College Worth It To Public, WSU Argues Economics Prof Uses Census Data To Calculate Yield On Investment

As they face the challenge of educating more students with fewer tax dollars, Washington State University officials are arguing you can go to the bank with a college sheepskin.

They’re citing a study to prove it.

An analysis by WSU economics professor Ernst Stromsdorfer suggests that the money invested in a college education yields as good an annual return as a 10-year treasury bill.

Put differently, the higher earnings of a college graduate ultimately outweigh the combined cost of tuition, the taxpayer subsidy and the income a student forgoes during the college years.

While a t-bill will earn 9.3 percent a year, men earn a 12.5 percent annual return from their college degree, while women earn a 9.8 percent annual return on average, the study shows.

And those are just low-ball figures, said Stromsdorfer, who expects to see the return rise as he fine-tunes his calculations.

“Education continues to be a good investment for the state and the nation,” he said.

The WSU provost’s office paid for Stromsdorfer’s study as the school continues to press its case for funding in the tight budget environment of the Proposition 601 spending limits.

With demographic trends showing the WSU system could have 30,000 students by the year 2010, Stromsdorfer’s study is one tool officials can use in making an economically based argument for continued funding, said Provost Tom George.

“For the amount of money that it takes to educate that many students, the return far outweighs the amount you invest,” George said.

Stromsdorfer used data from the 1990 U.S. Census to analyze the income, age, gender, ethnic origin and education levels of Washington residents. Focusing on ages and education levels, he plotted the relative increases in earning power of people without high school diplomas, high school graduates and holders of associate’s, bachelor’s and master’s degrees.

To be sure, the data are only a snapshot in time based on previous economic conditions, not the job environment that future college graduates will face.

That aside, Stromsdorfer’s preliminary results show a significant difference between the lifetime earnings of those who do and don’t have college degrees.

The average lifetime income for a Washington man without a high school diploma is $650,100, while the earnings for the holder of a bachelor’s degree are more than twice that at $1.4 million.

Earnings for women are lower on average. However, a woman with a bachelor’s degree earns an average of $675,100 over her lifetime compared to the $259,800 earned by a woman without a high school diploma.