From a new paper by Sang Yoon Lee, Yongseok Shin, Donghoon Lee:
Going to college is a risky investment in human capital. However, we highlight two options inherently embedded in college education that mitigate this risk: (i) college students can quit without completing four-year degrees after learning about their post-graduation wages and (ii) college graduates can take jobs that do not require four-year degrees (i.e., underemployment)… We show that the interaction between these options and the rising wage dispersion, especially among college graduates, is key to understanding the muted response of college enrollment and graduation rates to the substantial increase in the college wage premium in the United States since 1980. Furthermore, we find that subsidies inducing marginal students to attend colleges will have a negligible net benefit: Such students are far more likely to drop out of college or become underemployed even with a four-year degree, implying only small wage gains from college education.
On a related note, Ben Casselman reports:
barely half — 52.9 percent — of students who enrolled in fall 2009 had earned a bachelor’s or associate degree six years later…. graduation rates were much lower, and fell much more sharply, for older and part-time students, the same groups that saw big enrollment increases during the recession… The low graduation rate shouldn’t come as a big surprise. The recession drove people to attend college who wouldn’t have gone otherwise and who were likely less prepared than other students. Many of them ended up inworse shape than if they hadn’t gone to college in the first place: burdened with thousands of dollars in student debt, but without a degree to show for it.