Does College Really Pay Off for Poor Students?

According to researchers Timothy J. Bartik and Brad J. Hershbein at the Upjohn Institute for Employment Research, people from low-income backgrounds who complete college, compared to those who complete only high school, increase their career earnings by 71 percent.

To put that 71 percent return in dollars: For the average college graduate from a low-income background (those who grow up with family earnings below 185 percent of the poverty line), lifetime earnings are about $810,000. But for the average person from a low-income background with just a high school diploma, average lifetime earnings are about $475,000.

That boost of $335,000 vastly exceeds tuition costs, as well as associated scholarship costs, and any foregone earnings from attending college instead of immediately working full-time after high school. Because college so dramatically pays off for low-income groups, policies to boost college access and success make good sense: college graduation for lower-income groups has a benefit-cost ratio of over 3 to 1.

Unfortunately, college graduates from low-income backgrounds earn far less than college graduates from higher-income backgrounds. Furthermore, both the dollar and percentage boost to college is much greater for those from higher-income backgrounds. Additional efforts and policies are needed to help lower-income Americans better access the highest-paying jobs, for example, through helping them attend more selective colleges.

In the meantime, college still has a good economic return for most Americans, including the poor and other disadvantaged groups.

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