Is College Worth It?

 

Is College Worth It?

 

Most perceive life as a linear path: go to school, go to college, get a job. This is all we know. This is how life works. However, for the past few decades, there has been significant inflation in college tuition fees and overwhelming student debt has become a prevalent issue. There is also questionable relevance of a college degree to the modern global economy. Now more than ever the question of whether college is worth it or not has risen to prominence. 

 

According to the 2016 Prospective International Student Survey, the US remains the primary destination in the world for international students, so the US will be the focus.

 

Free College Education from the 1940s to 1960s

The federal government passed the GI Bill in 1944, which paid for the college education of the 8 million returning veterans (GIs) from WW2. It transformed college education by removing the major hurdle to higher education: cost. Lower socio-economic groups were finally being represented. The number of college students nearly doubled in the 1940s, from 1.5 million to 2.7 million in the 1950s. A college degree was considered the “ticket to a better life.”  Then in 1958, the National Defense Student Loan Program was inaugurated, extending the GI Bill to many civilians. With college education costing nothing, students attending college increased from 15% in 1940 to 40% by 1970. 

 

Inflation in Tuition Fees and Student Debt from the 1970s

However, 1970 was a tipping point in government aid for higher education. The US economy’s inflation rate hit double-digits and college tuition fees climbed rapidly to match, or exceed it. The government was not prepared for the rise in education costs, so they shifted the federal grant programs to subsidized loan programs. With less support from the government, colleges turned to consumers and increased tuition fees from this point onward. According to the National Center for Education Statistics, in 1985 to 1986 the average cost for a 4-year public institution including tuition, fees, and room and board for undergraduate students was only, however, $3,859. Following this, the financial recession in 2008-9 then led to major cuts in state funding to public institutions. Overall state funding for public two and four-year colleges in 2018 was more than $6.6 billion below what it was in 2008. In response to this, colleges have increased tuition significantly over the past decade. Annual published tuition at four-year public colleges has risen by 37% since the 2008 school year. The average cost for a 4-year public institution including tuition, fees, and room and board for undergraduate students increased from $14,036 in 2008-9 to $20,050 in 2017-8. According to the Trends in College Pricing 2019 College Board Report, between 2009-10 and 2019-20, average published tuition and fee prices rose by $670 (in 2019 dollars) at public two-year colleges, by $2,020 at public four-year institutions, and by $6,210 at private nonprofit four-year colleges and universities.

 

    Figure 1 

 

Rising tuition fees have brought forward issues of affordability and access because the costs have shifted from the state to students. Families with annual wages that have stagnated or fallen over the recent decades are unable to afford a college education for their children. This is especially a problem for students of color (National Center for Educational Statistics show that nationwide about three-fourths of African American youth attend schools where most of their classmates qualify as low-income), low-income students, and students from non-traditional backgrounds (usually those who come from social classes, ethnic groups or age groups that are underrepresented, or it may include gender groups in some areas, students with disabilities, those who are older typically over the age of 24 at point of enrollment, a high school graduate who directly went into the workforce and is now attending college for the first time, etc.) The reality is that student debt has become a prevalent issue. According to the Institute for College Access and Success, the loans borrowed by an average student (including those not borrowing) rose from $3,000 in 2008 to $4,100 in 2012. The average student loan debt is currently $32,731 in 2020. 

 

 

However, domestic students are eligible for grants, scholarships, state and federal financial aid such as FAFSA and the Federal Pell Grant, so the financial burden of the rising tuition fees are not felt as much compared to international students who are not eligible for federal aid. Not only do international students have to pay double to triple the cost of the in-state tuition fee, but they have to also pay an additional $350 SEVIS fee on top of the $150 Visa application fees. Furthermore, only US citizens or permanent residents studying outside the US can apply for international student loans. Most universities also offer limited scholarships for international students and the competition for them is fierce. Therefore, there is significantly greater financial burden on international students. While this can be justified, as international students do not pay local taxes and thus, are not contributing to the local economy, international students are a great source of revenue for universities, so expensive tuition fees would discourage them from studying in the US. In a 2018 Opens Door report, it was found that new international student enrollment fell by 6.6% at American universities in the academic year 2017-18, for the second consecutive year.

 

    

Figure 2

 

Moreover, even after considering grants and scholarships, undergraduates at 4-year colleges still had almost $11,000 of unmet need in 2015-16, with $6,600 still left uncovered after taking all loans into account. There are still inequities in debt burden that persist with lower-income students, and the certain groups mentioned before. Black students in particular are more likely to have debt at graduation and have more of it to repay. What was initially free, has grown pricier over the past 50 years. The price of attending a 4-year and 2-year public or private universities has grown significantly faster than the median income and so has student debt. Thus, the pressing question: To what extent is this justified?

 

The value of a college degree

A college degree has for a long time been strongly believed by many to be crucial for finding a good job and financial security. This is still the case today. The fact of the matter is that a college degree is like a startup raising money; it gives you a head start when it comes to one’s earnings due to the credentials it provides. Compared to a high school diploma, a college degree guarantees a higher salary over the course of your career. According to the U.S. Bureau of Labor Statistics, those with a bachelor’s degree have a median income almost twice that of those with only a high school diploma. When you go to a more prestigious or reputable university, students get better job placements and salary increases; going to UCLA compared to Pepperdine starts you at a 10% to 30% higher salary coming out of school. 

 

 

However, recent unemployment data of college graduates has highlighted the question of how relevant college coursework is to jobs. According to the Federal Reserve Bank of New York, in 2019 and the previous years, stagnant around 40% of recent college graduates are underemployed, working in jobs that do not require a college degree. Furthermore, according to Forbes, the median pay in 2019 for bachelor degree holders was below 1990 levels. It seems that a college degree, at least a bachelor’s degree, does not always guarantee a higher salary or financial security because credentials are not all that matters. We need to ask ourselves to what extent does college prepare students for the real world?. According to Strada-Gallup Education Consumer Survey, only 26% of U.S adults with college experience strongly agreed that their college coursework was relevant to their work and daily life. The confidence ratings of all higher education institutions measured by Gallup has fallen from 57% to 48% in the past few years since 2015. This has to do with the fact that most think what is studied in college is not fully relevant to work; only 13% of Americans strongly agree that college graduates are well prepared for work.

 

 

    Furthermore, the cost to attend university has increased nearly eight times faster than wages have. During the same time, the median pay for college graduates has stagnated. The average annual salary of $51,34, according to consulting firm Korn Ferry in 2019 was only 2% more than in 2018, barely outpacing the inflation in tuition fees. The firm based its findings on an analysis of 310,000 entry-level positions across nearly 1,000 organizations. 40% of recent college graduates in 2019 were also unemployed or underemployed (Figure 4). This widespread problem of wage stagnation and underemployment shows that a 4-year college degree is no guarantee of decent wage growth and financial security.

 

 

 

 

While in the short-term a college degree may guarantee a higher salary, in the long term it will not increase your salary so your college degree may not matter anymore. What will matter, are the skills you should have learnt through your college coursework, but research studies have shown that most feel that coursework in college does not best prepare students for the real world. The Gall-Purdue Index is the largest representative study of college graduates, and findings from 2014 have shown virtually no correlation between where you went to college and success later! There were more important factors like participating in internships where you applied what you learnt in the classroom or having a mentor who motivated you and guided you towards your goals and dreams, however only 14% of college graduates had this. These doubled your odds of being engaged in your work and thriving in your well being later. This proves that what college you go to does not matter. While the internships, co-op or job placement opportunities are offered as part of the major program, this may come at the cost of having student debt. A solution could be taking online credential approved degree courses such as Coursera, edX, Khan Academy, Student Circle Network, Udacity, Education Portal, but students would not have the traditional college experience—the social life, life-changing moments, and networking opportunities that are essential to finding a job. This is not to say that college is the only place where this can happen, however plenty of these kinds of opportunities are easily available here. They still have the great option of applying to vocational training programs, career schools or online associate degree programs, which will give them the valuable experience and essential skills desirable by employers. 

 

 

There is however another pathway one could take which is the ‘GoPro Early’ pathway that could be even better. This is where one works directly out of high school with the chance of being able to earn a college degree. Potentially, it could be the ultimate solution because one would be able to get the college credentials at a lesser cost without student debt, whilst also learning workplace skills and building relationships with others. PriceWaterhouseCoopers is already offering these kinds of opportunities, where students can go straight from high school into apprenticeship programs that add credentials and degrees into the process. There is already a growing trend among large employers to offer college degrees as an employee benefit to attract and retain better talent and upgrade the skills of their existing workforce. Some examples include Walmart, Discover, Starbucks, Disney, Papa John’s. But a ‘Go Pro Early’ model may not be for everyone. It is suited only for those who already know what career they want to pursue and are looking for work experience, are considering trade school options, or for those who do not find college to be a perfect fit for them and are looking for affordable college options. 

 

 

Whether or not college is worth it, does not have a black or white answer; it is much more complicated than that. It will depend on the individual and what they want to pursue. 

Students need to know that there are many good opportunities for students at lower-priced institutions, which can still certainly yield excellent results. There are also many alternatives, quality and affordable options mentioned above that one should not hesitate to take. Ultimately, the value of a college degree is questionable but at the end of the day, the value of a college degree comes down to whether or not you will make the most out of college, not where you go. 

 

Works Cited 

 

Busteed, B. (2019). The Convincing And Confusing Value Of College Explained. Forbes. Retrieved from https://www.forbes.com/sites/brandonbusteed/2019/09/03/the-convincing-and-confusing-value-of-college-explained/?sh=5fc79dca372d.

 

Friedman, Z. (2020). Student Loan Debt Statistics In 2020: A Record $1.6 Trillion. Forbes. Retrieved from https://www.forbes.com/sites/zackfriedman/2020/02/03/student-loan-debt-statistics/?sh=71f7bd24281f.

 

Min, S. (2019, May 17). Sorry, class of 2019: Paychecks for new U.S. college grads are barely rising. Retrieved from https://www.cbsnews.com/news/sorry-class-of-2019-salaries-for-recent-college-grads-remain-flat.

 

Employment: What’s happened to wages since 2010. (2019, June 10). Retrieved from https://fullfact.org/economy/employment-since-2010-wages.

 

The Labor Market for Recent College Graduates - FEDERAL RESERVE BANK of NEW YORK. (2020, October 22). Retrieved from https://www.newyorkfed.org/research/college-labor-market/college-labor-market_underemployment_rates.html.

 

Wage Stagnation in Nine Charts. (2013, September). Retrieved from https://www.epi.org/publication/charting-wage-stagnation.

 

10 High-Paying Jobs You Can Get Without a College Degree. (2020, May 10). Retrieved from https://www.thebalancecareers.com/high-paying-jobs-that-don-not-require-a-degree-4147576.

 

Jones, B. J. M. (2020). Confidence in Higher Education Down Since 2015. Gallup.com. Retrieved from https://news.gallup.com/opinion/gallup/242441/confidence-higher-education-down-2015.aspx.

 

Townsend, M. (2019). Where’s the value in a college degree? - Mike Townsend - Medium. Medium. Retrieved from https://medium.com/@mikettownsend/wheres-the-value-in-a-college-degree-8baa4fa279e3.

 

State Higher Education Funding Cuts Have Pushed Costs to Students, Worsened Inequality. (2019, November 15). Retrieved from https://www.cbpp.org/research/state-budget-and-tax/state-higher-education-funding-cuts-have-pushed-costs-to-students. 

 

Understanding the Rising Costs of Higher Education - Best Value Schools. (2020, August 11). Retrieved from https://www.bestvalueschools.com/understanding-the-rising-costs-of-higher-education.

 

US: International students now have to pay US$350 SEVIS fees - Study International. (2019, October 09). Retrieved from https://www.studyinternational.com/news/international-students-350-sevis-fees.

 

The History of Higher Education in the United States. (2020, December 30). Retrieved from http://www.worldwidelearn.com/education-advisor/indepth/history-higher-education.php.