March 12, 2019
As we close in on Regular Decision verdicts this month, a whole new class of college students is in the on-deck circle waiting to come to bat this fall. Bad baseball metaphors aside, one of the questions these new collegians-to-be may be pondering is: Will it be worth it? Determining the value of a college degree can be challenging, but it's an important consideration.
College is expensive on multiple levels. Of course, the primary -- and perhaps most important level -- is cost. I won't get into the student loan debt issue here, but the price of a college degree is something that can have a lifelong financial effect. Another level of expense is ROI: Return On Investment. Will those years after graduation return the value of all the time, effort and cost you've put into it?
Finally, will all that investment place you into a field of work that you targeted during your four (or more) years of study? We've discussed engineers who become art critics and geologists working as sports writers. There are many questions to be answered, especially for current high school juniors and sophomores planning to set sail for the halls of ivy.
Perhaps one way to look at it, to paraphrase a former United States president, would be to say, “It depends on what the meaning of 'worth it' is." Is college worth it strictly from a lifetime earnings perspective? Or worth it from a life-enrichment aspect? Or both? There are various kinds of “value."
First, let's take a look at the value of college from an economic (earnings) and “opportunity" angle. When you search the web for answers to the query “Is college worth it?" you get the usual avalanche of responses. I chose two. The first is a brief opinion article aptly titled Is Going to College Worth It? Some New Evidence. Commentator Richard K. Vedder reflects on my ROI comments above:
For years those pushing kids to go to college noted that there was a huge and growing earnings differential between high school and college graduates, making college a good investment even with soaring tuition fees. I have argued that the end to that rising income differential, along with higher fees, is now lowering the rate of return on the financial investment of going to college, and markets are starting to respond as manifested in falling enrollments.
Then Vedder contrasts income with wealth -- an interesting, if not provocative, comparison:
But there is another, arguably even better measure of economic well being than income, namely wealth. Forbes does not publish a list of the 400 Americans with the highest incomes, but rather those who have accumulated the most wealth. When people say “Jeff Bezos is the richest man in the world," they are talking about his wealth, not his annual income. Three researchers at the Federal Reserve Bank of St. Louis (William Emmons, Ana Hernandez Kent and Lowell Ricketts) have gathered estimates of income and wealth by educational attainment and noted that the wealth differential associated with a college degree has declined for more recent graduates....
… Why? There are several possible explanations, but one very obvious one is that it takes far more resources to obtain a college degree today than it did several generations ago. Today, for example, there is $1.5 trillion in student loan debt outstanding, triple the amount of, say a little more than a decade ago. Higher debt, lower net wealth. To get the income differential associated with a degree, people sacrifice increasing amounts of wealth. The ratio of wealth to income among college graduates appears to be falling over time....
There's that old nemesis again: student loan debt. More loan debt equals lower net worth. You may not be thinking in terms of net worth in relation to the ROI of a college degree, but across your lifetime, post-graduation, your net worth will become part of your overall profile and will be reflected in your power to acquire things, such as a home, a car or other significant purchases. The almighty credit score will also reflect to some degree your net worth, since it uses income vs. debt as part of its algorithm.
So, on the one hand, with Vedder's analysis, we can see something of a cloudy value outlook for college graduates who need loans to get through school. Those appear to be in the majority, obviously, with total loan debt hovering at the $1.5 trillion level.
However, to be fair and balanced, let's take a look at a less cloudy perspective, hopefully without having to put on our rose-colored glasses.
This brighter view is by Jill Schlesinger, business analyst at CBS News. Her article's thesis states that as this year's new college grads throw their caps in the air, they will ...
… face the stark reality of a mound of education debt. Given the still-tough job market, many families continue to wonder whether college is worth it. The answer is yes, with a caveat.
… don't go into hock up to your eyeballs — and parents, please don't raid your retirement accounts and borrow against your home — to do so.
That makes sense, obviously, but easier said than done, in my view. Anyway, what are some of Schlesinger's “worth it" points?
- … household income of young adults with college loans is nearly twice that of people who didn't attend college ($57,941 vs. $32,528).
- … a study from the Federal Reserve Bank of San Francisco shows that the average US college grad can expect to earn at least $800,000 more than the average high school graduate over a lifetime …
- … Priceonomics blog pegs the 30-year wage premium at $200,000 of extra income ($6,667 a year) compared to that of a high school graduate's salary.
- Researchers at Georgetown predict that [by 2020], the share of jobs requiring post-secondary education will likely increase to 64 percent …
Need more convincing? Let's extract the main pro-college points from Anthony Carnevale's testimonial about college's worth. His opening salvo is blunt and forceful:
Those who make the “skip college" argument often bolster their arguments with official state and national Bureau of Labor Statistics (BLS) data suggesting that the U.S. higher education system has been turning out far more college grads than current or future job openings require … it all sounds alarming and — with the backing of national and state government BLS data — authoritative.
There's just one problem with the official BLS statistics: they're wrong.
He provides a detailed rationale for his position on that and then goes on to categorize his reasons for a college education. Here are the bullet points:
- There is a better explanation for the puzzling official data that suggest we are producing too many college graduates: Official education demand numbers have serious flaws.
- Technology drives ongoing demand for better-educated workers … Wage data show that employers have tended to hire workers with postsecondary credentials for these more complex positions — and pay a wage premium to get them.
- A spate of media stories on value of college fuels needless fears … Stories on the value of college tend to follow the business cycle, and when the cycle is down, journalists often find it easy to write a story that bucks the conventional wisdom.
- College is still the best safe harbor in bad economic times … while it is true that the sticker price cost of going to college has risen faster than the inflation rate, the college wage premium has risen even faster, both in terms of the cost of going to college and the inflation rate.
So there you have two points of view about college value, for what they're worth. Now, with your patient permission, let me enthrall you with my personal perspective about why college is worth it, from a life-enrichment aspect.
I came from a conservative blue-collar community whose chief economic stimulus came from the railroad and its ongoing employment juggernaut. Thus, my cultural environment was quite cloistered. Although I had access to and attended a well-above average high school, I was intellectually lazy and failed to take advantage of a reasonably wide array of stimulating extracurriculars, such as drama clubs, music groups, specialized science clubs and the like. I focused on sports — baseball and tennis — to the exclusion of deeper cortex-enhancing undertakings
My chief motivator for attending college was the fact that I was recruited for tennis. Otherwise, I might have gone to Computer Systems Institute and become an IT maven. A funny thing happened to me while I was at college, though. I learned about things that stimulated my intellect and ultimately became lifelong passions for me.
In the realm of literature, I came to know authors, such as D.H. Lawrence and John Cheever, whose works inspired my own writing interests. Among the arts, I discovered Dimitri Shostakovich and Samuel Barber in music and Goya and Pollock in painting. I also learned about acoustics, common-sense mathematics and the German language.
My point is that college, in the true meaning of “higher" education, is about more, possibly much more, than making greater amounts of money over your lifetime, or accumulating the wealth that Vedder discusses above. As I look back over the many decades since I graduated from college, I can recall periods when money was hard to come by and my degree may not have been pulling its weight in helping me land comfortable employment.
However, even in the depths of those periods, when I was discouraged and feeling blue about my circumstances, I had compensating resources that got me through. Nothing can pick up my day like the final movement of Shostakovich's Fifth Symphony, the finale of Rachmaninoff's Third Piano Concerto or the fugue from Beethoven's C-sharp minor String Quartet. How about D.H. Lawrence's The Horse Dealer's Daughter? Or Picasso's Guernica? Without college, I may never have known these works.
Your counterpoint may be, “Hey, I don't need college to enjoy great music and art!" That point of view reminds me of the legendary bar scene in Good Will Hunting when Matt Damon, a non-college graduate, explains to an elitist Harvard bore flaunting his Ivy League college knowledge, “You dropped a hundred and fifty grand on an education you coulda' picked up for a dollar fifty in late charges at the public library." (This film was from the late '90s, so at least double that Harvard cost figure.) Maybe so, but I'm no Matt Damon!
So, bottom-lining it from my perspective … Is college worth it? You bet. Just keep a lid on your debt!
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