If You Take 6 Years To Graduate From College, The Value Of Your Degree Will Be Cut Nearly In Half

The rate of return for students who finish their degree in six years is 40% less than the return for students who only took four years, the New York Fed says.

Yesterday, Fed researchers Richard Deitz and Jaison Abel published an article showing that on average a college degree is worth the investment, but that the picture becomes a bit less clear for certain types of college graduates.

Now we know one of the unusual flavours: The non-traditional graduate. The rate of return on an investment in a college degree for a grad who took only four years to graduate is 14% over the lifetime of one’s career. But for someone who takes five years to graduate, the return slips to 11%. And for someone for whom it took six years, you’ll only recoup 8%.

The reason is the opportunity cost on lost years of wage increases, an earnings “wedge” they say persists throughout one’s career.

“The differences add up each and every year, so that those graduating later never really catch up to those who graduated earlier,” they write.

Here’s their table showing the opportunity cost breakdown for five-year and six-year grads:

Abel and Deitz have two more posts on this subject this week that promise to add even more nuance to the question of whether college is a worthwhile use of one’s money.

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