Why the Return on Investment Debate Deserves a More Honest Conversation
by Rob McLay and Xiaodong Wu
At a time when universities are under pressure from rising costs, public skepticism, student debt concerns, and political scrutiny, one question keeps resurfacing: is higher education still worth the investment? It is a fair question, but it is often answered too simply. Some defend higher education as if its value were self evident in every case. Others suggest that university has become a poor bargain for most people. The stronger evidence points somewhere in between. Higher education still produces substantial returns for most graduates and for society as a whole, but those returns are not automatic. They vary by field of study, institution, cost, completion, geography, and family background. That is why the real question is not whether higher education pays off in the abstract, but under what conditions it delivers strong and equitable returns.
The broad economic case remains strong. Across OECD countries, adults with tertiary education continue to earn significantly more than those with only upper secondary education. OECD data published in 2025 shows that adults with a bachelor’s degree earn on average 39 percent more than those with upper secondary attainment, while those with a master’s or doctoral degree earn 83 percent more. Employment outcomes also improve as education levels rise, with very high employment rates among those with advanced qualifications. These patterns matter because they confirm that, in general, higher education still provides a meaningful long term earnings premium and greater labour market resilience.
The returns are especially striking when measured over the life course. In the United States, OECD estimates that the lifetime net private benefit of tertiary education remains very large even after costs are taken into account, reaching roughly USD 726,100 for men and USD 511,400 for women. Those are average figures, not guarantees, but they reinforce the point that higher education still yields a substantial payoff over time in many systems, even where tuition is high. Georgetown University’s Center on Education and the Workforce reaches a similar conclusion from a different angle. Its 2025 analysis finds that prime age workers with a bachelor’s degree earn about 70 percent more at the median than workers with only a high school diploma.
Yet average returns can hide deep inequality. The most serious commentary on higher education ROI now stresses variation, not just overall gain. Georgetown’s recent work shows that earnings differ sharply by major, with much stronger financial returns in fields such as engineering and computer science than in lower paying but socially important fields such as education and public service. This does not mean the latter lack value. It means that a serious return on investment discussion must distinguish between private wage returns and broader social returns. A teacher or social worker may not see the same salary premium as an engineer, even though the public value of their work is immense.
Completion is another decisive factor. Higher education is far more likely to pay off when students actually finish their programs. OECD data shows that across 32 OECD and partner countries, only 43 percent of bachelor’s students graduate on time, though the number rises considerably when students are given more time. Students who borrow, spend, or forgo wages but leave without a degree often face a very different financial reality than those who complete. This is one reason why return on investment cannot be separated from student support, advising, affordability, and institutional quality. It is not enough to widen access if systems do not also help students persist and graduate.
Recent research also suggests that the gains from higher education are becoming more uneven across social groups. A 2025 NBER summary on the changing distribution of returns to higher education found that wage benefits have increasingly tilted toward students from higher income families. The reasons include differences in institutional quality, resources, graduation rates, and labour market opportunities. In practice, this means that higher education can still be a powerful engine of mobility, but it can also reproduce inequality when lower income students are concentrated in under resourced institutions or face greater barriers to completion. That is a major warning sign for policymakers and university leaders.
This is where the public conversation often becomes too narrow. Too much commentary reduces higher education to a simple wage premium, as though the only question is whether graduates make enough money to justify tuition fees. But the return on higher education is broader than salary alone. The World Bank continues to emphasize that tertiary education drives innovation, strengthens institutions, builds advanced skills, and supports long term economic transformation. UNESCO likewise frames higher education not only as a route to employability, but also as a contributor to research capacity, civic development, and social mobility. These wider benefits are harder to measure than income, but they are central to the public case for investment in universities and colleges.
Classic and contemporary economics research points in the same direction. The long running literature reviewed by Psacharopoulos and Patrinos found that returns to education remain consistently positive across countries and over time, with higher education often producing especially strong private returns. More recent commentary from Brookings argues that college is still worth it, even in an era of debt anxiety, but insists that systems can and should do better in controlling costs, improving completion, and ensuring that students receive value commensurate with what they invest. That is probably the most credible position today. Blind celebration is not enough, but neither is blanket cynicism.
A more honest discussion of return on investment therefore leads to a more demanding policy agenda. Institutions need to be more transparent about outcomes. Governments need to pay closer attention to completion, not just access. Financial aid systems need to reduce the risk borne by lower income students. Universities need to align more deliberately with changing labour markets without abandoning their civic and intellectual missions. And public debate needs to recognize that some returns are private and financial, while others are social, democratic, and long term.
So does higher education still pay off? The answer is yes, but not automatically and not equally. The strongest evidence still shows that higher education remains one of the most important long term investments available to individuals and societies. But its returns depend on who gets in, who completes, what they study, what they pay, and the quality of the institution they attend. The future of higher education will depend less on defending old assumptions and more on making those returns more transparent, more equitable, and more real for a wider range of students.
References
OECD. Education at a Glance 2025 including sections on earnings advantages, labour market participation, and completion.
OECD. Education at a Glance 2025: United States.
Georgetown University Center on Education and the Workforce. Ranking 4,600 Colleges by ROI (2025).
Georgetown University Center on Education and the Workforce. The Major Payoff: Evaluating Earnings and Employment Outcomes Across Bachelor’s Degrees.
National Bureau of Economic Research. “The Changing Distribution of the Return to Higher Education.” 2025.
Brookings Institution. “College Is Still Worth It, Even With Student Debt, but We Can Do Better.” 2025.
Psacharopoulos, George, and Harry Anthony Patrinos. “Returns to Investment in Education: A Decennial Review of the Global Literature.” World Bank.
World Bank. “Tertiary Education.”
UNESCO. “What You Need to Know About Higher Education.”
Suggested Reading List
The best core set would be OECD Education at a Glance 2025, Georgetown’s Ranking 4,600 Colleges by ROI, Georgetown’s The Major Payoff, the NBER piece on the changing distribution of returns, the Brookings commentary on whether college is still worth it, and the World Bank review by Psacharopoulos and Patrinos. Together they provide strong international evidence, institutional level analysis, and nuanced commentary.
Note: AI was used to support drafting, synthesis, and fact verification alongside standard research practices.