This paper examines the financial value over the course of a lifetime of pursuing a college degree under a variety of different settings (e.g. major, student loan debt, individual ability). Using a lifecycle simulation approach, I account for ability/selection bias and the substantial probability that entering college freshmen will not eventually graduate, two critically important factors when evaluating the value of pursuing a college degree.
I find that financial proposition of attending college is an unambiguously good investment for the vast majority of individuals with low to average college costs, although majors with a lower expected return do not pay off until middle age. However, when the financial costs of attending college are high (defined here as roughly 30,000peryear),thegainsfromattendingcollegearefarmoretenuous,particularlyamongthosewithbelowmedianabilityandthosepursuinganArts/Humanitiesdegree.Iestimatethenetpresentdiscountedvalueofattendingcollegetovarybetween95,000 and $275,000 depending on the major (STEM, Business, Social Sciences, Arts/Humanities) pursued