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Does it pay?  What are your experiences?  Who went to college? who didn't?

 I graduated in mechanical engineering in 1972 from a state college on the west coast. I was lucky in that my parents paid for my entire education. I went to a junior college for 2 years and the state college for 3 years. I'm guessing everything (school, books, living expenses) for the 5 years was in the $6K range.

It's really worked out well for me. I got an engineering design job pretty quickly when I graduated at what was that time a good living salary of $10K/year. I've stayed employed in engineering throughout my career and done very well in both job and compensation progression. I can't imagine doing as well financially without the college education. Plus, I've usually had work that was challenging and interesting.

While education is an investment, I look at it as more doing what you need to do to be able to do the work you want to do. As long as the compensation in the desired profession is generally adequate to meet a person's desired standard of living, the ability to be able to follow your passion is more important than absolute financial return. 

 I was a little frustrated after reading your article on the benefits of a college education. It was fine as far as it went, but I wish you had data to show what factors cause one to vary from the median. I'll bet there's a large variation from the mean in this case. Among the factors that I'd bet make a huge difference:
- major - an engineering major surely does a lot better than an art history major, on average
- grades - a diligent student with an A average likely does better than one who parties most of the time and ekes by on a C average
- private vs public school - it would be instructive to know whether there's a measurable difference in lifetime income and net value after loans and such

Knowing this kind of data would give parents and prospective students a better understanding of their odds of being better off. The student proposing to go to Harvard for 4 years on borrowed money and major in philosophy most likely has considerably worse odds than the one majoring in software engineering. Everyone knows this but it would be helpful to know how much worse.

Regards, Dennis

 Scott,  

Now I want you to stretch your calculations to medical school. Even if someone attends one of the Texas state medical schools, the investment cost is tremendous. When a young person says to me that they want to study medicine, I tell them that it is a wonderfully exciting and emotionally rewarding profession. It has also become a profession with limited financial reward. Those who are in medical school now and who have significant educational debts - $100,000 and more - will be faced with many years of very limited surplus income. They could easily be 25 years out of school before they have repaid all their debts. And even if they are able to graduate and complete their post-graduate training without debts, will they ever be able to catch up with their college friends who earned a BA or BS and began earning $45-60,000 per year, depending upon their area of education.  Will we be able to continue to attract ambitious, smart students into medicine as this situation worsens?
 
Marvin

 Dennis,

Thanks for your note and observations. I had similar questions while writing the column which took an “outside” case--- borrowing 100 percent of the costs of attending a private college. For better are worse, a 700 word newspaper column, by its nature, is a quick trip to a single idea, not a careful examination of an issue.

Worse, some of the conditions for changing the economics of education and lifetime income may seem obvious, but might not hold up to close examination. Many MIT electrical engineers who graduated in my class, 1962, had a difficult time in the 70’s when military spending was cut--- they couldn’t transfer their skills to the commercial sector. They might as well have had a degree in French literature. The same has happened with other technical skills. One of my younger brothers, on the other hand, has devoted his life to academic mathematics and has made a very nice life teaching, including owning a house in France as well as one in Los Angeles. So there are surprises all around…

Scott

 Thanks for the thought-provoking column about the economic value of a college education.

It reminds me a bit of the Biblical advice that "man does not live by bread alone."  In making these choices, capable students will always consider the spiritual and intellectual benefits of a college education, things that are not so easily measured.

I used my college education to get into a low-paying profession (journalism.).  However, I was successful (partly through my collegiate network) and eventually landed jobs that allowed me to live overseas for nearly 30 years.  I reported from more than 100 countries, and meet some of the most interesting people of our times. A high school diploma would not have opened up such opportunities.

Regards,

Michael

I think your retroanalysis using lifetime consumption is right on.  However you should also consider how many kids go to college and drop out.  I bet it is at least one-third.  Their expenses are mostly wasted.  I suppose a couple of years of college might help a tiny bit in the job market, but not much.  They would have been much much better off never going and wasting the money and time.

All this is to caution parents against pushing their unwilling kids to go to college.  Universities are full of kids who do not want to be here.  I suppose some prosper against their own wishes, but most do not.  If your kid is at all unwilling or uninterested in going to college, make him get a job.  Some will prosper in the job market and others will decide college is a great idea.

PS you shouldn't regret anything you did at MIT.  If you had studied harder so what?  You are a big success.  If there was something you wished you had learned better, say multivariate calculus or differentiable manifolds, go ahead and pick up the book right now.  If it was electrical engineering or molecular biology no problem, everything you would have learned would now be wrong.
 

As an economist, I appreciate your examination of the real cost of a college education, but hope that you will also publish analyses of factors not considered in your “College can be a crapshoot” column. These factors include the following:

• The relative value of a public university education may exceed that of private universities;
  
  
• “College” does not always mean a baccalaureate degree or higher, and can include technical and community college certificates and degrees; and
  
  
• The number of jobs that require post-secondary education has increased with technology—our economy has changed such that the number of occupations that only require a high school education has declined in most industries. Most high school graduates will need more education just to become employable in an occupation that pays enough for self-support.

I work with the public labor exchange, where we meet individuals ill prepared for employment if they only have a high school education. Training in technical and/or academic skills is required for the jobs that we thought, 30 years ago, to be the most basic or to require modest on-the-job training. Truck drivers, police officers, mechanics and many other occupations require advanced training available from community colleges and private career/technical schools. Wages for those jobs generally exceed those for jobs that do not require any more than a high school education.
 

Did the underlying study analyze the likelihood of a person earning a much larger than average annual income with and without a college degree, i.e. becoming the CEO or other Sr. Exec of a company making a high six or seven figure annual income?   Anecdotal evidence suggests to me that the odds are near zero of this happening to a high school grad…. and that they go up sharply for an ivy league grad.    Therefore, one’s best shot at winning the career ‘lotto’ is by getting a college degree from the most prestigious university one can get into too!   After all, a degree from Stanford, MIT, Harvard, Princeton, Rice, etc generally means admission to the “club” – and members of the ‘club’ tend to look out for each other throughout their careers.   This is certainly true of far less prestigious universities, such as Texas A&M.

 
I agree that college has gotten ridiculously expensive, especially over the last 10-15 years it seems.   I went to UT from 80-84 and I have a daughter that is a sophomore there now.    The price tag has gotten way out of hand.   She is costing me about $23k/yr now and she should graduate debt free on the daddy-pay plan in 2010.   God willing, she will then have a BHP (Business Honors Program) degree with a double major from one of the best B-schools in the world though.   At that point I’m highly confident she will have a far better quality of economic life than the vast majority high school grads……even if she had $100k of debt to pay back.

 

 

I think there has been some good exchange on this topic.  I think one of the main points of Scott's article is, that with tools like Esplanner which is a sophisticated planning tool that embraces consumption smoothing,  we can learn how those decisions affect our living standard over time.  With such tools, we can look at the lifestyle choices we make and evaluate our decisions from an economic standpoint. For example, before I met my wife, she had already completed her undergraduate education, studied and lived in Japan for three years, and attended 3 years of Chiropractic school, incurring a significant amount of debt just for attending Chiropractic school.  Daddy paid for all her other pre chiropractic school and choices, which has lowered his standard of living now in retirement.  Dad would not change any of those decisions he made.  My wife would not have change her decisions either.  Now that we have started our family, my wife's enthusiam for practicing full time is diminishing.  Meanwhile, we have significant student loan debt (helped nicely by the free fall in interest rates years ago).  Had we met earlier and if tools like esplanner were available, perhaps she could have priced these choices into our lives, as we do other choices like where to live, and if we will send our child to private school, versus public schooling versus homeschooling.  My choice of course would have been to skip the chiropractic school because of the expensive costs.  However, our decision making in the household is democratic, so our decision on whether my wife would have attended chiropractive school would have taken into consideration many other factors.  But is just nice to have to ability to price the choices economically and balance our decision making withe the non economic factors.

 Kelvin  

I am a baby-boomer. As someone who paid for a college education and teaching degree with grants and work study and a National Defense loan paid off by teaching in inner-city school, I value a college education highly.  I went to a local, small, liberal-arts Lutheran (which I am not) college with a fairly generous funding program. My husband put himself through college by living at home and commuting and working during the summers. Having a college education dramatically increased our incomes over our parents because they had no college degrees, were not able to take advantage of the opportunities offered to service men after WWII and did not really participate in the booming economy as many people did. 

I know the value of a college education was more than money, however...it enriched my life so that I know I am a different person...going to college fed my soul...I don't know too many people who feel the same way in today's world, although I suspect there are some who just don't choose to advertise the fact...

Education is about becoming a different person--stronger, more self-aware, more creative as well as more realistic...to increase not just information but responsibility...to learn to value new opportunites, to think for yourself with reasoning--not emotion. To be open-minded about considering alternative points of view and willing to admit errors in judgement...it is supposed to broaden a person's horizons, not narrow them to one perspective...having a college degree does not guarantee those changes nor does going to trade school or spending time in the military or just in the work force. Some people who have graduate degrees can leave college without being educated--I can think of  at least one in a fairly high government position now.

The price of a college education has seen one of the most dramatic rises in cost in post-Vietnam America. All aspects of getting a degree have cost the student more; many professors have benefited but there are many colleges that have closed the tenue track to all but a few and force most instructors into a kind of teaching surfdom where they work part time, get few benefits, and can't expect anything better. The quality of the education received is much more in question as well--especially in the last decade or so--when there are more TA's in the classroom than professors--when research and winning grants is more important that actually teaching students...big business and big education seem to go hand in hand in many areas which further compromises the problem.

But some trade schools aren't any better--I read recently that some culinary schools charge an arm and a leg and when students leave they are basically still working at the lowest rung in the kitchen with little earning power to cover their monthly loan payments on their large student loans...getting  HVAC cerrtification is no guarantee that someone will earn 100,000 a year--that usually requires someone to start his own business and be successful--so while there may not be school debt there could be other debt incurred. Being an auto mechanic or a service tech also requires a growing sophistication and educational level to succeed and maintain a stable employment.

There aren't any easy answers--but surely there should be more choice and information offered by the public schools and easier funding by the federal government--I would think a special tax on businesses to do just that (and a higher one on businesses that send their work off-shore) since business complains about not having a skilled work force...

While I agree with the general tenets of your article and appreciated the hidden costs that you revealed, I did have to disagree with your final conclusion because I think you left out some important factors. First is financial aid. Over half of the students at the expensive private schools pay less than full cost and some pay essentially nothing. Plus, the majority of college students are attending less expensive state schools. Next is unemployment caused in part by cheap foreign and illegal immigrant labor. This is more likely to hit the undereducated. I think this may be a small enough percentage difference that it won't significantly alter your average values, but it can be decimating to an individual who has more limited options without a college degree. Then there is benefits. Many regular laborers have no retirement and limited health care. White collar jobs are more likely to have a good benefits package which adds significantly to the value of their job. My last economic factor is longevity. Unless you manage to move into a supervisory position, it is hard to extend a common labor job into one's 50s or 60s. Plus, it is very difficult to negotiate with a factory employer to let you work 10 or 20 hours a week after you retire. On the other hand, many of the jobs available with a college degree only require a functioning brain and the ability to type on a computer. So a college-educated worker can still function effectively into their 70s and some can work deals to consult after they retire. I think this last point will be more important in the future as our average lifespan increases and the definition of 'retirement age' changes. The other major benefit is not economic. The number and types of jobs, the ability to be a manager or work for yourself all increase with a college degree. The financial reward may not increase as much as advertised, but the satisfaction level certainly can go much higher. I think my greatest concern about your article was that the tone seemed to be against borrowing for an education as this was risky and might not pay back the cost. Very few car loans, home-improvement loans or personal loans for a vacation or Hi-Def TV pay back at all, but our society is happy to take that chance. At my university, we have far too many students who flunk out because they are working 40 hours a week to pay for their car loan and electronic addictions and can't put in the time for their studies. I agree that students should think carefully before going deeply into debt (we are still paying off my wife's loans from ten years of college and grad school) but they shouldn't be scared off from a debt because it won't pay back. Thank you for your time and I look forward to many more great articles from you.

 The limitation and virtue of the column genre is that they are short. The newspaper definition of a column is that it is one column on a broadsheet page, a measure that comes in at 700 words. In 700 words you don't get to talk about nuances. You state a basic idea and you drive for it, traversing from A to B as quickly as possible.

That's one of the reasons Larry and I chose an extreme case--- that you went to a private college and borrowed every dime--- for the column. Readers could see that (1) the College Board was overstating the benefits of a college degree because they weren't considering the lifetime impact, (2) that a college education still had a positive payback, and (3) that reducing the amount a student paid for education or the amount borrowed (due to, say, helpful parents) would increase the net benefit.

What struck us most was the fact that getting that education wasn't a no-risk proposition. It might not payoff even though it is being sold as a slam-dunk.

I saw the column as a call for prudence in education spending, as a suggestion that any child who was not powerfully motivated should consider a lower cost public institution rather than an expensive private school unless their parents were happy to pay for the privilege of saying, "my son at Stanford" or "my daughter at Princeton."

I don't mean that in a callow way. I will always be grateful that my late stepfather paid for my MIT education and, later, happily supported one of my younger brothers through Harvard, Oxford, and a Ph.D. at Princeton. George F. Blasius never had the opportunity to go to college, but he delighted in making it possible for all his kids. 

Scott 

Dear Scott-

When I joined the Navy in 1967, I joined despite the hazards of Viet Nam because I wanted the GI Bill.  It was the only way I felt I could afford college.  After being in the Navy (and Marines) for my initial 4 year enlistment, I received a 4 year scholarship to go to college while on active duty, in return for another 4 years of service after college.  By the time I satisfied my obligation, I had 12 years logged into the Navy and was a full Lieutenant.  I stayed the additional 8 years to qualify for a Navy retirement, and while doing so, used my GI Bill benefits to acquire a master's and doctoral degree on my off duty time.  I now have applied my education for 20 years in the civilian community, and have semi-retired early to only do the profession work I really enjoy.  No more corporate malarkey for me.

I share this to point out there are ways to go to college on someone else's nickel while also being gainfully employed.  Education for me has been inexpensive (though demanding of my liberty and free time) and fulfilling.  It allowed me to develop skills, confidence, maturity and insights I would otherwise probably not have, and to achieve the satisfaction that comes from starting with very little in life and gaining independence and control over my own destiny. 

My brother, on the other hand, never went to college and has (luckily) been an employee of the same private company for 30 years.  However, the company was recently bought out and went public, and he has lost many of his benefits and is fearful of losing control of his retired future.  I can't say, though, whether he would prefer to have changed lives with me.  Education can be part of life, and life is really what you are able to make of it.

Does it pay to go to college?  It depends.  Your Mileage May Vary.

 
In high school I had excellent grades and test scores, my dysfunctional family figured I was "college material" so I should go.  By the time I graduated high school in the early 1970s, I had $4,000 (ballpark $20K in today's dollars) saved up from working outside of school hours.  (I started shoveling snow around town when I was ten, and had my first paper route when I was twelve.)

Because of my dysfunctional family's situation, I didn't qualify for any loans or grants, so I paid my own way. I was accepted by several excellent schools and rejected by only one but went to a middling university because they had a specific program of interest to me, and it was much more affordable than my other options. 

I graduated with a liberal arts degree, intending to go to law school.  I also had a minor in comp sci, thinking it would afford a rare and exotic niche for a lawyer.  By the time I graduated, I had gone through all my savings and had taken out some student loans.  I saw others graduate from law schools and not be able to make a living as a lawyer, while burdened with massive debt.

In a fit of risk aversion, I decided not to borrow up to my eyeballs to go to law school.  I graduated at the bottom of a recession in a depressed regional economy and ended up with a minimum wage job.  My comp sci training was all mainframe-based and quickly became obsolete with the ascent of the PC, and as I could not afford to keep my skills current - I didn't even own a PC until the 1990s - I violated the Digerati Prime Directive and became functionally obsolete.

I have a different minimum wage job today, but I still have student loan debt and I have no idea how (or if) I'm ever going to get out of the financial abyss.   Where I work today, we have three college grads, all earning our state minimum wage.