Tuesday, March 24, 2009

Great College Hoax

I have been thinking a lot about what a college degree means in the current recession. My research has led me to question not only the value during a recession, but the value of college in general for some students. The key is some — there is little question that an education pays off in many fields.
The Great College Hoax
Kathy Kristof
Forbes Magazine dated February 02, 2009
Higher education can be a financial disaster.
College graduates will earn $1 million more than those with only a high school diploma, brags Mercy College radio ads running in the New York area. The $1 million shibboleth is a favorite of college barkers.
In fact, the Daily Mail (U.K.) found the difference in earnings, at least in the U.K., was less than $222,000, even though U.K. universities often claim students will earn $550,000 (U.S. dollars) more during their careers. Worse, those are averages — meaning some fields earn substantially more. There is a skewing of results due to the very high incomes in certain fields. If the median, not the mean, were considered, the majority of humanities students don't even clear $100,000 more during their working years.
Like many good cons, this one contains a kernel of truth. Census figures show that college grads earn an average of $57,500 a year, which is 82% more than the $31,600 high school alumni make. Multiply the $25,900 difference by the 40 years the average person works and, sure enough, it comes to a tad over $1 million.
We're back to averages that are meaningless. Which college grads earn more than $50,000 a year? I'm willing to bet you can omit a lot of humanities majors. Also, how long does it take to reach the average? For teachers, it can take years to reach the upper pay ranges.
What about loans and debts?
Offsetting that million-dollar income discrepancy is the $46,700 four-year cost of tuition, fees, books, room and board at a public school and $99,900 at a private one--even after financial aid, scholarships and grants. Add all this to the equation and college grads don't pull even with high school grads in lifetime income until age 33 on average, the College Board says. Even that doesn't include the $125,000 in pay students forgo over four years.
I'm not sure who estimated the lost income, which I think is too high, but the lost years in the workforce can delay raises and promotions later. The last years are important, since many retirement programs are based on those last years.

Another study gives more weight to the Forbes findings:
LONDON, March 18 (UPI) -- A British study has found that earnings reported by some college graduates are only marginally higher than earnings among some non-graduates.
Some universities in Britain are pushing for tuition hikes, The Daily Mail reported Wednesday. However, a study released by Warwick University found that students graduating with arts and humanities degrees earned on average about $2,500 more per year than non-graduates.
Another report calculates this difference as $1,650. That is only $137.50 per month. Sure, that adds up, but not nearly as much as the debt piled up during college for many students.

Here are some of the things I think we need to start telling students:

  1. What you love might leave you deeply in debt. You need to decide how much "following your heart" is worth.
  2. You can major or minor in a scientific or technical field and still study within the humanities. The notion of "pragmatists" versus "dreamers" is nonsense. Too many people scare themselves away from subjects with math and/or science.
  3. The future, according to our government leaders and their funding priorities, rests in alternative energy, computer networks, and health care. If that's where grants are, that's where universities will be investing, too. Follow the money.
  4. We will always need the humanities. Science without ethics is dangerous, so we need our philosophers and artists who give us reasons to care.

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