredFlintstone's picture

Wage garnishment for his "entire life"? That seems hard to imagine.

Chuck Knoblauch's picture

California still hs a thriving porn industry?

Organ donors wanted?

Prison labor is an option?

SmittyinLA's picture

As long as "the state" is allowed to discriminate in hiring based on a college degree* yes, it is "worth it". 

*However if a law were passed which prohibited discrimination in hiring based on accredited college degree and NOT actual applicable job skills a college degree would become worthless. 

ie "OK potential hires, here is the skills test for the position you are seeking, highest scorer wins by law" 

Americans have allowed the state to create a phony "education toll" for employment, particularly public employment, Americans can refute this policy, but they don't, they seek grants instead. 






Kelley's picture

Did you notice the group they left out?

They compared college graduates to high school grads.

But they left out the ones who go to college using student loans who don't finish. That's 40% of those who start college.

Those folks have the debt, but they don't have the degree.

Those folks are the ones whose lives are ruined financially.

It's tough for them to get high paying jobs, but the loans are there to be repaid.

MeBizarro's picture

This was the only relevant comment on here and really gets at the crux of the problem.  You have 4-year graduate rates in the US which are moderate overall and at some facilities incredibly poor (below 30%). 

Completed issue and the SF Fed paper really didn't do a good job in teezing out the differences and reflecting that in their models.  It was just a binary decision (high school vs BA) and misses a lot of the nuance. 

If you are going to college full-time, there is no reason it should you more than 4 years and there are way too many people it treat it as a joke.  The goal should be to take as many AP classes in high school to eliminate unless entry-level survey courses too.  No reason that competitive academic kids don't at least have 8 credits (2 courses) going in.   

I'll help pay for my kids college education but not unless they have a clear intended goal, graduate in 4 years (ideally tie to a professional degree and do an accelerated program), and maintain at least a 3.5 overall.  It's a job and my payment (tuition/other expenses) should reflect a pretty high-level of expectation given the investment. 

FredFlintstone's picture

I know a lot of people who when to college for a year or two and maybe have an associates degree. They probably did not rack up debt as they don't bitch about it. They have decent incomes.

Offthebeach's picture

College is too big to fail. Must be bailed out.

Bemused Observer's picture

Maybe we should just scrap the whole college business and go to apprenticeships. Businesses can train the people they need at their OWN expense. Then, they will get exactly what they want. After all, doesn't private business do everything better?

Right now we subsidize their payrolls with social programs, we subsidize their businesses with tax breaks. I see no reason to continue subsidizing their employee training. What's next? Do they want us to wipe their asses too?...And, if they actually had to INVEST in their workers, they might not be so quick to chew 'em up and spit 'em out. And at least if they DO the worker walks away with something (training).

Ghostdog's picture

Its hard for me to take seriously any institution of learning that only allows free speech in free speech zones... In case the dimwits didnt figure it out, learning is about exploring and when you shut down exploring you might as well just get on a ride at six flags as they both garner the same results. You had a good time, are not any smarter, are broke when you go home but have a glorified ski lift ticket to wear on your coat to pick up drunkis chics in bars with

wally_12's picture

Our Next door neighbor received a degree in Microbiology 2 years ago from a michigan State University. She was working at Kohls going to school. When she finished, she went back to Kohls and is still there.

FredFlintstone's picture

a michigan State University might be drastically different than Michigan State University. There are only two good ones up there (sorry). A microbiologist typically needs a masters or doctorate. Kind of like a psychology degree. My sister has a BS in microbiology because she could not hack calculus and dropped out of biochemistry. One of my boys has a BS degree in psychology from a michigan State University and does not use it. He is a laborer.