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College Still Pays Off, but Not for Everyone - ABI

Investing in a college degree still pays off for most students with higher salaries and greater wealth, but in recent years it has become riskier, splitting graduates more widely into haves and have-nots, the Wall Street Journal reported. “It just has not been the blanket guarantee of following the same path to prosperity that the earlier generations followed,” says economist William Emmons of the St. Louis Federal Reserve. There are three related shifts causing economists to re-examine the returns of college. First, the wages of college graduates have remained mostly flat this century, after inflation. Second, the cost of attending college has soared. Third, even with higher salaries, significant numbers of college graduates in recent years are failing to build the kind of wealth that previous generations did. The question of higher education’s value has gained urgency because so many more Americans are going to college than before, and because they are paying far more to do so. The share of Americans between ages 25 and 29 with a bachelor’s degree rose to 37 percent last year from 29 percent in 2000, Education Department data show. College and graduate-school tuition has risen at triple the rate of inflation this century, according to Labor Department data. Students who borrowed now leave college with more than $30,000 in debt, on average, and a small but growing number is carrying $50,000 and beyond, according to a report last year by the Brookings Institution. College graduates still earn far more than those who never got an education beyond high school. Americans with a bachelor’s degree — but not a graduate degree — earned an average $77,239, nearly $32,000 more than the average earnings of workers with only a high-school diploma, according to the New York Federal Reserve.

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