A recent study conducted by the Federal Reserve Bank of New York found that, over the course of their lives, college graduates are likely to make $1 million more than non-college graduates. The report said, “Over the past four decades, those with a bachelor’s degree have tended to earn 56% more than high school graduates.”

Despite the results found by the New York Fed, college graduates looking to make that extra $1 million don’t usually find it coming to them so easily. In fact, according a study by Wells Fargo, about 31% of millennial Americans regret paying for college instead of trying to get a full-time job right out of high school.

The Guardian pointed out that, while student loan debt amounts to about $1 trillion in the United States, it is something the New York Fed report authors chose not to incorporate into their analysis on the rate of return of an education.

The Guardian also found that the New York’s Fed’s cost of tuition estimates were severely skewed. “The report estimates the total cost of four-year tuition to be $26,000, arguing that the net price of a bachelor’s degree is $6,550 a year – well below the annual $14,750 sticker price. At many private colleges, particularly elite ones such as those in the Ivy League, the sticker price is above $50,000,” wrote The Guardian’s Jana Kasperkevic.

In addition to undervaluing the cost of obtaining a bachelor’s degree, the New York Fed valued the cost of an associate’s degree at $0, stating the that real cost of an associate’s degree was “more than fully subsidized by various tax benefits and other form of aid.”

Kasperkevic mentioned that although everyone from President Obama to Starbucks CEO Howard Schultz, is concerned about the student debt epidemic in the United States, the New York Fed believes that student loans are cheap subsidies.

In exchange for paying interest, people can take out student loans to delay paying their college expenses. Thus, it is not necessary to incorporate such financing options into our rate of return analysis,” the report from the New York Fed stated. “In face, because interest rates on student loans are often subsidized at below-market rates, student loans generally allow people to earn higher returns than our results would indicate.”

 

The New York Fed also failed to acknowledge the fact that not all students are eligible for subsidized loans, with interest rates around less than 6%. Many students are forced to turn to private loans, which come with interest rates as high as 18%.

The current unemployment rate for college graduates is 3.2% in the United States – which may seem small – until it is calculated to equal more than 1.5 million Americans. That means more than 1.5 million Americans have a bachelor’s degree or higher, and are unemployed, each individual carrying an average of $30,000 in student loan debt, and with no guaranteed job.

While looming student loan debt has been one thing to make college graduates question the point of their degree, underemployment has been another.

The New York Fed admits that the likelihood of being underemployed, “declines significantly with age, and more college graduates work their way into college-level jobs by the time they reach their thirties.”

The report went on to say, “About a third of those who obtain a college degree do spend much of their careers in jobs that typically do not require a bachelor’s degree.”

The New York Fed did maintain that college graduates are still getting something out of their degree. “Employers are willing to pay a premium for college graduates relative to those with just a high school diploma, even in jobs that are not typically considered college-level positions,” stated the report.

Despite the recent struggles of college graduates, investing in a college degree may be more important than ever before because those who fail to do so are falling further and further behind,” stated the New York Fed.

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