Average debt levels for public college students have shown a disturbing upward trend during the past ten+ years. According to the College Board, in 2001—when 52% of students borrowed–the debt level per borrower was $10,600; and the debt per bachelor’s degree recipient was $20,500. In 2005, those figures climbed to 55% of students borrowing with a debt level of $12,500, and the debt per bachelor’s degree was then up to $21,800. In 2009, the numbers were: 56%, $13,000, and $23,200. In 2012, the numbers were 57%, $14,300, and $25,000. The national default rate on college loans is 9.1%. At a time when college costs more than ever; and we are facing a $1 trillion student debt bubble, it is entirely reasonable to ask “Is College Even Worth It?”
The value of the education based on money alone differs with different choices of courses to pursue. Students would do well to make a study of what fields of study are likely to bring long-term success, and which are likely to have been an arcane exercise in futility. However, overall, a college degree is worth the financial cost—above and beyond the human value of learning. Over a forty-year span of work, the average high school graduate earns $800,000, and the average graduate with a bachelor’s degree brings in a cumulative $1.6 million. The debt not withstanding does not negate the value of the college degree–$600,000 offsets the debt load. The earnings advantage of having a college degree over a high school degree alone was two and a half times greater in 2013 than it was in 1965 which underscores the ramping up of competition for jobs and for better paying jobs in today’s job market. The advantage of having a two year associate’s degree was seven percent from then until now.
When I was growing up, the mantra was that you could not have a decent life without a high school diploma. Now, nearly 35% of young adult Americans (male and female) have bachelor’s degrees. It can now be suggested that achieving financial success in a world of educated people is far more difficult without that competitive degree. The income gap continues widen with the college graduate earning $17,000 more per year than the high school graduate. The hard fact is that the job opportunities for those people with nothing more than a high school degree is becoming increasingly curtailed. In 1965, a college graduate could expect a salary of $38,833, a two year associate’s degree graduate, $33,655, and a high school graduate could expect about $31,384. By 2013, those numbers were $45,500, $30,000, and $28,000. The high school graduate’s outlook is bleak—that income can scarcely support a marginal life for a family of four. The high school drop-out earning minimum wage cannot do so. The consequences for life are significant: more young people with only high school degrees live at home with parents, are reduced to using public transportation, require family, church, or government financial assistance, are unemployed or underemployed, and if employed have dead-end jobs not careers with minimal chance for advancement.
Given the difficult economic times, college graduates are displacing people from jobs usually open to high school graduates. 22% of young people with only high school degrees are living in poverty compared to 6% of those with college degrees. Studies of employment since the recent Great Recession reveal disheartening statistics, even for college graduates, according to a study by the Federal Reserve Board of New York. In 2012, about 44% of graduates were working in jobs that did not require a college degree–a rate that was about what it was in early 1990s. Only 36% of that group were in what the researchers called “good non-college jobs”–those paying around $45,000 a year–down from around half in the 1990s. The share of underemployed recent grads in low-wage–below $25,000–jobs rose from about 15% in 1990 to more than 20% currently. About one-in-five–23%–underemployed recent graduates were working part-time in 2011, up from 15% in 2000. Bad as those statistics are, the outlook for non-graduates is worse. In 1965–when the members of the “Silent Generation” were 25-34 years-old–median earnings for high-school graduates were 81% of those for college graduates; in 2013, among the so-called Millennials, it was 61.5%.
The influx of public money is why tuition is lower at a public university. The real cost of an attendance is subsidized. Money raised from tuition doesn’t need to cover all of a public college’s expenses, such as paying faculty. Meanwhile, private colleges don’t receive funds from state legislatures. They rely heavily on tuition and private contributions. This means tuition rates are generally higher–tuition and fees for a public four-year institution cost $20,823 for the 2011-12 school year, about $8,000 less than private institutions. Debt-wise, private school students were worse off, with about two-thirds of alumnus leaving school nearly $30,000 in debt. Tuition and room and board at private four-year colleges rose by 81%–more than double the inflation rate–between 1993 and 2004. The obverse side of that coin is that financial aid provided by private institutions–even to the upper middle class–has grown more than tuition, by 135% over the same period. Six year graduation rates, according to the Pew Research Center, tend to favor private universities: public, 50.6%; private nonprofit, 59%; but private for-profit, 33.5%.
Prestige is usually higher for attending and graduating from a well-known private institution, but tuition is high—usually higher for a private education–for a good education. If money is no object and prestige is important—go private. If finances are a primary concern, consider all of your alternatives before committing yourself to a decade of debt. The vast majority of experts on educational value (cost v. benefit) favor the public school route as the best bargain and value. For undergraduates, there is little that a private college can offer in the way of curriculum and social life that a public institution cannot; and it is illogical to choose private over public schools on the basis of future benefit v. upfront cost. Post graduate study is a different issue and one that takes a major and careful study before selecting public versus private institutions.