A Harvard University building on August 30, 2018 in Cambridge, Massachusetts. The U.S. Justice Department sided with Asian-Americans suing Harvard over admissions policy.
Scott Eisen/Getty Images
A Harvard University building on August 30, 2018 in Cambridge, Massachusetts. The U.S. Justice Department sided with Asian-Americans suing Harvard over admissions policy.
Now playing
01:56
Does it matter which college you go to?
Shutterstock
Now playing
04:47
Permanent work from home is here. Will cities survive?
Now playing
02:35
Compass CEO: I'm firmly betting on NYC real estate
A United Dwelling apartment created form an old garage
Gabe Ramirez
A United Dwelling apartment created form an old garage
Now playing
03:17
See how this company turns garages into affordable housing
CNN
Now playing
01:39
Mortgage rates are at historic lows. Should you refinance?
eviction crisis pandemic renters orig vf_00002113.jpg
eviction crisis pandemic renters orig vf_00002113.jpg
Now playing
03:45
She's out of work and facing eviction. She's not alone
Sean Clark
Now playing
04:01
Covid-19 is driving millennials out of cities and into first homes
Montague Real Estate
Now playing
00:44
Would you buy this island after only a video tour?
Now playing
03:13
Young adults returning home is impacting the rental market
Now playing
02:32
US facing 'avalanche of evictions' as rent freezes expire
Public Comment
Now playing
04:54
America's housing crisis was already here. Coronavirus made it worse.
OAKLAND, CA - DECEMBER 04:  Rows of new homes line a street in a housing development on December 4, 2013 in Oakland, California. According to a Commerce Department report, sales of single family homes in the U.S. surged 25.4 percent in October, the larget gain in over 33 years. (Photo by Justin Sullivan/Getty Images)
Justin Sullivan/Getty Images
OAKLAND, CA - DECEMBER 04: Rows of new homes line a street in a housing development on December 4, 2013 in Oakland, California. According to a Commerce Department report, sales of single family homes in the U.S. surged 25.4 percent in October, the larget gain in over 33 years. (Photo by Justin Sullivan/Getty Images)
Now playing
02:15
Can't pay your mortgage? Here are your options
ANDREW HARRER/BLOOMBERG/GETTY IMAGES/CNN
Now playing
03:29
Selling your home is complicated. Zillow wants to change that
Douglas Elliman
Now playing
03:13
Can living in a 'wellness home' make you healthier?
Gabe Ramierz
Now playing
03:03
The flying saucer-shaped Futuro home was doomed to fail
Nick Godsell
Now playing
02:04
Would you live in a glass house? This family does

With the cost of college constantly rising, it’s easy to wonder whether four years of college is worth it anymore.

But new research from the Federal Reserve Bank of New York concludes: yes, a college degree still pays off.

The average college graduate earns $78,000 a year compared to the $45,000 earned by someone with only a high school education, according to the analysis. That’s a 75% premium, or more than $30,000 a year.

The wage premium for a college education rose from less than $20,000 in the 1980’s to $35,000 in the 2000’s. Since then, it has fluctuated between $30,000 and $35,000 a year.

The unexpected cost of college

While the price of college has increased significantly since the 1970’s, students aren’t paying as much as the price tags suggest, according to the study, which updated research from 2014.

While the sticker price continues to go steeply higher, with the average cost of college at $18,000 a year, the price students actually pay after grants and other assistance – or the “net price” – is around $8,000.

That means that if the average four-year college education looks like $72,000, it may come in more like $32,000 out-of-pocket once grants and other aid are factored in.

The net price is not only much lower than the sticker price, but it’s also increasing at a slower rate, according to the researchers. The average sticker price of college grew from $5,000 annually to $18,000 between 1970 and today. But net prices increased from $2,300 to $8,000 during the same period.

And the tuition isn’t always the biggest cost involved in getting a college education. The opportunity cost – or the income a student loses out on when they take four years out of the workforce to go to college – is much greater.

The strong job market has pushed up wages for those with only a high school diploma as well as those with a college degree. So while someone with a college degree will eventually command a higher salary, they still lose out on four years worth of wages, amounting to an average of $120,000, the New York Fed found.

A college degree is still a good investment

As an investment, a college degree has an average rate of return of 14%, the study found, well above the long-term return benchmarks for traditional investments like stocks at 7% or bonds at 3%.

But this isn’t always apparent to families during the college search. Since the cost of college is up front and the benefits are doled out over many years, the economic value of a college degree is often hard to see.

The value of a degree was boosted by the technology expansion of the 1990’s, but has gone down a bit in recent years. Despite the drop, the report says the overall long-term benefit of college still outweighs the costs.