Is College Worth It? Education, Student Debt, and Economic Confidence

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With increased attention given to rising student debt levels, the question “Is college worth it?” is being asked more and more. To help answer this question, we examined the impact of both education levels and student debt on individuals’ economic confidence, using the HPS-CivicScience Economic Sentiment Index (ESI).

Key findings are:

Economic confidence rises with education-level. College graduates’ ESI is five points above individuals with just some college and eight points above those with just a high school degree or less. Those with a post-graduate degree exhibit some diminishing returns with an ESI just one-point higher than those with just a college degree.

Having a degree is a stronger predictor of confidence than student debt. Overall, those with student debt have lower economic confidence than those who don’t. However, college graduates with student debt have slightly higher economic confidence than those with just some college and no student debt.

The dominant strategy for maximizing economic confidence is to get more education. Higher education leads to greater economic confidence, even if it requires debt.

Student debt may impact confidence in buying a house. College graduates without student debt have a more optimistic view of the housing market than those with student debt. Still, those with a college degree and student debt are slightly more optimistic than those who have just some college, but have no student debt.

Student debt most likely impacts consumer and career choices. Of the 44 percent of people ages 18 to 54 that have student debt, nearly three-fourths of respondents indicated that student debt impacted consumer and career choices. Note, 56 percent of respondents reported no student debt.

Overall, these findings confirm intuition that all else equal, student debt may impact consumer and career decisions. But regardless of the debt, going to college is worth it. The findings also point to the importance of students finishing. Those with a college degree – student debt or no student debt – have a higher level of economic confidence than those with just some college.

View the entire report here.