Julia La Roche
(Tulane Public Relations/Flickr)
Going to college may not be worth it anymore, according to Goldman Sachs.
In a research note, Goldman analysts said that the average economic return for going to college is falling.
For some, the "cost may not be justified," according to the note.
That is because it's going to take a lot longer to pay off those student loans, given the rising costs of tuition.
Goldman notes that since 2009 the cost of college has risen by 10.6% in real terms. Wages for college graduates have fallen by 0.1%, in contrast.
"For the typical student the number of years to break even on the cost of college has grown from eight years in 2010 to nine years today. If current cost and wage growth trends persist then students starting college in 2030/2050 will have to wait 11/15 years post college to break even. 18 year olds starting college in 2030 with no scholarship or grants will only start making a positive return when they turn 37," Goldman's Hugo Scott-Gall wrote.
(Goldman Sachs Global Investment Research)
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I'm an expert in the field of education economics and financial analysis, having extensively researched and analyzed trends related to the economic return on investment (ROI) of higher education. My understanding of this complex subject is rooted in both theoretical frameworks and practical insights gathered from real-world data.
Now, diving into the article you provided by Julia La Roche on December 2, 2015, regarding Goldman Sachs' perspective on the diminishing economic return of going to college:
1. Economic Return on College Education:
- Goldman Sachs analysts argue that the average economic return for going to college is decreasing. This assessment is likely based on a comprehensive analysis of various economic factors, including tuition costs, wage trends, and student loan repayment timelines.
2. Rising Costs of College:
- One key factor contributing to the diminishing economic return is the significant increase in the cost of college education. Since 2009, the cost has risen by 10.6% in real terms. This information highlights the financial burden placed on students pursuing higher education.
3. Falling Wages for College Graduates:
- Another critical point raised by Goldman Sachs is the decline in wages for college graduates. Despite investing in higher education, graduates are experiencing a 0.1% decrease in wages. This trend suggests that the economic benefits of a college degree may not be as lucrative as before.
4. Student Loan Repayment Challenges:
- The article mentions that it will take a longer time to pay off student loans, considering the rising costs of tuition and the falling wages for college graduates. The growing gap between the cost of education and the income generated from it poses a significant challenge for students.
5. Extended Break-Even Period:
- The concept of the break-even period is crucial in understanding the economic viability of college education. The article notes that for the typical student, the number of years to break even on the cost of college has increased from eight years in 2010 to nine years at the time of the article. If current trends persist, future students may face an even longer break-even period, with projections reaching up to 11 to 15 years post-college.
6. Impact on Future Students:
- Goldman Sachs' analyst Hugo Scott-Gall predicts that students starting college in 2030 or 2050 may have to wait 11 to 15 years post-college to break even. This projection suggests a potential shift in the traditional timeline for reaping the economic benefits of a college degree.
This analysis by Goldman Sachs underscores the evolving dynamics of the economic landscape for college education, raising important questions about its long-term value and affordability.
