Despite expense, long-term financial return on bachelor’s degree still beats other options

Many students who applied for college received their acceptance letters sometime between mid-March and mid-April and are now planning for the transition.

More people these days, though, are not going that direction and questioning the value of a college degree.

The doubts reflect several trends. For one, higher tuition rates, resulting a higher debt load when they’re done.

The wage premium earned by college graduates compared to their high school graduate peers has stagnated.

And elite colleges and universities are under fire by critics for a variety of reasons.

But data and labor market trends continue to highlight the strong longer-term returns from investing in higher education.

A bachelor’s degree tends to open doors to jobs with better pay, benefits and opportunities for advancement, and the unemployment rate of college graduates is lower than their less credentialed peers.

A Pew Research Center study found that the typical college-educated worker between 25 and 34 years old makes about $70,000 a year. That’s a significant pay premium compared with high school-educated counterparts, who make around $40,000.

Of course, the cost of college matters. Students and their parents need to be financially smart and wary of borrowing too much to pay for a degree.

On that front, they may need to make some tough choices about where to go based on keeping the costs reasonable.

That includes whether to go for a four-year degree. While the long-term return on graduating from a public college or university with a bachelor’s degree is greater than the comparable figures for an associate degree or certificate, the return on investment from earning the latter two are still impressive.

The Center on Education and the Workforce calculates that investments in certificates and associate degrees pay off more quickly than the bachelor’s degree over a 10- to 20-year time horizon.

The reasons reflect the lower cost of paying for a two-year course load, plus getting in the job market more quickly.

But over a 40-year time frame, the bachelor’s degree pays off with the highest return. The median return on investment for a bachelor’s degree at a public institution over that time is $1.8 million. The comparable figures for associate degrees and certificates earned at a public institution are $1.4 million and $1.3 million, respectively.

The takeaway: Research and experience show that investing in postsecondary education from certificates to bachelor’s degrees can pay off big.

Chris Farrell is senior economics contributor for “Marketplace” and a commentator for Minnesota Public Radio.