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Volume 18
Issue 2
Fall 2013

A N EC O N O M I C E D U C AT I O N N E W S L E T T E R F R O M T H E F E D E R A L R E S E R V E B A N K O F S T. LO U I S

College Degrees: Why Aren’t More
People Making the Investment?
© Shutterstock

BY MARIA E. CANON AND CHARLES S. GASCON

Economic
Snapshot
Education
by the Numbers

What’s Your
Question?
College and Careers

Resources
New for Fall

www.stlouisfed.org/education_resources

T

he benefits of higher education have continued to grow over the past 30
years—specifically, greater earnings and lower unemployment for those
with a college degree. With this in mind, one might assume more students would
invest in a college education. Yet, the high school dropout rate has remained at
nearly 20 percent and the fraction of high school graduates who do not enroll in
any form of college (one-third) has not changed at all. Even though a greater percentage of high school graduates enter college today than 30 years ago, college
dropout rates have increased, lowering the college graduation rate.
If the benefits to education appear to be so
high, why don’t more people seek a college
degree? Some possible factors explored here
include higher tuition costs, changes in assistance programs, fear of failure, earnings risk,
and the recent recession and financial crisis.

Measuring the Benefits of College
It is well documented that college graduates
earn more over their lifetimes than those
with only a high school diploma (hereafter
referred to as “high school graduates”). A
measure that highlights this difference is
called the skill premium. This premium
measures the difference between the
average earnings of those with a four-year
college degree and those without and considers factors such as school choice, major,
occupation, and geographic location. Recent
estimates suggest that the average skill
premium for those with a four-year college

degree is between 65 and 75 percent, meaning they earn an average of between 65 and
75 percent more than high school graduates.
Supply and demand help explain this
phenomenon. Over time, the demand for
college graduates has increased faster than
the supply of college graduates, and therefore earnings for college graduates have
increased. On the other hand, the demand
for less-educated workers has decreased
and so have their earnings. Figure 1 clearly
shows the divergence between earnings for
college graduates and high school graduates.
(The space between the lines in Figure 1 is a
measurement of the skill premium. It is easy
to see that the difference between the college graduates’ line and the other two lines
has grown—not so much due to an increase
in earnings for those with a college degree
as a decrease in earnings for those without a
college degree.) From 1980 to 2008, the skill
continued on Page 2

T H E F E D E R A L R E S E R V E B A N K O F S T. L O U I S : C E N T R A L T O A M E R I C A’ S E C O N O M Y ®

Student Loan Delinquencies
continued from Page 1

FIGURE 1

SOURCE: College Board Advocacy and Policy Center and authors’
calculations.

premium for male college graduates increased by 26
percent over those with some college and by 33 percent over high school graduates. (It is common to use
male earnings because of issues specific to the female
labor force participation rate. For example, women
with the expectation of high earnings tend to enter the
labor force, while women with the expectation of low
earnings tend to elect to stay home.)
In addition to higher lifetime earnings, a college
degree brings another substantial benefit—a significantly lower unemployment rate (Figure 2). Between
2000 and 2007, the average unemployment rate was
4.6 percent for high school graduates but only 2.4
percent for those with a college degree—a difference
of 2.2 percentage points. During the recent recession,
the rates diverged even more, with a difference of 6
percentage points.
FIGURE 2

NOTE: “Some college” includes associate degrees.
SOURCE: Bureau of Labor Statistics, Table A-4.

What Drives College Participation Rates?
In recent years, the college participation rate has
grown substantially. According to a 2010 study by
economist Gonzalo Castex, between 1980 and 2000

WWW.STLOUISFED.ORG/EDUCATION_RESOURCES

2

the rate increased from 41 percent to 68 percent. It
varied widely across groups, however, with higher
participation rates for students with high ability (based
on standardized tests) and those from high-income
families. For example, the gap in college participation
rates between students from the lowest-ability quartile
and the highest-ability quartile was more than 60
percentage points.
To try to explain the growth in the participation rate
and the differences across groups, Castex considered
four factors: increases in the college skill premium,
increases in the availability of merit-based college aid
(grants and scholarships), shifts in both the distribution of family income and individual ability, and
increases in tuition costs. Among the four factors, he
found that an increase in the college skill premium is the
most influential factor affecting college participation.
For some, increased availability of merit-based aid
reduced the cost of a college education, making college more desirable. According to Castex, between
1980 and 2000, the ratio of grants awarded to highability students to the cost of education increased by
70 percent for low-income students and by 50 percent
for high-income students. This ratio changed little for
students with low ability. Castex found that this redistribution of aid accounts for 6 percent of the aggregate
increase in college enrollment and has a larger effect
for students with high ability.
Holding ability constant, Castex found that students
in low- and middle-income families have greater access
to need-based grants and scholarships. Since 1980,
there has been a significant change in the relationship
between student ability and family income. Castex’s
findings suggest there are now more students with
high ability in middle-income families than in 1980,
implying more grants for middle-income students and,
therefore, an increase in college participation.
Tuition costs influence college participation as well,
but perhaps not as much as might be anticipated.
Average college tuition increased by about 150 percent
between 1980 and 2000, according to the College
Board. It seems reasonable that higher tuition would
put college out of reach for more families and deter
enrollment because of a lower return on investment,
but higher tuition costs can be offset by more borrowing. Castex found that increased tuition costs reduced
the overall college participation rate by only 3 percent
(7 percent for students with low ability).
College is a risky, irreversible investment, which
makes some students hesitant to commit. Two terms
that define risk associated with college are failure risk

and earnings risk. Failure risk refers to the possibility that a student will not complete college.
Earnings risk refers to the possibility that a college
graduate may not find a job or may not find a job
with the level of expected earnings.

Failure Risk
According to a 2009 study by economists John
Bound, Michael Lovenheim, and Sarah Turner,
college failure rates are close to 50 percent at
four-year public colleges. In addition, as the rate of
college enrollment has increased, completion rates
have decreased. Generally, students who drop out
of college tend to do so after two years, and the
costs of failure can be very high. With the two years
of tuition expenses and forgone earnings, college
dropouts may see no return on their investment.
Also, many dropouts fail to earn any skill premium
because most specialized learning takes place in
the later years of college. Therefore, failure risk
warrants consideration and may be a prime reason
many students choose not to attend college.

Earnings Risk
Even with a college degree, there is no guarantee
regarding future earnings or employment. Attending college may or may not pay off as planned.
A May 2011 New York Times article by Catherine
Rampell reported that in 2009 slightly over half
of college graduates under the age of 25 held jobs
requiring a college degree. Moreover, 22 percent
of this same group was not working at all, and the
remaining 22 percent was underemployed, meaning they held jobs below their skill level.
Even though this recent underemployment may
be largely due to the state of the economy, some
college graduates still do not earn the skill premium
they expected—and invested in—because of factors
such as their school performance, degree choice,
or quality of life issues (e. g., purposefully taking a
lower-paying, less-stressful job).
It is possible for relatively young college graduates to immediately earn less than they expected.
Because earnings tend to grow over a lifetime,
starting with lower-than-expected earnings can
potentially reduce one’s lifetime earnings, making
earnings risk worthy of consideration as well.

Impact of the Recession
Traditionally, economic slowdowns have not
been associated with declining college enrollment

WWW.STLOUISFED.ORG/EDUCATION_RESOURCES

rates. In bad economic times, with fewer good
jobs available, many people choose to go
to college instead of work. During the most
recent recession, however, college enrollment
rates declined. The housing crash and financial
crisis may be largely to blame, making college
unaffordable for some families. In addition,
many college endowments lost significant
value, likely resulting in fewer scholarships.
And additional money was hard to come by—
the financial crisis made it more difficult for
households to borrow.
College graduates felt the effects of a tight
economy as well. The often-feared earnings
risk became a reality for many, as the New York
Times article indicated. Since the start of the
recession, the unemployment rate for college
graduates has more than doubled, from under
2 percent in 2007 to a peak of 5 percent at the
end of 2010, and roughly one-quarter of recent
graduates remain underemployed. Although
the recession ended, the economy has
experienced a “jobless recovery”: Job growth
has not kept pace with economic growth.
The unemployment rate remains elevated.
Although the skill premium seems to have
increased during the recession, the unemployment and underemployment of college
graduates gives credence to concerns about
earnings risk—investing in college can be risky.
Poor outcomes for college graduates may be
another factor explaining the slow growth in
college enrollment rates and elevated college
dropout rates.

Conclusion
Even though a college degree can bring
significant, long-term benefits, many avoid
college altogether or fail to complete their
degrees. Factors that influence people’s
choices regarding college include higher
tuition costs and changes in the availability of
financial aid. The main factors holding down
college enrollment rates, however, appear to
be fear of failure and earnings risk. The recent
recession and financial crisis added credence
to these fears, with many college graduates
left underemployed or unemployed. Yet, even
though earning a college degree entails risk,
all but a very few college graduates will earn
substantially more earnings over their lifetimes
than those with only a high school diploma. n

3

BIBLIOGRAPHY
Altonji, Joseph G.; Bharadwaj,
Prashant and Lange, Fabian. “The
Anemic Response of Skill Investment to Skill Premium Growth.”
VOX, May 6, 2008; www.voxeu.
org/index.php?q=node/1110.
Athreya, Kartik and Eberly, Janice.
“Risk and the Response of College Enrollment to Skill Premia.”
Northwestern University, unpublished manuscript, January 2012.
Bound, John; Lovenheim, Michael
and Turner, Sarah. “Why Have College Completion Rates Declined?
An Analysis of Changing Student
Preparation and Collegiate
Resources.” NBER Working Paper
15566, National Bureau of Economic Research, December 2009.
Castex, Gonzalo. “Essays on Human
Capital Formation.” University
of Rochester, Ph.D. dissertation,
August 2010.
College Board; http://trends.collegeboard.org.
Garriga, Carlos and Keightley,
Mark P. “A General Equilibrium
Theory of College with Education
Subsidies, In-School Labor Supply, and Borrowing Constraints.”
Working Paper No. 2007-051A,
Federal Reserve Bank of St. Louis,
November 2007.
Goldin, Claudia and Katz, Lawrence
F. “Long-Run Changes in the Wage
Structure: Narrowing, Widening,
Polarizing.” Brookings Papers on
Economic Activity, Issue 2, 2007.
Hungerford, Thomas and Solon,
Gary. “Sheepskin Effects in the
Returns to Education.” Review of
Economics and Statistics, 69(1),
February 1987.
Lange, Fabian and Topel, Robert.
“The Social Value of Education
and Human Capital,” in Eric
Hanushek and Finis Welch, eds.,
Handbook of Education Economics.
Volume 1. New York: NorthHolland, 2006.
Rampell, Catherine. “Many with
New College Degree Find the
Job Market Humbling.” New York
Times, May 18, 2011.

Lifetime Earnings: A Good Reason to Go to College

A

main reason students enter college is the college skill premium—
the ability to make more money over their lifetimes than high
school graduates. Although circumstances vary, reasonable estimates
indicate that by their mid-30s college graduates fully funding their college education with student loans will surpass the lifetime earnings of
high school graduates (Figure 3). For example, assuming the average
cost of attending college (including room and board) is approximately
$26,500 per year ($16,000 for public college and $37,000 for private
college), a student who completely finances four years of college with
loans will accumulate just over $100,000 in debt. Assuming the student pays off that debt (with interest) and earns a skill premium of 74
percent after graduation, by age 34 he or she will surpass the lifetime
earnings of a high school graduate.

FIGURE 4

The Role of Risk
Fear of dropping out of college (failure risk) or not being able
to find a high-paying job after graduation (earnings risk) are real
concerns for many. Assuming the same yearly college costs noted
above, a student who drops out of college after two years will accumulate just over $50,000 in debt and enter the labor force with a
much lower skill premium. The student will be saddled with student
loan debt (plus interest) but earn only 15 percent more than a high
school graduate. As a result, his or her lifetime earnings will remain
below those of a high school graduate well beyond retirement
(Figure 4).
Earnings risk is slightly more complicated because of the many
different scenarios that could affect potential earnings. Comparison
of data, however, show that in the majority of cases the lifetime
earnings of a college graduate will outpace those of a high school
graduate (Figure 5): By age 27, the earnings of a college graduate will
surpass those of a high school graduate. To match the lifetime earnings of a college graduate at the lowest end of the earnings spectrum, a high school graduate will have to work into his or her 60s.

FIGURE 5

FIGURE 3

NOTE: The shaded band shows the present value of lifetime earnings of
a college graduate earning a skill premium between 125 percent ($73,125
per year; top of the band) and 25 percent ($40,625 per year, bottom of the
band). All calculations assume a 5 percent interest rate on student loan
debt and a 3 percent discount rate.

SOURCE: College Board Advocacy and Policy Center. “Trends in College
Pricing.” 2010, p. 15, Figure 1.

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4

Glossary
Borrowing – Taking money with a promise to repay the money
in the future.
Costs – Things unfavorable to a decisionmaker.
Debt – Money owed in exchange for loans or for goods or
services purchased with credit.
Demand – The quantity of a good or service that buyers are
willing and able to buy at all possible prices during a certain
time period.
Earnings – Money or income received in exchange for labor
or services.
Earnings risk – The possibility that a college graduate may
not find a job or may not find a job with the level of expected
earnings.
Failure risk – The possibility that a student will not complete
college.
Graduation rate – The percentage of students who complete a
given course of study (e.g., high school or college) relative to
the total number of students enrolled over a given period.
Grants – Money that does not have to be repaid that is given
by the government to a recipient based on specific criteria
and a designated purpose. Some college grants must be
repaid if the student fails to maintain college eligibility.
Income – The payment people receive for providing resources
in the marketplace. When people work, they provide human
resources (labor) and in exchange they receive income in
the form of wages or salaries. People also earn income in the
forms of rent, profit, and interest.

Recession – A period of declining real income and rising
unemployment; significant decline in general economic
activity extending over a period of time.
Return on investment – A performance measure of the
effectiveness of an investment. It is calculated as the net gain
(gain from investment minus cost of investment) divided by
the cost of the investment.
Scholarships – Financial assistance given to support a student’s education, awarded on the basis of academic or other
achievement.
Skill premium – The difference between the average earnings of
those with a four-year college degree and those without.
Supply – The quantity of a good or service that producers are
willing and able to sell at all possible prices during a certain
time period.
Underemployed – Wanting a full-time job but having only a
part-time job; being overqualified for a job and receiving
less pay than would be earned at a job requiring a higher
skill level.
Unemployment – A condition where people at least 16 years
old are without jobs and actively seeking work.
Unemployment rate – The percentage of the labor force that is
willing and able to work, does not currently have a job, and is
actively looking for employment.

Interest – The price of using credit; the price of using someone
else’s money.
Labor force – The total number of workers, including both the
employed and the unemployed.
Private (or nonpublic) college – A college owned and operated by an individual, religious institution, partnership, or a
corporation other than the state, a subdivision of the state, or
the Federal government and that is supported primarily with
nonpublic funds.
Public college – A college that receives monetary support
from public funds.
Quartile – One part of a set of data divided into four equal
parts.

WWW.STLOUISFED.ORG/EDUCATION_RESOURCES

stlouisfed.org/education

5

ECONOMIC SNAPSHOT

Education by the Numbers
Current Economic Data

1. According to the graph below, how has the percentage
of high school graduates who enroll in college changed
recently?
From 1998 to 2010, the percentage of high school graduates
who enrolled in college increased slightly. (This is a continuation of a long-run trend.)

Q4-’12

Q1-’13

Q2-’13

Q3-’13*

Growth Rate
Real GDP

0.1%

1.1%

2.5%

NA*

Inflation Rate
Consumer Price Index

2.2%

1.4%

-0.0%

NA

Civilian Unemployment Rate

7.8%

7.7%

7.6%

NA

*Advance estimates were not available because of the October government shutdown. Please see the
online version for updates.
SOURCE: GDP, Bureau of Economic Analysis; www.bea.gov;
Unemployment rate and consumer price index, Bureau of Labor Statistics; www.bls.gov.

3. According to the chart below, how has the education level
of individuals changed since 1940?
From 1940 to 2009, the percentage of the population ages
25 to 34 with a bachelor’s degree or higher increased from 6
percent to 32 percent, while the percentage of high school
dropouts decreased from 64 percent to 12 percent.
SOURCE: National Center for Educational Statistics, Condition of Education, 2012. http://media.collegeboard.
com/digitalServices/pdf/advocacy/cca/12b-6368_CCAProgressReport_WR.pdf.
NOTE: High school completers refer to those who received a high school diploma or equivalency certificate. This
indicator provides data on high school completers age 16 to 24, who account for about 98 percent of all high
school completers in a given year.

2. According to the graph below, what is the unemployment rate
of recent college graduates by level of degree and gender?
From 2007 to 2011, the unemployment rate for those with a bachelor’s degree was higher than for those with an advanced degree.
In both categories, women had lower unemployment rates than
men (except for women with an advanced degree in 2009).

SOURCE: U.S. Census Bureau and
http://trends.collegeboard.org/education-pays/figures-tables/educational-attainment-over-time-1940-2009.

research.stlouisfed.org/fred2/

SOURCE: U.S. Bureau of Labor Statistics. http://www.bls.gov/opub/ted/2013/ted_20130405.htm

WWW.STLOUISFED.ORG/EDUCATION_RESOURCES

6

ECONOMIC SNAPSHOT

Education by the Numbers, cont.
4. According to the chart below, what is the breakdown of
degrees earned by recent college graduates?

5. According to the chart below, what is the trend for college
graduates working in jobs that do not require a degree?

Almost 82 percent of recent college graduates earned a bachelor’s degree. The remainder earned an advanced degree.

Since 2007, the percentage of college graduates working in
jobs that do not require a degree increased roughly 10 percent.
However, for 2013 a slight 0.3 percent decrease is projected.

NOTE: Recent college
graduates refer to
persons age 20 to 29 who
completed a bachelor’s,
master’s, professional, or
doctoral degree in the
calendar year of the survey
(Jan. through Oct.). In Oct.
2011, recent college graduates
totaled 1.3 million.
SOURCE: U.S. Bureau of Labor
Statistics.
www.bls.gov/opub/mlr/2013/0
2/art1full.pdf.

NOTE: *Through May.
SOURCE: Center for Labor Market Studies at Northeastern University
http://www.northeastern.edu/news/in-the-news/recent-college-grads-face-36-mal-employment-rate/.

6. According to the chart below, what is the correlation
between (i) education and unemployment and
(ii) education and earnings?
There is a positive correlation between educational attainment
and median weekly earnings. There is a negative correlation
between educational attainment and the unemployment rate.

SOURCE: Bureau of Labor Statistics, Current Population Survey

WWW.STLOUISFED.ORG/EDUCATION_RESOURCES

7

WHAT ’S YOUR QUESTION?

College and Careers
1. Are there alternatives to college for achieving financial
prosperity?

4.Are all college majors equal?
No. All fields of study are not equal in terms of employment
opportunities and earnings. Specific majors and higher technical
skills can and often do offer lower unemployment and higher earnings. The college major chosen has a potentially large effect on
the value of a four-year degree. For example, by mid-career, those
with engineering and economics degrees will typically earn almost
twice as much those with social work and education degrees.

Yes. The Council of Economic Advisers has concluded that the fastest job growth is likely among occupations requiring an associate
degree or a post-secondary vocational certificate. It is projected
that nearly half of future job openings will be filled by those with
an associate degree or occupational certificate. Some of these
“middle-skill” occupations (e.g., electrician, construction manager,
dental hygienist, paralegal, and police officer) will pay more than
some jobs requiring a bachelor’s degree. In fact, 27 percent of
people with post-secondary licenses or certificates—credentials
short of an associate’s degree—earn more than the average bachelor’s degree recipient.

SOURCE: http://centerforcollegeaffordability.org/research/studies/underemployment-of-college-graduates.

5. Which career choices have the lowest unemployment
rates? The highest?
Generally, unemployment rates are higher for non-technical majors,
such as the arts or law and public policy—9.8% and 9.2%, respectively. Unemployment rates are relatively lower for those with
education, engineering, or health and sciences degrees—5.0%, 7.0%,
and 4.8%, respectively.

SOURCE: http://www.gse.harvard.edu/search/index.html?cx=0164466036971636083
62%3Aurqj_p1s5to&q=Pathways+to+Prosperity&cof=FORID%3A11&siteurl=www.gse.
harvard.edu%2Fcontact.

2. What advice do recent college graduates offer?
According to the Heldrich Center for Workforce Development
Work Trends report published in March 2012, 62 percent of the
college graduates surveyed believe they will need more college
in addition to a four-year degree to be successful in their careers.
When asked what they would do differently if they could, 48
percent responded they would select a major more carefully or
choose a different major, while 4 percent responded they would
not go to college.

SOURCE: http://cew.georgetown.edu/unemployment2013/.

6. How has the total number of college graduates changed in
recent years relative to the demand for highly skilled jobs?
From 1970 to today, the percentage of the U.S. population 25 years
of age or older with a college degree has grown from 10 percent to
30 percent. The proportion of college graduates, however, has grown
faster than the demand for highly skilled jobs. It is projected that by
2020 the number of Americans with a bachelor’s degree will increase
by 19 million, while the number of jobs requiring a bachelor’s degree
will increase by less than 7 million.

SOURCE: http://www.slideshare.net/heldrichcenter/career-development-coursepresentation-march-2012.

3. What is the trend in the wage premium for
college graduates with (i) a four-year degree and
(ii) an advanced degree?

SOURCE: http://centerforcollegeaffordability.org/research/studies/underemployment-of-college-graduates.

The wage premium for college graduates with a four-year degree is
approximately 60 percent but has remained basically flat over the
past decade. Since 2000, the growth in the value of an advanced
degree accounts for most of the growth in the wage premium for
college graduates.

7. Where can I find information to help me make a career
choice?
Read the Occupational Outlook Handbook for the United States (available at http://www.bls.gov/ooh/). This resource features hundreds of
occupations and provides job descriptions along with the education
required, projected earnings, and employment projections.

SOURCE: http://www.clevelandfed.org/research/commentary/2012/2012-10.cfm.

8. How have increases in college costs differed according to
the type of institution?
While tuition has continued to climb, the average annual percentage increase is smaller for private four-year institutions than in
the previous two decades. Increases at public institutions (both
two-year and four-year) have been larger.
SOURCE: http://media.collegeboard.com/digitalServices/pdf/advocacy/
cca/12b-6368_CCAProgressReport_WR.pdf.

WWW.STLOUISFED.ORG/EDUCATION_RESOURCES

8

BULLETIN BOARD

LITTLE ROCK

Conversation with the Chairman for
Educators: The History of the Fed (K-12)
November 13, 2013 | 4 p.m. – 7:30 p.m. CST
University of Arkansas Global Campus
Rogers, AR
Registration: http://www.stlouisfed.org/
newsroom/events/?trk=0&rid=490
Federal Reserve Bank of St. Louis—
Little Rock Branch
Registration: http://www.stlouisfed.org/newsroom/
events/index.cfm?id=491

LOUISVILLE

Conversation with the Chairman for
Educators: The History of the Fed (K-12)
November 13, 2013 | 5 p.m. – 8:30 p.m. EST
Federal Reserve Bank of St. Louis—
Louisville Branch
Registration: http://www.stlouisfed.org/newsroom/
events/?trk=0&rid=492

MEMPHIS

Conversation with the Chairman for
Educators: The History of the Fed (K-12)
November 13, 2013 | 4 p.m. – 7:30 p.m. CST
Federal Reserve Bank of St. Louis—
Memphis Branch
Registration: http://www.stlouisfed.org/newsroom/
events/?trk=0&rid=493

Getting to the CORE: Count on Reading
and Economics (K-8)

Personal Finance Training for
Secondary Teachers
January 9-10, 2014 | 8:30 a.m. – 3:30 p.m. CT
Middle Tennessee State University
Murfreesboro
Registration: http://www.frbatlanta.org/forms/
register_140109_nsh.cfm

S T. L O U I S

Conversation with the Chairman for
Educators: The History of the Fed (K-12)
November 13, 2013 | 4 p.m. – 7:30 p.m. CST
Federal Reserve Bank of St. Louis
Registration: http://www.stlouisfed.org/newsroom/
events/index.cfm?id=488

Webinar: New Education Resources
(K-12)
November 14, 2013 | 2 sessions
2:30 p.m. – 3:30 p.m. CST
3:30 p.m. – 4:30 p.m. CST
Registration: http://www.stlouisfed.org/newsroom/
events/index.cfm?id=505

NCSS Pre-Conference Clinic
Engaging Online Programs and More
from the St. Louis Fed (Secondary)*
November 21, 2013 | 12:30 p.m. – 4:30 p.m. CST
Federal Reserve Bank of St. Louis
Registration: http://www.socialstudies.org/
conference
*The clinic is free but registration is required through the
NCSS Annual Conference.

December 7, 2013 | 8:30 a.m. – 3:30 p.m. CST
Mississippi Valley State University
Itta Bena, MS
Registration: e-mail Jeannette.n.bennett@stls.frb.org

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9

Bank Contacts
Little Rock
Kris Bertelsen
501-324-8368
Kris.A.Bertelsen@stls.frb.org
Louisville
Erin Yetter
502-568-9257
Erin.A.Yetter@stls.frb.org
Memphis
Jeannette Bennett
901-579-4104
Jeannette.N.Bennett@stls.frb.org
St. Louis
Mary Suiter
314-444-4662
Mary.C.Suiter@stls.frb.org
Barb Flowers
314-444-8421
Barbara.Flowers@stls.frb.org
Scott Wolla
314-444-8624
Scott.A.Wolla@stls.frb.org
Jennifer Bradford
314-444-4608
Jennifer.L.Bradford@stls.frb.org

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PAYING AND RECEIVING INTEREST

In Plain English: Making Sense of the Federal Reserve has been
a popular video, online program, and print book for years.
Now, enjoy it as an eBook. Students can download In Plain
English from the iTunes Store. The eBook contains all the
same information as the other formats, helping students
understand this complex, yet effective, organization.

This short, online interactive course is the perfect complement to your instruction on interest. In 15 minutes, your
students will learn what interest is, will view interest from
the borrower’s and the lender’s points of view, will recognize opportunity cost as the basis for interest charges,
and will engage in a practical exercise deciding whether to
spend savings or take out a loan to buy a car.

New from the Economic Lowdown
Video Series
CIRCULAR FLOW

Households and businesses interact in the economy through
the markets for resources and for goods and services. This
video on this somewhat dry subject is just engaging enough
to make learning about the important circular flow model
interesting and fun. The story thoroughly covers the concept,
with entertaining graphics and clear explanations.
EXTERNALITIES

New Economic and Personal
Finance Vocabulary Tool:
Glossary Flash Cards
The terms in our glossary can now be printed as doublesided flash cards. You simply check the terms you wish to
include in your deck, print the cards, and cut apart. Or better yet, let your students know about this useful new tool
and they can assemble their own decks to prep for tests
and competitions.

New Economics Lessons

This episode in our EconLowdown video series explains
ways in which we can discourage those nasty negative
externalities, such as pollution, while encouraging those
externalities that benefit us all, such as those that arise
from a well-educated population.

BARBIE® IN THE LABOR FORCE

Since 1920, women have more than doubled their share
of the labor force. More women are working, but has the
type of work they do advanced similarly? What were the
top occupations for women 20, 60, and 100 years ago, and
how do those occupations compare with women’s choices
today? In this lesson, students use primary source documents to review historical trends in women’s share of the
labor force and chosen occupations. Using Barbie careers
as a timeline, they speculate as to why Barbie represented
certain careers for girls at different points in time since
1959. They choose which career Barbie might represent next
year and explain that choice in a one-page essay.

New from No Frills Money Skills
UNDERSTANDING BONDS

The latest episode in the No Frills Money Skills series is a
spy thriller with our video host using high-tech tools to
stop Miss Information and her plot to misguide, mislead,
and misadvise. Students learn about government bonds,
corporate bonds, coupon and no-coupon bonds, and the
potential risks and return of investments.

SKY BOYS: HOW THEY BUILT THE EMPIRE STATE BUILDING

New Short Courses Online
OPPORTUNITY COST ONLINE COURSE

Pressed for time? Do we have to ask? In fewer than 12 minutes, your students can complete this online course, which
points to an important concept in economics—every choice
we make has a cost—an opportunity cost. Some costs are
small and relatively short term. Others are significant. Recognizing the opportunity costs of your decisions can help you
make more-informed choices. This short course is designed
to help students apply the idea of opportunity cost to the
decisions they make.

In this lesson, students learn about human resources, productivity, human capital, and physical capital. They participate in three rounds of a reasoning activity. From round to
round they receive training and tools to help them improve
their reasoning ability and thus increase their productivity.
Students will then listen to the story by Deborah Hopkinson about how the Empire State Building was built and
identify examples of key concepts mentioned or shown
in the book.
WORTH!

In this lesson, students participate in a banking role play in
which they portray roles based on characters in the book
Worth! by A. LaFaye. The students learn about banking,
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FEATURED RE SOURCE S

New for Fall
profit, risk, and reward. Students discuss some of the factors
that affect loan interest rates and the availability of credit.
Students apply their knowledge of the content by writing a
fictional applicant a letter of acceptance or rejection.

Professional Development:
Click, Learn, and Teach
Earn one hour of graduate credit and/or a certificate for
select topics (currently GDP, unemployment, and inflation)—all from that comfy chair in front of your computer.
Choose a topic, complete the activities, supervise students’
completion of an interactive EconLowdown program, and
submit your assessment items. For full details, go to http://
www.stlouisfed.org/education_resources/teacher-professional-development/.

Video Series Now with Q & A
The following video series now feature online questions
to check student understanding: Economic LowDown,
No Frills Money Skills, In Plain English, and the new
FEDucation, which explains the Fed’s roles and responsibilities. Enroll your students through our new and improved
Instructor Management Panel.

Personal Finance Chats
While the topics remain timely, our chat format has
changed—the following new chats are brief videos:
FAFSA 101: Walks through every screen of the online Free
Application for Federal Student Aid.
College Choice 101: Outlines a systematic way to compare
college costs and make a decision about where to go.
Financial Aid 101: Clarifies and defines financial-aid
options and requirements.

New Online Courses
FISCAL POLICY

Inflation, unemployment, recession, economic growth—
these economic concepts affect people in very real ways. In
two thought-provoking, interactive lessons, learn about fiscal policy, the avenue by which Congress and the president
attempt to influence the economy.
MONETARY POLICY

In this course containing three interactive, thoughtprovoking lessons, learn about monetary policy, the
avenue by which the Federal Reserve System influences
the economy in order to meet the Fed’s dual mandate of
stable prices and full employment.

WWW.STLOUISFED.ORG/EDUCATION_RESOURCES

COLLEGE 101 INFOGRAPHIC

Be educated and informed. Forecast your financial aid with
the FAFSA4caster calculator. Find out what percentage of
students received federal financial aid in 2012 and see the
results of an April 2013 salary survey. Use the calculator
to estimate the size of your monthly loan payment and
the annual salary required to manage that payment. Learn
about the top 75 college destinations with a link to the
College Destination Index. Identify some of the reasons
students select particular colleges...and more.

The Invisible Paw: Economics Through
Timeless Berenstain Bear Books
You likely read these stories to your students or have them
on a shelf for your students to read. Here’s a great way to
include some economics and personal finance instruction
while reading an old favorite. We have developed three new
lessons to help you do just that.
THE BERENSTAIN BEARS GET THE GIMMIES

The little cubs learn that they must make choices because
they cannot have everything they want. Students follow
along with the story by completing an activity listing all of
the goods that will satisfy the cubs’ wants. The students then
construct a word web and graphic organizer (table) to identify goods that will satisfy a want. They identify the problem
of scarcity, make a choice, and identify their opportunity cost.
THE BERENSTAIN BEARS: OLD HAT NEW HAT

Students make a choice about what they want to eat for
dinner, but then they are asked to trade with a partner and
discuss whether they like their new dinner better. Based
on this discussion, they learn about preferences. Then they
hear a story about a little bear who looks at many hats to
see if he can find a new one he likes. Students will relate
key concepts from the lesson to the story and create a hat
to discuss their own choices and preferences with the class.
THE BERENSTAIN BEARS’ TROUBLE WITH MONEY

Mama and Papa Bear use several figures of speech relating
to money. Students draw a picture of a bank and write a caption explaining their illustration. Students follow along with
the story by listening for additional figures of speech and
how they relate to the concepts of banks and interest. The
students also construct a story map of an event in the story
relating to why people choose to keep their money in banks.

fraser.stlouisfed.org/
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Inside the Vault is written
by economic education staff
at the Federal Reserve Bank
of St. Louis, P.O. Box 442,
St. Louis, MO 63166.
The views expressed are
those of the authors and are
not necessarily those of the
Federal Reserve Bank of
St. Louis or the Federal
Reserve System.

printed on recycled paper using 50% post-consumer waste

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