College Is Worth the Rising Costs: NY Fed

With that in mind, the New York researchers, Jaison Abel and Richard Deitz, weighed the upfront costs of college against a lifetime of benefits, calculating an internal rate of return, but using "back of the envelope" estimates due the complexities involved.

They found the IRR of a bachelor's degree earned in four years is 14% currently, down from a record 16% in in the 1990s because of rising costs, but up from 8% to 9% in the 1970s and 1980s. That current rate of return easily exceeds the return on stocks and bonds, which the Fed researchers tag at 7% and 3%, respectively.

"While the rising cost of college has eroded the return to a bachelor's degree to some extent, our analysis suggests that college remains a good investment, at least for most people." The return on investment declines significantly, however, if a student doesn't earn a degree in four years.

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