During the past few years, a heated debate about the value of higher education has perplexed millennials. The question: Is attending college a good decision?
A piece by Eduardo Porter in the New York Times makes a strong case that college is a worthwhile investment of both money and time, and students should make every effort to obtain a degree.
When a young adult, in conjunction with his or her family, decides whether to attend college, what is important? For sure, college life is enjoyable and rewarding; social life on campus is a great experience. But, in these days of growing financial hardship, many families are not willing or able to finance college for their children. Return on investment (how much a college education increases a person’s earning power) and assumption of debt (assuming the student will need external financial assistance) are critical considerations. Exacerbating the issue is the growing number of students who drop out after incurring a few year’s worth of debt.
Here are some observations made by Porter and by some think tanks that he referenced in his article:
- The financial albatross of educational debt is a “growing meme” around the necks of our youth.
- College attendance in the U.S. is continuing to slip behind the rest of the world, according to the Organization for Economic Cooperation and Development (OECD) In 2008, 30% of Americans age 25 to 34 had a college degree, fourth place among their peers. In 2011, the rate increased to 43%, but the U.S. rank decreased to eleventh place.
- Older Americans 55-64 years old have graduation rates higher than every industrial country except Canada and Israel.
- 70% of Americans matriculate at a four-year college (seventh place per the OECD). But, less than two-thirds actually graduate.
- OECD calculated that a college degree is worth $365,000 for the average American man after subtracting all costs over a lifetime. For women, it is worth $185,000 resulting from lower pay for females and life decisions that take many women out of the work force.
- College graduates earn more money. A typical four-year college graduate earns 84% more than a high school graduate.
- A study by the Hamilton Project at the Brookings Institute “underscores how inequities in education are hampering social and economic mobility, contributing to entrenched income inequality.”
- The Hamilton Project study also points out that half of Americans in the top fourth of income have a college degree. Among the poorest fourth, fewer than one in 10 graduated from college. And, the college graduate rate of high-income Americans born in the 1980s was 20 percentage points higher than in the 1960s. Low-income Americans advanced only 4%.
- The OECD pointed out that every year all governmental agencies in the U.S. together spend about $9,200 per college student. The report also says that governments earn $231,000 from each college graduate (from higher income taxes and lower unemployment payments). The conclusion is that these same groups should be able to spend more to support students.
- Eric Hanushek, a professor at Stanford University wrote, “Subsidies to higher education are bonuses for the people who already are coming out ahead.” Since those who are not “coming out ahead,” are paying for the successful, it represents a transfer from the poor to the wealthy.
One of the important conclusions to make from this article is that too many start college and do not finish. Getting a degree as opposed to taking courses is the critical difference that elevates a person economically. The question is: Are incoming college students ill prepared to deal with the rigors of college. If so, more needs to be done to help high schoolers.
A second issue is the pervasive suggestions that college is not worth the time or the money. The facts in this column clearly prove that college increases a person’s chance of earning more money, and with it, an improved life style. The naysayers about education are doing young people a disservice and effectively endorsing the income gap that separates college graduates from others.