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College degrees pay off handsomely

Is a four-year college degree a better investment than a two-year degree?

There might not be that much of a difference when it comes to bang for your buck, according to a study released Tuesday by the New York Federal Reserve Bank. The survey shows that, despite rising tuition costs and decreased wages, the return on investment for all college degrees has held steady at roughly 15% annually for more than a decade. And, what’s more, that remains the case for someone graduating with a bachelor’s degree and for holders of associate degrees.

While economists Jaison Abel and Richard Deitz, who authored the study, admit that the results reflect the fact the costs of a two-year degree are much lower than a four-year school’s tuition, they also point out that, either way, graduates are getting a better return on their investment than they would playing the stock market. “These rates of return indicate that, for the average student, a college degree remains a good investment,” the authors write in their study. “To put these findings in perspective, consider that investing in stocks has yielded an annual return of 7% and investing in bonds an annual return of 3% since 1950.”

As for the question of whether or not a student’s area of focus affects their educational investment, the answer is “yes.” Graduates who majored in engineering or math and computers saw the best return at 21% and 18%, respectively. In comparison, liberal arts majors garnered just a 12% return. But, the authors point out, even the lowest return on investment by major – education majors, at just 9% – still “easily passes the threshold of a sound investment.”

So, tell that to your parents, education majors.