Suppose you’re 20 years old and you can either take a loan out to go to college or use that money to buy a house. Which is the better investment?
Once, this question sounded like a no-brainer. College was the golden ticket in the modern economy, the clear path to a better standard of living. But there is a narrative brewing among pundits and some economists arguing that because many millennials are facing thousands of dollars in student debt they won’t be able to buy a home. And now they may be regretting their choice and embracing politicians who promise to wipe away their debt.
But millennials who went to college can take heart they likely made the right decision, even if they are coping with student debt and have no home to show for it. The economy still rewards education. Not only that, it pays college graduates a premium for living in an urban area that has higher housing costs. Those same costs make buying a house before the age of 30 harder, but investing in the skills and networks that go into being an urban, educated worker early in your career will have financial payoffs greater than owning a home.
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Allison Schrager is a senior fellow at the Manhattan Institute, author of An Economist Walks Into a Brothel (Random House), and a co-founder of LifeCycle Finance Partners, LLC, a risk advisory firm. Follow her on Twitter here.
This piece originally appeared in Quartz