Is College Worth It?
June 3, 2014
More and more Americans are questioning whether college is worth the cost, yet postsecondary education is more important to economic success today than ever before. Andrew Kelly, founding director of the Center on Higher Education Reform at the American Enterprise Institute, clarifies questions surrounding the debate over higher education.
Determining the value of a college education today is confusing: Tuition prices and student debt are on the rise, and while wages for college graduates are down, the wage premium for a college degree is at its highest levels. So is college worth it?
Kelly concludes that going to college is generally worth it for the individuals who actually graduate from college.
Going to college is not the same as completing college.
- When studies compare the wages of individuals with bachelor's degrees to the wages of those with only high school diplomas, they include only students who actually complete their college education, not students who go to college but drop out.
- While the college payoff is undoubtedly larger than for those with only high school diplomas, it cannot be as large, Kelly writes, as studies make it appear.
- The answer to whether college is worth it should incorporate the risk of a student not completing his studies. Students deciding between entering the workforce or enrolling in school should recognize this distinction.
Most studies compare graduates with debt to graduates without debt, finding that graduates with debt have lower levels of well-being and less wealth, an unsurprising statistic. However, what about comparing graduates with debt to non-graduates without debt? A Pew study determined that graduates with debt have less wealth ($2,200 less) than those without debt and without a college degree. Of course, Kelly says, graduates generally have higher wages than non-graduates, allowing them to accumulate wealth more quickly once their debts are settled.
The students who fare the worst are those with debt but who do not graduate from college. In the same Pew study, students with college debt who failed to graduate had just 14 percent of the wealth that college graduates with debt had.
Source: Andrew P. Kelly, "Let's clarify the 'college is worth it' conversation," Forbes, May 31, 2014.
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