I am writing in regards to the 'Education Pays' report co-authored for the College Board. The report concludes that higher education yields a high rate of return for students from all backgrounds. My belief after analyzing the report is that several critical errors were made in the data.
First, you assume the average student graduates in 4 years when your own data says the average is 6.2. Second, you use an artificially low interest rate of 6.8% when private loans run 12-17%. Third, you use the average adult income instead of a realistic starting salary for a 22-year-old.
According to your chart, the net income difference over 40 years between high school and college graduate is under $250,000. If adjusted for these errors (-$421,441), the financial benefit of a college education goes negative. For the average young person, it may make more financial sense to bypass college and enter the workforce.
--MR
