Great Advice for Parents by Inceptia 2021

“In general, college degrees are a good investment, but the return in terms of cosmopolitan areas is phenomenal,” says John Winters, associate professor of economics at Iowa State University, who conducted the study. In cities, bachelor’s degree holders earn $95,229 on average, an 86.2% premium compared to a worker with a high school diploma and a 55.7% premium compared to an associate degree holder. Winters says that’s primarily because cities have a higher concentration of jobs in fields that often demand workers have four-year degrees, such as tech, finance and marketing. Workers in these fields earn higher wages, which leads to a greater return on investment for degrees. However, Winters’ findings also mean it’s less critical to have a four-year degree if you want to live in a smaller metro or rural area. Bachelor’s degree holders in nonurban areas have mean earnings of $67,893, which puts their wages at a 46.4% premium compared to high school diploma holders and a 29.6% premium compared to associate degree holders. Degree attainment doesn’t guarantee equity In some ways a college degree can exacerbate income and racial inequalities, such as student debt and ability to repay that debt, says Marshall Anthony Jr., a senior policy analyst at Center for American Progress, a public policy research organization. “A college degree doesn’t usually work the same for everybody,” Anthony says. Black borrowers tend to take on greater amounts of debt – about $25,000 more, on average, than White borrowers, according to federal data. In 2016, among those with a bachelor’s or higher degree, Asian full-time, year-round workers ages 25-34 had higher median annual earnings ($69,100) than their White peers ($54,700), and median earnings for both racial/ethnic groups were higher than those of their Black ($49,400) and Hispanic ($49,300) peers, according to the most recent available data by the National Center for Education Statistics. Higher debt and lower wages also mean Black borrowers will accrue more interest over time: Four years after graduating from college, Black graduates have $52,726 in student loan debt compared to White graduates at $28,006, according to a 2016 Brookings Institution study.

Anna Helhoski is a staff writer at NerdWallet, a personal finance website. The article Skip College? Not If You Want to Make MoreMoney originally appeared on NerdWallet on July 19, 2021.

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