Delaying College During the Pandemic Can Be Costly

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Liberty Street Economics reports: “Many students are reconsidering their decision to go to college in the fall due to the coronavirus pandemic. Indeed, college enrollment is expected to be down sharply as a growing number of would-be college students consider taking a gap year. In part, this pullback reflects concerns about health and safety if colleges resume in-person classes, or missing out on the “college experience” if classes are held online. we provide an economic perspective on going to college during the pandemic. Perhaps surprisingly, we find that the return to college actually increases, largely because the opportunity cost of attending school has declined. Furthermore, we show there are sizeable hidden costs to delaying college that erode the value of a college degree, even in the current economic environment. In fact, we estimate that taking a gap year reduces the return to college by a quarter and can cost tens of thousands of dollars in lost lifetime earnings”.

“Despite rising costs, we have shown that college has remained a good investment, at least for most people, when we weigh the costs against the benefits during normal times. The economic costs of college include direct costs, such as tuition and fees, as well as opportunity costs—the wages one gives up while in school. However, nothing is normal in the current economic environment. Unemployment has skyrocketed, and there are signs that wages for some workers are falling. How does this change the return to college?”

“To re-estimate the return to college during the pandemic, we make one simplifying assumption: that workers with only a high school diploma are not able to find a job during the next year (we hold tuition constant to make a conservative estimate). Think Twice before Delaying
Of course, the return to college is not the only factor to consider when deciding whether to go to college or the right time to do so”.

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