By CARL BIALIK
The swelling ranks of unemployed young college graduates are left with a diploma, stacks of student-loan bills and lingering questions about just how much that degree is worth.

A million dollars? Sorry, say economists, but that widely reported figure significantly overstates the boost a bachelor's degree gives to earnings over a career. The estimate isn't baseless, but it doesn't account for the cost of college, nor the opportunity cost of forgoing income during school.
Another complication: Even before stepping foot on campus, students who attend college generally have better earnings prospects than their high-school classmates who go straight to work. So any estimate of college's monetary value needs to separate out those factors.
There is good news, though, for the ivory tower. College does pay off for most, and just completing a year or two boosts future income. In addition, prospective students who are on the fence about college are the most likely to benefit, according to several studies.

"In the end, the world runs on fuzzy measures," says Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce.

Mr. Carnevale's Georgetown center, as well as the U.S. Census Bureau, have produced estimates of the lifetime earnings advantage for college graduates. Both groups use census data to build what researchers call a synthetic working life for typical Americans at each level of education.

They assume that a typical student graduating from college now will, at each age, earn as much as the typical college graduate does at that age today. From that, researchers can estimate how much more someone who stops at a bachelor's degree will make than someone with just a high-school diploma: about $1 million, among those in each group who will work full-time from age 25 to age 64.

But they don't account for tuition—and student-loan interest—nor lost wages. They also don't discount future earnings, which are worth less than money earned today. The chief flaw, though, lies in assuming that the only difference between college graduates and high-school graduates who don't attend college is the additional diploma.

Compared with their high-school classmates who don't continue their studies, college-bound students have higher family income, higher high-school grades and better standardized-test scores. Some researchers think they may also differ, on average, in ways that are difficult to measure, such as motivation. Those factors increase earning potential, independent of a college degree.

Researchers have attacked this problem in one of two ways. Some have tried to control for various factors that differ between the two groups, such as their home ZIP Code during high school, an imperfect proxy for family income.

The other approach is to find some other condition that affects whether students go to college without reflecting on their abilities, and use it as a sort of natural experiment, a sorting mechanism between the student and worker. These have included distance from undergraduate institutions, or the happenstance of finishing high school in a year in which college capacity was greatly expanded or contracted. One study, for example, focused on students from the first class at the City University of New York after it adopted an open-admissions policy.

A series of studies with both approaches has found the marginal value of a year of college is somewhere between 6% and 10%, according to Mark Long, an economist at the University of Washington, and other researchers. Earning a diploma confers a bit of a bonus, because it is necessary for some licenses and because it signals to employers a higher level of readiness. That adds up to a lifetime earnings increase of between $300,000 and $600,000 for completing college—for the typical worker. Many of these studies are from a decade ago or longer, and some economists think the true benefit has grown because of a greater demand for skilled labor.

This suggests to some economists that initiatives to expand enrollment will be fruitful, by encouraging those students at the margins, who are best-situated to benefit from college. However, these studies are measuring the outcome for a single, theoretical, additional student. The risk of vastly expanding enrollment is the corresponding growth in supply of college-educated labor, which could drive down salaries.

Other factors aren't captured by the aggregated earning stats. College graduates also are likely to have bigger benefits packages. Some studies point to their improved health outcomes. And some degrees confer far more earning power than others. Some 28% of people who stopped school after earning an associate's degree earn more than those who get a bachelor's degree.

—Learn more about this topic at WSJ.com/NumbersGuy. Email numbersguy@wsj.com.