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College Board Releases New Education Pays Report

October 6, 2010

The College Board began its "Education Pays" series in 2004. The 2010 report, the third in this series, uses data from the U.S. Department of Education, the Census Bureau, and other organizations to document the returns that students individually and society generally receive from their investments in higher education. Returns are measured in three key ways: employment earnings students receive after leaving their postsecondary programs; increased taxes and other revenue state and federal governments receive from students after they leave college, and lower expenditures for health and other social services as a result of college attendance and graduation.

The key returns to individuals include:

  • Higher earnings: Median earnings of bachelor's degree recipients working full time, year round in 2008 were $55,700 -- $21,900 more than median earnings of high school graduates.
  • Lower rates of unemployment: For young adults between the ages of 20 and 24, the unemployment rate in the fourth quarter of 2009 for high school graduates was 2.6 times as high as that for college graduates.
  • Higher earnings for women: In 2008, median earnings for women ages 25 to 34 with a bachelor's degree or higher were 79 percent higher than median earnings for women with a high school diploma. The earnings premium for men was 74 percent.
  • Increasing earnings gains over time: The median hourly wage gain attributable to the first year of college, adjusted for race, gender, and work experience, increased from an estimated 8 percent in 1973 to about 10 percent in 1989, and 11 percent in 2007.

The most important returns for federal and state governments include:

  • Increased tax revenues.
  • Lower expenditures on public assistance programs: In 2008, 8 percent of high school graduates ages 25 and older lived in households that relied on the Food Stamp Program, compared to just over 1 percent of those with at least a bachelor's degree.
  • Lower spending on social programs over time: Estimated lifetime savings range from $32,600 for white women to $108,700 for African American men.

The report also demonstrates nonmonetary benefits of higher education. College attendance and completion leads to healthier lifestyles, reducing health care costs for individuals and for society. When controlling for different age levels, college-educated adults are less likely than others to be obese. In addition, during the decade from 1998 to 2008, the smoking rate declined from 14 percent to 9 percent among adults with at least a bachelor's degree, while the rate for high school graduates declined from 29 percent to 27 percent. What's more, individuals with higher levels of education are more likely to engage in volunteer activities for nonprofit organizations.

In addition, "Education Pays" also describes trends in college attendance and degree attainment by income and racial/ethnic group. Although college enrollment rates continue to rise, large gaps persist across demographic groups. The college enrollment rate of high school graduates from the lowest family-income quintile increased from 51 percent in 1998 to 55 percent in 2008. Meanwhile, the rate for middle-income students declined from 63 percent to 61 percent, whereas 79 percent of the highest income high school graduates enrolled in college in 1998, and 80 percent enrolled in 2008. From 1998 to 2004, the gap between the proportions of white and black high school graduates who enrolled in college within a year of graduation fluctuated between 8 and 10 percentage points. By 2008, the gap had grown to about 14 percentage points. From 2000 to 2004, the gap between the proportions of white and Hispanic high school graduates who enrolled in college within a year of graduation narrowed from 19 to 10 percentage points. By 2008, the gap had declined to 8 percentage points.

Free copies of "Education Pays" may be downloaded from the College Board's website.


Ken Redd
Director, Research and Policy Analysis