What Is the Economic Pay-Off to a Community College Degree? Working Paper Series, No. 3-85.

Three different analytical approaches to assessing the economic return to be derived from the two-year college degree are examined in this paper. Introductory comments discuss the conditions that gave rise to interest in assessing the economic pay-off of both two- and four-year college degrees. Next, the paper analyzes the economic costs and benefits of beginning work after high school, earning a two-year college degree, and obtaining a four-year college degree, using and explaining the following approaches: (1) constructing an age earnings profile based on census data to trace the path of a person's lifetime income; (2) calculating lifetime income by determining the worth of future income in terms of present dollar values; and (3) establishing the internal rate of return on the investment in schooling. In the next section, the effects of an individual's willingness to incur risk are incorporated into the value calculations. Finally, brief concluding remarks summarize each analytical method and assert that calculating income alone as a benefit of education underestimates the rate of return to be derived from all forms of education. Graphs, tables, and formulas are included. (MPH)