Which of the following best explains why going to college might be considered a good financial decision?

• A. College graduates typically earn higher wages over their lifetimes compared to those without a degree.
• B. College education is always free and does not require any investment.
• C. College guarantees immediate wealth upon graduation.
• D. Attending college eliminates all future financial risks.

Answer: (A)

Verified step by step guidance

1. Understand the concept of investment in human capital, which refers to the time and resources spent on education to increase future earning potential.
2. Recognize that going to college involves costs, such as tuition fees and opportunity costs (foregone earnings while studying), which are investments made today.
3. Identify that the financial benefit of college comes from the higher wages that college graduates typically earn over their lifetimes compared to those without a degree.
4. Evaluate the options by comparing the realistic outcomes: college education is not free, does not guarantee immediate wealth, and does not eliminate all financial risks.
5. Conclude that the best explanation is that college is a good financial decision because it generally leads to higher lifetime earnings, outweighing the initial costs.