Is College Really Worth It?
College affordability is something that millions of people have to deal with. Every year the price of tuition goes up and the cost of going to college becomes more and more irrational for students. However, this isn’t deterring students from going to college. Rather than forgoing college until they have enough money, or simply not going to college, students are taking out massive loans to fund their college education. About 60% of students take out loans to help cover their education costs. The student loan debt recently crossed the 1 trillion dollar mark and continues to grow with every new semester. This massive bubble, now second only to mortgage loan debt, has its roots in the 1980’s when many states cut funding for higher education in order to lower taxes. Public universities were then forced to raise their prices in order to cover their expenses. Yet, the price of college continues to grow today at such an astounding rate that the university is looking more like a private business than a center for education.
The problem is that most students — and young persons in general — have the idea that college is necessary ingrained in them. Throughout most of their educational careers, teachers and parents relentlessly stress the importance of college to students. It is presented as the gateway to a successful and fulfilling life. Consequently, not going to college is painted as your speed pass to working fast food for the rest of your life. Our generation has been practically brainwashed into attending college. And who could blame us for not realizing this? Most of our childhood and our entire adolescence is spent in the classroom. We don’t know anything else. All we were taught was that after high school comes college. And that’s that. In addition, the media’s portrayal of college makes it almost impossible to turn down. College has become this imaginary utopia that is at once the most important and the most fun part of life. Through these lenses, it would seem crazy to not go to college. Yet, in reality, both of these portraits of the university are largely false and highly misleading. This essay attempts to present the facts of college utility and explain the negative effects of college’s current image in order to give a more realistic idea of what college is and what it can do for you.
The first issue I want to talk about is money. Before my college career started, I knew college was expensive and that many leave college with student loan debts. However, many people that I talked to described it as a necessary evil and just shrugged it off. I adopted this mentality as well. Student loans were a very abstract fear for me. However, after a little research they have become a concrete fear.
Let’s begin with some numbers. We start with the average cost of a public college per year: $22,261. This number accounts for tuition, fees, books, housing, meals, etc. Basically everything it will cost you to go to college per year. Now multiply that by 4 (assuming that you stay dedicated to school and don’t fail a single class) and we’re at $89,044. This is an incredible amount of money. As mountainous as this number is there are ways to chisel it down. There are countless scholarships and many middle to upper class parents have the ability to help their children with the cost of college. With all of these factors accounted for, the average student leaves college $26,600 in debt. The mountain of cash has transformed into a large hill, but this is still a huge amount of money. Now let’s assume that Joe College, who has just graduated, finds a job immediately. He will be making $44,928 per year. He moves to Dallas or some other metroplex and he starts a nice little life. He’s got an apartment, he eats well, he’s made friends that he goes drinking with. Joe is doing great. This lifestyle has a price though. The average cost of living in America is $1850 per month. Multiply this by 12 and we’re at $22,200 per year. But were not stopping there; Joe still has to pay taxes. Social security tax takes away 15.3% of your paycheck. With Joe’s income, that’s $6873.98. However, half of this is paid by your employer (It’s not counted in your salary, which means you’re still losing it, you just don’t know.) So Joe’s only paying $3436.99 for the Social Security tax per year. Next, Joe has to pay his income tax. Making $44,928 per year he’s taxed $4,793 in income tax (moneychimp.com). The two taxes added together equal $8229.99. This plus his cost of living expenses leaves him with $14,698.01 left over every year. Joe still has one more bill to pay though, his student loans. With an interest rate of 6.8% over ten years (the standard rate of payment) Joe has a $300 payment every month to pay off his loans. That’s $3600 per year. So now Joe is left with $11,098.01 every year. This leaves Joe with plenty of breathing room. He can pay off his student loans with ease and can even go on a pretty sweet vacation! However, as all too many college grads know, getting a decent paying job straight out of college rarely ever happens. Employment issues aside, is Joe really as well off as he seems?
Let’s take a look at Adam, who decided to not go to college. While the numbers vary, the average salary without a college degree is right around $31,000. I’ll use the same cost of living expenses and were down to $9,000 a year left over. Minus taxes, which would be $5,124.50 using the same formulas used with Joe. Adam ends up with $3,875.50 left over every year. Not bad at all, and that’s pure profit. Adam isn’t in debt at all.
Now, we take the difference between the annual leftover cash between Joe ($11,098.01) and Adam ($3,875.50) and we’re left with a $7,222.51 difference. Joe seems to be much further ahead than Adam, but let’s not forget that Adam has been making pure profit for 4 years while Joe was in school spending thousands of dollars on tuition and other expenses. Joe spent $89,044 dollars to get his college education, PLUS he missed out on $124,000 (the total amount of money Adam made over 4 years of working) while he was studying instead of working. So, while he invested $89,044 into his college education, his true economic investment comes out to $213,044 (adding cost of tuition and potential profits lost due to not working). Joe was $213,044 behind Adam before he even started the game.
Just to catch up with Adam, Joe has to make a total of $213,044 more than him. So, for the 10 years that Joe is paying back his student loans he’ll have made $72225.10 (the difference taken earlier, $7,222.51, multiplied by 10) more than Adam. His deficit is now down to $140,818. Now we divide that by the difference in income per year when Joe isn’t paying back school loans, $10,822.51. This equates to 13.01 years on top of the first 10 years. Therefore, Joe will be working for 23 years before he ever catches up to Adam in terms of total money gained.
While Joe seems to be better off on the surface, he is really severely behind Adam in an economic sense. His investment definitely has not paid off; unless, of course, you are viewing college as a 23 year investment, in which case, you’ll start to see profit thereafter. This investment hardly computes with the “Return on Investment” formula ((Gain from investment — cost of investment)/ (cost of investment)). You have to add up just over 10 years of profit, that is, annual income gained above Adam ($7,222.51 for the first ten years and then a fraction of the profit after his loans are paid off, $10,822.51), for the formula to equal 0. In comparison, Adam didn’t have to invest anything and has a ridiculously high return using that same 10 year window.
And remember, this is all public university numbers, when private university numbers are substituted the amounts double and you’ll die before you make up your money.
Unemployment is a big issue for everyone, college graduate or not. However, it is a more significant issue for college graduates because most of them are sitting on substantial amounts of debt and need a way to pay it off immediately. Desperation for work sets in the second after graduation. Most find jobs, but there are some unfortunates that are unable to. 4.1%, almost 2 million, college graduates are currently unemployed. This results in deferred loan debts that continue to grow every day with interest. And, keep in mind, you cannot declare bankruptcy on a student loan debt; you’re stuck with it, man. On the other hand, the unemployment rate for high school graduates is 7.6%, with just over 2.75 million unemployed high school graduates. This is a significant amount more than college graduates, but it is on par with the unemployment rate of the nation as a whole. While their rates of unemployment are almost twice as high as college graduates, high school graduates are in the same boat as the general population.
Once again, on the surface it seems as though college does provide an edge when it comes to employment opportunities, however slight it may be. Yet, when a closer look is taken at what kind of jobs these college graduates are working, the picture becomes vastly different. The Center for College Affordability recently came out with a report that states that “Increasing numbers of recent college graduates are ending up in relatively low skilled jobs that, historically, have gone to those with lower levels of educational attainment.” So what does this mean exactly? Well, according to the CCA around 48% of college graduates are working jobs that require less than a 4 year degree. Broken down further, only 11% of these require some college, while 37% simply require a high school diploma.
Let’s do a little experiment. There are 133,055,000 people age 25 and over in the work force (this is a good age to work with because most people have made their decision on whether or not to go to college by then).Say that the 37% of college graduates, 17,527,270 people, that are working jobs that require no college experience decided to not go to college after high school, but they still fill the positions they are currently working. Now that they have no college experience, they are moved to the “High School Graduate, No College” column of our chart. This was home to 36,121,000 people before the migration, but is now (hypothetically) home to 53,648,270 people. Out of all these people, there are still only 2,762,000 that are unemployed. Remember, the group that moved columns still earned their jobs. Their hire was not based on any college degree, as the job did not require it. This equates to an unemployment rate of 5.14%. Now, back to the “Bachelor’s degree and higher” column (I’m going to leave in all 11% of college graduates that are working jobs that require less than a bachelor’s degree but more than a high school diploma, I’m throwing college a bone here.) Before I moved the 37% who didn’t need any college there were 49,236,000 people in this column, there are now 31,708,730. Out of this number, 1,865,000 are unemployed, which equates to an unemployment rate of 5.9%. Almost a full point higher than those without any college experience at all!
Employment-wise, this shows us that there is no advantage whatsoever in attending college, and our previous section proved that there is no real advantage salary wise. Furthermore, I believe our economy would actually be better off had these graduates that are working jobs that don’t require degrees not gone to college in the first place. Hundreds of millions of dollars in student loan debts could have been avoided.
The fact of the matter is, there are not enough jobs in our current economy that require a college degree. While I don’t think there is such a thing as “over-educated”, I do believe that America is “over-schooled”.
INFLATION AND DEPRECIATION
The average consumer price index, CPI, inflation per year is 2%. What cost $1 last year, now costs $1.02 today. That means that the price of something will double (increase by 100%) roughly every 32 years. That means in 1980 a pack of gum that cost $1, costs $2 today. College tuition inflation doesn’t follow this standard. Since records began in 1978 the price of college has increased 1120%, four times as much as the consumer price index. This is largely due to the increased demand for a college degree.There are more people going to college now than ever before, with a 37% increase in attendance between 2000 and 2010 alone. With more and more people earning bachelor’s degrees, their value is steadily decreasing. To illustrate, imagine that the Federal Reserve flooded the market with currency and the dollar essentially became a piece of paper; the exact same thing is happening with bachelor’s degrees. If the trend of college attendance continues, within a few years a bachelor’s degree will become the new high school diploma. In fact, this trend is taking place already. In today’s labor force, one needs an advanced degree in order to stand out in the never ending battle for employment. This trend in the job market will require even more time and effort by students to ‘keep up’ and make the problem discussed in the first section even worse. Luckily, the norm for college students right now is only a bachelor’s degree. At the same time, however, this means that college students are being forced to not only spend thousands of dollars, but also four years of their life just to be on the same playing field as everyone else. You would think such an investment would raise you a rung or two on the social ladder, but this just isn’t the case.
As more of the population flocks to the university, the value of the product they’re buying is decreasing at a proportional rate. We’re paying more money for something that means less and less every time someone graduates. Moreover, as shown in the previous section 48% of graduates don’t even use their degrees. Tuition rates are being raised and the value of the degree is being decreased by many that don’t need or use them. This is a nonsensical system that no smart buyer would involve himself with. Of course, no one can blame anyone for going to college. The promise of a better life for you and your future family is hard to resist. However, since so many people are pining after this piece of the American dream, it’s almost as if no one can have it.
If student are going to spend so much time, effort and money on something that is essentially worthless they should not be forced into debt over it. And if they are going to be forced into debt over it they should have some guarantee of a job as soon as they graduate in order for their investment to make sense.
WHAT THE UNIVERSITY HAS BECOME
I’ve heard many people of my generation describe college as “the best time of your life”. I came into it with these expectations. I wanted to go to parties and have a good time and make memories etc. And I did, but I’ve found that all of these elements became the focus of my college career. Not only were they the focus of my college experience, but I could tell it was the focus for a lot of other students. The idea of having a good time in college has been taken to such an extreme by the media that the expectations for a university have changed. Because so much of the time spent at college is based around social interactions, many universities focus on student retention rates more than education in order to continue receiving money from them. This results in easier classes, higher grades and more graduates. Richard Arum and Josipa Roksa’s Academically Adrift, a scathing evaluation of today’s university, states that 45% of students don’t show any academic improvement over their first two years of college and 36% show no improvement over the entire four years that they spend in college.
Now don’t get me wrong, I love the vices of life just as much as the next guy. However, I’ve realized that I don’t need to go to college to enjoy them. Sure, everyone is allowed to have fun in college, and I believe everyone should have as much fun as they can, whenever they can. But, I begin to have a problem when the university becomes one expensive party, and accepts this fact and willingly advertises this in order to recruit you.
I can’t claim to know what college was like back when my parents went. I assume it was pretty much the same thing, but at least when they graduated, their degree was worth something. They may not have learned much, but what they were working towards was worthwhile and provided a good life for them. That’s simply not the case anymore. Any benefit or prestige associated with earning a bachelor’s degree 20 or 30 years ago is almost nonexistent today, yet the desire for a good time is just as present as it was back then. We’ve been hearing from our parent’s generation how great college is and what it can do for you for our whole lives. It was true in their case. For our generation, college just supplies the party aspect, which can be attained anywhere, but falls short on the other front. I mean if you’re really just looking for a good time, instead of spending money on a college tuition spend it on Jose Cuervo tequila. I guarantee you’ll get more bang for your buck.
With the current state of the university, I think an alternative must be implemented in America. A good place to start on that would be improving upon and promoting apprenticeships; America would do well to take a few lessons from Switzerland. With an increase in apprenticeships we could gain more citizens into the work force sooner and stifle the inflation of college degrees. Small business ventures, highly valued assets of America’s Neoliberal mindset, would flourish due to new found skill sets in America’s youth. The student loan bubble would slacken its growth rate, and, if given enough time, might even shrink. The implementation of apprenticeships would undoubtedly take a significant amount of time. But, America, more specifically, her students, can take the first step and acknowledge the existence of alternatives to sprinting directly to the nearest state university.
I have a confession to make: despite all I’ve said, I plan on returning to college. During my time off from school I managed to land a full time job with benefits. I’m actually living quite comfortably at the moment. However, I truly dislike my job. I want to be able to do what I love to do for the rest of my life: write. Honestly, I’m scared that without a college degree I won’t be able to make that happen. Sure, I can make a website sampling all of my articles, stories, reviews, etc. I can do all sorts of stuff to prove that I have what it takes to be a serious writer. But, so can all the other young writers out there, and most of them will have degrees. Until the degree oriented mindset of the job market calms down, jobs that can actually provide a living for families and are simultaneously satisfying will be controlled by employers that demand degrees.
I refuse to go over the benefits of college in this argument. They’ve been stated probably about a quadrillion times by teachers all over the country and have become cliche (i.e. “Networking!”). As biased as that makes my argument, by no means am I trying to convince America to abandon higher education. To me, and I believe to the general population, education is a precious asset to a nation that must be guarded. The only reason this essay was written is because I care so much about it. But, that doesn’t exempt higher education from criticism. To be apathetic and compromising towards the growing financial irrationality of the university will only give lawmakers more freedom to further the distance between citizen and education. I can only hope I’ve sufficiently introduced the topic and issues in a manner that proves beneficial to the debate on higher education. After all, a little roughing up will only leave the university stronger.
Originally published at www.thesyndromeirregularly.com on August 7, 2013.