A Review of Research on the Returns to Higher Education

Recent stories of soaring student debt levels and under-placed college graduates have caused some to question whether a college education is still a sound investment.

In this paper, the authors review the literature on the returns to higher education in an attempt to determine who benefits from college. Despite the tremendous heterogeneity across potential college students, the authors conclude that the investment appears to payoff for both the average and marginal student. During the past three decades in particular, the earnings premium associated with a college education has risen substantially.

Beyond the pecuniary benefits of higher education, the authors suggest that there also may exist non-pecuniary benefits. Given these findings, it is perhaps surprising that among recent cohorts college completion rates have stagnated. The authors discuss potential explanations for this trend

The paper concludes by succinctly interpreting the evidence on how to make the most out of college.