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Faced with the prospect of a semester or year of virtual, yet still expensive, schooling, some families and students are considering a year off from college.
But a gap year could have steeper costs than they think, researchers from the Federal Reserve Bank of New York warn.
Jaison Abel and Richard Deitz, both assistant vice presidents of the bank's Research and Statistics Group, compared the costs and benefits of attending college now during the pandemic to the costs and benefits of not attending, with a focus on the question of whether to take a gap year.
On the cost side are direct costs, such as tuition and fees, and indirect costs, such as opportunity costs, or the money one gives up by attending school instead of working. Both have declined during the pandemic, according to the researchers — direct costs, because many schools are cutting tuition to attract students, and opportunity costs because the job market has shrunk.
Moreover, the increase in unemployment due to the pandemic has not been "nearly as steep for college graduates," the researchers note, explaining that many jobs held by college graduates can be done more easily from home than jobs held by workers without a college degree.
The benefits of a college education center on the college wage premium — the extra wages a college graduate earns compared to the wages of a high school graduate. "If you can't find a job, going to school is less costly," the researchers write. "Despite greater uncertainty about the path of future earnings, there is little reason to think that the college wage premium will shrink."
They explain that even when wages stagnate or decline, "they tend to fall as much or more for those without a college degree."
They mention, however, that networks developed through personal relations at school could be damaged with extensive remote instruction.
Long-Term Costs
Delaying college for a year forfeits a year's worth of wages that could have been earned with a college degree had the student graduated a year earlier. In addition, entering the job market a year later damages a student's entire lifetime earnings profile from which they can "never really catch up."
(Chart: Federal Reserve Bank of New York) 
