Does paying more for a college education produce a higher future wage?

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Loeb, Hayden
Kunkel, Margaret
Brennan, Harriet
Issue Date
Scholarship Sewanee 2020 , Education and earnings , Earnings after graduation
Have you ever wondered if investing more of your time and money to attend a more prestigious institution makes for a better financial future? Our paper examines the long-term effects of college qualities on earnings of financially independent workers. We study this relationship by observing the impact of institutional characteristics such as admission rates, average test scores, proportion of students in a particular field of study, and net expenditures on wages incurred 10 years after enrolling in college. In doing so, we take into account demographics, socioeconomic status, and debt accumulation of the college graduate. Upon analyzing the mean annual earnings of 1109 independent students in 2019 with the amount spent on attending college ten years prior, we discover a significant relationship consistent with numerous studies. More specifically, we find a 10% increase in net price to be associated with a near full percentage increase in earnings ten years after graduation.