The Single Most Important Piece Of Advice For Anyone Who Takes Out A Student Loan

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Despite record student debt, the benefits of a college degree still outweigh the costs, according to a new report from the Federal Reserve Bank of New York.

But the real message to students - especially if you are borrowing is: stay in school.

The study, published by Jaison Abel and Richard Deitz, found that the return on a college degree has remained at 15%. (As a point of comparison, Abel and Deitz note that since 1950, investing in stocks or bonds have yielded annual returns of 7% and 3%, respectively.)

And though college graduates now make less on an inflation-adjusted basis than they did a decade ago, wages have fallen for all workers regardless of their level of education. In short, you get about as much of a leg up, wage wise, now as you did a decade ago.

Federal Reserve Bank of New York

Federal Reserve Bank of New York

Abel and Deitz also find that "net tuition," which they compute as the "sticker price" of attending college minus the aid students receive that doesn't need to be paid back, isn't rising as quickly as gross tuition numbers suggest.

They find that the while "sticker price" of a bachelor's degree has increased from $4,600 per year in the 1970s to about $15,000 in 2013, "net tuition" rose from $2,300 a year in 1970 to about $6,500 per year in 2013.

Federal Reserve Bank of New York

Abel and Deitz, however, note that their findings pertain only to students who finish college. They write:

"Significantly, our rate of return estimates pertain to those who complete a college degree; the estimates do not account for the risks associated with not completing the degree and dropping out of college. Indeed, while college dropouts incur at least some of the costs associated with going to college, they enjoy far fewer benefits."

This message is an often overlooked part of the debate about student loan debt and the effects it will have on our economy going forward.

In addition the Fed's report, yesterday The New York Times discussed a recent study by the Brookings Institute that found debt burdens from student loans have not risen sharply.

Among Brookings' findings were that the mean - or simple average - of student debt held has increased over the last decade; however, the median - or midpoint - of all debt held actually decreased from 2007-2010. In other words, there are more outliers taking on massive amounts of debt, but not enough to lift the average

Brookings Institute

The Times' piece caused a bit of a kerfuffle on the internet.

Brookings fellow Matthew Chingos, one of the authors of the Brookings study, told The Times' David Leonhardt, "We are certainly not arguing that the state of the American economy and the higher education system is just great. But we do think that the data undermine the prevailing sky-is-falling-type narrative around student debt."

Leonhardt also noted the problem with dropping out of college after taking out loans, writing that, "The vastly bigger problem is the hundreds of thousands of people who emerge from college with a modest amount of debt yet no degree. For them, college is akin to a house that they had to make the down payment on but can't live in."

There is no denying that there are lots of students taking on lots of debt to attend college. But where some see a growing burden that will hamper the economy long-term, others see a clear message that college is still a sound investment.

At the very least, finish your degree.