As costs soar, the question of whether college is worth it continues to weigh on students and their families.

The total cost of a college degree — including the actual costs students pay over four years and the amount they “lose” by not working full-time during those years — is around $180,000 in 2024, up from $140,000 in the late 90s, new research from the Federal Reserve Bank of New York finds.

But the typical college graduate can expect a median 12.5% return on their investment in higher education, the agency says. That means for most students, it’s still worth it to go to college.

To estimate the return on investment of a college degree, New York Fed researchers considered out-of-pocket costs like tuition and school fees, earnings outcomes for those with and without degrees, and how much individuals could theoretically have earned if they didn’t go to school.

“While the cost of college has continued to rise, so have the benefits,” the researchers wrote in a blog post about the findings.

Tuition prices have been rising for decades, but the net price students pay for college after financial aid, grants and scholarships has been falling in recent years. The average net price for a four-year degree was about $30,000 in 2024, down from a high of about $40,000 in 2015, according to the Fed’s analysis of Education Department data.

Students who took out loans graduated with an average of $29,300 in debt in 2023, according to the latest College Board data.

Still, the benefits of a college degree largely outweigh those costs for most students in the long-term, Fed researchers say.

College graduates have earned a median of around $80,000 a year since 2020, while median wages for workers with just a high school diploma have hovered around $47,000 a year, the NY Fed reports. Plus, research has shown that the so-called “college wage premium” increases over time because wages grow faster for workers with degrees.

At age 25, college-educated workers earn 27% more than their peers without a degree. That premium grows to 60% at age 55, a 2023 National Bureau of Economic Research paper found.

Paying more for college diminishes the average ROI, but not too significantly for students who graduate in four years, the NY Fed finds. The median ROI remains at least 9% for graduates paying over $260,000 in total out-of-pocket and opportunity costs for their degree.

Students who take longer than four years to graduate from college naturally incur more costs, reducing their return, Fed researchers say. Additionally, entering the job market later can decrease their lifetime earnings.

The ROI for this group falls to 9.3% for students who take five years to graduate and just over 7% for those who take six years. 

Since the 12.5% return on investment is a median estimate, by definition, half of college grads will wind up with smaller returns, NY Fed reports. But for most graduates, the ROI remains positive.

Still, about a quarter of college graduates may not see a positive ROI at all, the agency says. That could be due to attending an expensive school or working in a low-paying industry post-grad.

If you’re interested in boosting your ROI, consider selecting a major with historically high earning potential. College graduates with engineering, math and computer degrees earn a median 18% return on their investment, NY Fed estimates.

On the other end of the spectrum, those who majored in education earn less than a 6% median ROI. 

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