What's the value of a college education? It depends

The average cost of attending a four-year private university is now nearly $42,500 per year—triple the price tag in 1990 and the equivalent, after taxes are taken out, of almost a year's income for a median household today.

Even state schools now cost students nearly $19,000 per year on average, a more than 100 percent increase over the last 25 years.

While wages have stagnated, college tuition has continued to climb, growing at a faster rate than both inflation and median income levels. That's put college increasingly out of reach for many families, who have turned to personal savings and student loans to make up the difference, sending student debt levels to a record $1.2 trillion last year—and putting their own retirement savings in jeopardy.

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Given those numbers, it's easy to wonder: Is a college degree worth it anymore?

On that question, the consensus is still a resounding yes. New York Fed researchers estimate college graduates earn about $1 million more over their lifetime than those without a degree. And the so-called college wage "premium" -- the difference in average earnings between college graduates and those with just a high school diploma -- has averaged about 56 percent over the last three decades.

But dig deeper into the data and it becomes clear that the value of a degree is eroding—while the premium has remained stable, the cost to attain a degree has risen and earnings for college graduates and non-graduates alike have fallen. And while there's plenty of evidence that a higher education provides a gateway to higher-paying jobs, the return on a college degree can vary widely, depending on a range of factors.

For one, there's the matter of completing college.

Only 36.5 percent of students at public, four-year universities have obtained a degree after five years—close to the lowest level in three decades. (Tweet this.) That number does go up at private universities, where 57 percent graduate within five years, according to an analysis by ACT, which has kept a comprehensive database of completion rates since 1983. But that means that even at private universities, more than four in 10 students don't have a degree after five years.

Different factors can affect schools' completion rates, of course. Some students transfer to other schools, others attend part-time while working so take longer to graduate. But the longer it takes to complete a degree, the larger the cost—both in terms of outlays and opportunities.

Those who put their studies on hold to work, or drop out altogether, don't enjoy the same wage premium that those with degrees do. In fact, those with some college credits don't fare much better than those with just a high school diploma, according to the U.S. Department of Education. Add in student loan debt, and the costs are even higher.

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Some schools have better completion rates than others. So, if your child is admitted, spending more on a private university may be worth it -- especially a prestigious one -- if it means that child is more likely to graduate on time. "The top 200 schools have graduation rates of 87 or 88 percent or more," said Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce. "And at a selective school, you'll have tutors, a peer group with high aspirations...the ambitions and expectations are higher."

That can improve the chances that students will not only graduate on time, but seek out better-paying opportunities when they do. Still, when a student graduates can make a difference. Earn a degree in a recession, and it may be difficult to find a job at all, much less a good-paying one. And that can affect a student's ability to pay off loans, build savings, and hurt their lifetime earnings potential.

While the Great Recession officially ended six years ago, the labor market has not yet fully recovered, and that's left many college graduates struggling to find jobs that match their skills and education level. "The depth of the recession and the slow pace of recovery since it ended means that seven classes of students have now graduated into a weak labor market and have had to compete with more experienced workers for a limited and slowly growing pool of job opportunities," wrote researchers at the Economic Policy Institute in a recent paper.

As a result, unemployment and underemployment among young grads remain particularly high compared to pre-recession levels. For young college graduates, defined as those between 21 and 24 years old, the unemployment rate is above 7 percent and the rate of underemployment -- meaning college graduates who are working in low-paying, low-skilled or part-time jobs -- stands at nearly 15 percent, according to the institute.

"While the labor market has been challenging for those with a degree, it's been even more challenging for those without a degree," said Jaison Abel, a research officer at the Federal Reserve Bank of New York, which has analyzed employment patterns.

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Young high school graduates face an unemployment rate of 19.5 percent and underemployment rate of 37 percent, according to EPI researchers.

That explains why the wage premium has remained relatively level, despite the recession. It's not that college graduates' wages are growing (they're not); it's that everyone's wages are going down. That also means the opportunity cost of going to school instead of working has gone down too.

There's no guarantee that your kid won't end up an underemployment statistic, working as an over-educated barista a year out of school. But selecting certain majors can lower the odds.

"All degrees are not created equal," said Georgetown's Carnevale. "What you take more and more determines what you make."

An analysis by Georgetown University's Center on Education and the Workforce found a graduate with a top-paying college major can earn an average of $3.4 million more over a lifetime than someone who graduates in the lowest-paying major.

Not surprisingly, STEM majors -- science, technology, engineering and math -- feature prominently at the top of the pay scale.

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Almost all of the highest-paying majors are in engineering fields, with petroleum engineering majors commanding median mid-career earnings of $136,000. But focusing too narrowly in a field can backfire, as Peter Cappelli, a management professor at the Wharton School and author of the new book "Will College Pay Off?" points out, since demand for niche specialties like petroleum engineering can fluctuate, depending on factors as varied as the price of oil to drilling regulations.

"A too-narrow focus on occupational preparation is superfluous," said Richard Arum, a sociology professor at New York University and author of "Aspiring Adults Adrift: Tentative Transitions of College Graduates" "The jobs [within a field] often change or are eliminated."

And if too many students chase a sub-specialty, the supply and demand equation can shift, leaving many graduates clamoring for a shrinking number of spots.

Still, STEM fields in general are expected to experience above-average growth over the next decade—from an increase of 13 percent for accountants and auditors to a 25 percent increase in demand for computer systems analysts, according to the Bureau of Labor Statistics projects. Other high-paying fields like healthcare and economics are also expected to grow by more than 10 percent.

And Kelly Services estimates the country will need nearly 250,000 more engineers over the next 10 years to work in high-growth sectors and industries.

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"Building an actual skill -- particularly quantitative and analytical skills -- is going to be better in terms of outcome than getting something more general," said Abel from the New York Fed.

That doesn't necessarily mean that if your kid is drawn to a lower-paying major, like education or history, they're doomed to struggle financially. For one, researchers have shown that a graduate degree can substantially boost the earnings potential for even the lowest-paying undergrad majors (though, of course, that requires more outlay upfront). There's also a wide range in salaries within fields, so even low-paying liberal arts majors may find higher-paying avenues withing their field.

As Georgetown researchers point out, the top 25 percent of education majors earn more than the bottom 25 percent of engineering majors.

Seeking out internships and tapping into professional networks during college can also help to improves a student's prospects after graduation.

When he was researching his book, NYU's Arum found that students who are involved in internships, apprenticeships and job transition programs are more likely to find a job upon graduation. STEM programs tend to take the greatest advantage of that, he said, in part because -- unlike liberal arts majors -- they were often set up specifically to prepare students for professional jobs.

Of course, there's no reason why arts and science majors can't find internships, he added. It may just require more effort on a student's part.

In fact, ensuring a good return on a degree largely seems to come down to the choices students make: whether they seek out fields with high pay and projected demand, pick a low-paying major but pursue a higher education to boost their salary prospects, or choose a career path within a lower-paying field that can lead to higher-paying opportunities.

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Still, while students can up their odds of success, college remains a risky, and expensive investment for families—and one whose value diminishes if costs increase faster than wages. At some point, if tuition costs continues to climb, the benefits simply may not be worth the price of admission for some.

Between 2011 and 2013, college enrollment actually started to fall. "We were thinking it could be the tipping point," said Will Kimball, a research assistant at the Economic Policy Institute. But then the trend reversed.

"The question now is how much more are potential students able to take on when they can't necessarily anticipate increasing returns on their degree?"