So even if it's not as bad of a situation as some make it out to be, it's still a serious business, as many can't find jobs right out of college in the current economic environment. What it all boils down to is the payoff in the long run, says one expert, as those with bachelor's degrees earn about $650,000 more over their lifetime than their peers who only have high school diplomas.
That number is deceptive because it doesn't take into account discounting and return on investment. Assume that the 650k is earned in equal intervals over 40 years (this is going to skew our results to make education look better, since educated incomes tend to be higher in later years, which means they are discounted more).
Assuming investments earn 5% and loans have 5% interest, this gives the lifetime earning difference between college and non-college graduates a present value of 274k. For 10% interest, this goes down to 152k.
To give a ballpark estimate of how delayed college earnings might affect the analysis, I did a linear model where I assume that college and HS grads start out at the same income but college grads earning advantage has linear growth. You might think of this as the High School generous version of the calculation. This gives 195k for 5% interest and 74k for 10% interest.
One important fact that I left out is that college grads have lower unemployment.
This still suggests that college is a winning investment, but it's present value is nothing close to "650k". It is closer to 200k. Students going to good schools or majoring in difficult subjects are likely seeing above average returns while average students and students attending weaker schools are seeing much smaller returns.