From Glenn Reynolds:
College is often described as a path to prosperity, but is it? A college education can help people make more money in three different ways.
First, it may actually make them more economically productive by teaching them skills valued in the workplace: Computer programming, nursing or engineering, say. (Religious and women's studies, not so much.)
Second, it may provide a credential that employers want, not because it represents actual skills, but because it's a weeding tool that doesn't produce civil-rights suits as, say, IQ tests might. A four-year college degree, even if its holder acquired no actual skills, at least indicates some ability to show up on time and perform as instructed.
And, third, a college degree -- at least an elite one -- may hook its holder up with a useful social network that can provide jobs and opportunities in the future. (This is more true if it's a degree from Yale than if it's one from Eastern Kentucky, but it's true everywhere to some degree).
While an individual might rationally pursue all three of these, only the first one -- actual added skills -- produces a net benefit for society. The other two are just distributional -- about who gets the goodies, not about making more of them.