Sunday, February 10, 2013

Economist's View: What's the Cost and Financial Value of College?

Without college, I'd probably be doing what my dad, brother, and grandfather did, work in a tractor store selling parts, and if I was lucky, some day get promoted to sales. College was my ticket out of the small farming town I grew up in, but if it wasn't for the low tuition at California state schools at the time, I probably wouldn't have made it. (Tuition was around $100 per semester, and I could earn enough to pay tuition, dorm fees, etc. working on farms in the summer and at a tractor store selling parts to cranky farmers during school. I also worked at a gas station for a while at minimum wage, and my boss/owner was a real, genuine ass, but I needed the money).

I can't say if it was worth it to society to subsidize my education -- this blog is one result of that investment -- but it was certainly worth it to me and to this day I have not forgotten what the state of California did for me. (I really, really, hated working at tractor stores and the gas station, nobody should have the power over people my boss at the gas station had over me -- he tried to screw me out of overtime, that sort of thing, though once I threatened to report him to the labor board his tune changed a bit -- and the thought of doing jobs like that for the rest of my life was a huge motivation in college. When I'd get to the tractor store in the morning, I'd write "480" on a notepad, that was how many minutes I had left until I could leave eight hours later, and then I'd tick the minutes off the rest of the day. I can remember just wanting one thing, to have a job where I didn't watch the clock all day long, to get lost in my work somehow -- it's hard to explain how much I hated those jobs -- and I was lucky enough to find that.)

I am biased from my own experience, but nobody will ever convince me that college is a bad investment. However, with tuition rising, access to college for naive kids like I was back then is a real issue. It's hard to explain just how naive I was, but when your parents only went to junior college for a year (and then got married at age 19 because you were on the way), and your high school is too small to have advisors to fill in the gaps, it's easy to make bad choices. I had no clue, for example, about how to finance education at a UC school, e.g UC Davis or Berkeley -- my parents simply said "we can't afford that" when I raised the issue, and with no co-signers for loans, and no knowledge about how to get a loan without a parent to co-sign -- it was different then -- the path to anywhere but Cal State Chico was, as far as I could see, closed. I might have found a way if Chico hadn't been so cheap, it would have gone through a JC, but likely not, and I am very grateful there was a path through a four year college for kids like me to take. Still, it was hard to get to a decent graduate school from Chico despite a economics/statistics/math major and nearly perfect grades my last three years, a UC school would have provided much more opportunity, but it was enough to get me here. I only hope that kids today have at least the same opportunity I had, and hopefully even better choices, but I'm not at all sure that they do:

What?s the cost and financial value of college?, Peter Dizikes, MIT News: What?s the right price for a college education? And what is its value??

Those are crucial questions at a time of rising student debt and high unemployment. But a group of scholars and policymakers at an MIT forum on Thursday suggested that one thing about college remains clear: Expensive though it can be, higher education pays off for Americans as a whole.

Indeed, the much-discussed idea of an ?education bubble? ? that college costs have soared too high to make a degree worthwhile ? is a ?dangerous myth that leads people to make bad choices,? said David Autor, an MIT labor economist who has extensively studied the relationship between education and earnings.??

Instead, Autor said, the best evidence shows that a college degree leads to a lifetime earnings increase of $250,000 to $300,000, even after subtracting the cost of higher education. Those returns, Autor noted, apply to graduates regardless of their undergraduate majors: Humanities students benefit just as science, engineering or business students do.?

And all evidence suggests education remains a key to social mobility in America, noted Janice Eberly... Moreover, Eberly said, ?These benefits accrue not only to individuals but society more broadly,?...

The forum?s moderator and organizer, James Poterba ... noted in his introductory remarks that higher education is ?an extremely important sector of the U.S. economy,? representing about 3.5 percent of the national GDP ? but one with an even larger impact on the country?s fortunes, given its centrality of knowledge and its impact on innovation-based growth to the economy.

Yet excellence in higher education requires a solid foundation of secondary education, observed?Claudia Goldin, an economist at Harvard University. And while high school graduation rates in the United States soared in the first half of the 20th century, they have been virtually stagnant since about 1970.?

?College completion just cannot advance much when high school completion does not,? Goldin said.?

For those who do go to college, the amount of student-loan debt they accrue has increased, as Autor acknowledged: At graduation, today?s public-university graduates hold $32,000 in student debt, on average, while graduates of private, nonprofit schools owe $46,000, on average. Going into debt always entails risk, Autor said, while asserting that the worst-case scenarios, of students with massive debt and low income, attract disproportionate media attention.

In reality, virtually all college students, Autor said, will emerge with useful work-force skills.?...

A retweet of this link:

Don't ask is it worth it, ask who can afford it? MT ?@markthoma: What?s the cost and value of college? - MIT web.mit.edu/newsoffice/201?? ? Paul Vigna (@paulvigna) February 8, 2013

Source: http://economistsview.typepad.com/economistsview/2013/02/whats-the-cost-and-financial-value-of-college.html

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