Forty years ago, 12 percent of Americans between ages 25-29 had college degrees. Now, 30 percent of the same age bracket have earned college diplomas–which is a small enough number it probably is still a distinction in the job market.
But, is the degree worth the cost?
Student debt is at an all-time high, good jobs are hard to find, so–when we hear a story about a college grad writing loan payments off his or her waitressing salary– it makes sense to think long and hard about how much that degree costs versus delivers.
Return on investment calculations help. These figures are based on what a college graduate, on average, will have earned through 20 years after graduating from a specific college–minus the cost of going to that college–versus what he or she could’ve earned, on average, after 24 years of working with only a high school degree.
Love numbers? Geek out on them here.
But, is ROI the best way to look at the is-this-college-worth-it discussion?
What other issues should we consider?
Let’s take a look.
ROI provides an objective look at the success of a college in preparing its students for work.
Payscale’s yearly calculations
Payscale provides a yearly list of ROIs for every college across the U.S. They even have it broken down according to major, when possible.
In order to make their calculations, they first figure the cost to attend a college, which is the out-of-pocket expense plus lost wages over four years (lost wages from for the years of being a student). Then, they figure the additional expected income from that diploma. This is therefore the difference between a 20-year salary for a bachelor’s degree and 24-year salary for a high school diploma.
Data was collected from 1.4 million college-educated workers who successfully completed a survey between January 2007 and February 2018.
The study is comprehensive and the calculations seem appropriate and helpful.
But, ROI is so incomplete it’s nearly inaccurate.
More Americans are going to college than ever before but only about 55% of students graduate in six years. This means that millions of Americans are taking on thousands of dollars in debt and not earning a diploma—making it even harder to repay those loans.
And, these loans are financed by the federal government, which means the dropouts that default on loans do so at the expense of taxpayers.
Specifically, lower income students struggle the most to stay in school. While the college-attendance gap between rich and poor is much smaller, the graduation gap is bigger. Students from families earning more than $90,000 have a 1-in-2 chance of getting a bachelor’s degree by 24; students from families earning under $35,000 have a 1 in 17 chance.
Said another way: Even though more low-income students are going to college there hasn’t been much change in the number of low-income college graduates.
This gap has big consequences because the benefits of college come largely from graduating, not just taking classes. Graduation allows students to complete a program and be prepared for a job.
It’s a binary situation: if you’re from a low-income home, and you go to the college, you will either learn to manage yourself, your time, produce good grades, and earn that degree–setting yourself up for a life built on success and the confidence that comes with it; or, you go to college, struggle with grades, money, etc, drop out, and need to not only repay those loans but also deal with the blow to your confidence.
Colleges also take a hit when students drop out: they want strong graduation rates and job placements. Some combat this by using strict acceptance rates, only culling from the top tier of students. Some–typically the colleges with the lowest graduation rates–take chances with students, giving more opportunities to a broader range of talents.
The top five schools with the highest drop out rates are for-profits.
For-profit colleges are popular among low-income students because they offer flexible programs and degrees. These are the same students that are often dependent on federal loans. And, for-profit college degrees generally don’t set students up well for getting high paying jobs. The combination–a large number of students with loans without access to good jobs–have resulted in for-profits having the highest number of loan defaults.
One study looked at two groups of students: one that entered college in 1996, and one that entered in 2004. From this, they found for-profit borrowers default at twice the rate of public two-year borrowers, but since for-profit students are more likely to borrow, they default at four times the rate of public two-year students as a whole.
Last year, Senators Ron Wyden of Oregon and Marco Rubio of Florida co-sponsored the Student Right to Know Before You Go Act, which would have expanded data collection on the employment and incomes of recent graduates. It didn’t pass but might be reintroduced.
This data is exactly the information that might be lacking when students consider for-profit colleges. What kind of job placement can I expect if I earn a degree from this school?
Education Secretary Betsy DeVos plans to eliminate regulations that made for-profit colleges provide employment data for their degree holders. These Obama-era regulations also cut off federally guaranteed student loans to colleges if their graduates did not earn enough money to pay them off. Both of these measures were in place to force for-profit colleges to demonstrate their value.
college benefits are not all transactional
The transactional view of college is short-sighted: we’re more than our salary. We are contributors to civic organizations. We are leaders of local clubs and charitable events. We are voters and advocates and critical readers of national and international issues. Throughout our lives we will need to help with homework, understand medical issues, run houses, read contracts, make financial decisions, interpret information and interact with our world–all of which are done best with writing, speaking, task-management, critical thinking and investigative skills. We use our ability to work together, to listen and to grow throughout our lives–all of which is cultivated in school.
same degree, same grades, different outcomes
It’s what you do with your time at school, not the piece of paper. You can add value to your degree through networking, internships, career-planning services, international study and access to diverse classwork, students and experiences.