The debate about whether a college degree is worth the cost is heating up
The disruptions from COVID-19 have completely changed the college experience for many, prompting prospective students to reexamine whether a college degree is worth it. And the latest enrollment figures show the greatest decline in a decade.
Consider that the National Student Clearinghouse Research Center recently reported that overall college enrollment fell to 16.9 million students, down more than 600,000 students from a year ago. That one-year decline of 3.5% is the largest semester enrollment decrease since 2011.
But that decline masks the problem as it includes undergraduate and graduate students – graduate student enrollment actually increased by 124,000 whereas undergraduate student enrollment cratered by 727,000 – for a drop of about 5%.
College Costs Continue to Rise
A four-year degree at a decent school is extremely expensive, and some influential people doubt that it’s worthwhile. However, education still improves your earning potential and, yes, improves you as a person.
College is presumed to be a key component to upward mobility and a ticket to the middle class in America. But this comes at a high cost.
In 2020-21, the average published (sticker) tuition and fees for full-time students are:
- Public four-year in-state: $10,560 (up from the previous year)
- Public four-year out-of-state: $27,020 (up from the previous year)
- Private nonprofit four-year: $37,650 (up from the previous year)
The only way for most students to attend is by heaping on student loans and today, Americans owe a total of $1.6 trillion in student debt. This exceeds even credit card and auto loan debt. Young people look down the barrel of increasing tuition, a very tough labor market for inexperienced workers and now rising interest costs to boot.
Skip College and Learn in the Real World?
This is why so many are questioning whether a degree is worth the expense. It isn’t hard to see the powerful relationship between education and lifetime earning power, but some argue to skip college and learn in the world rather than on campus.
How did such an idea emerge and gain momentum? Well, obviously the pandemic soured feelings about current employment and future financial well-being. A Heartland Monitor Poll raised startling concerns that previously unquestioned trappings of middle-class life have come to be seen as upper-class luxuries. The survey found 46% middle class participants felt that paying for children's college education was possible only for the wealthy. Also, 40% believed only the upper class could save enough to retire comfortably.
Most economists think the anxiety articulated in this poll is a reaction to a real and new peril. The poll participants know the world has changed, and they are very anxious about it. Nearly two-thirds of those who described themselves as middle class said their generation had less job and financial security than their parents. More than half said they had less opportunity to advance. To find a leg up, people are looking away from expensive universities with immaculate lawns and top-ranked football teams.
A Social Experiment
Peter Thiel, the co-founder of PayPal, raised eyebrows back in 2011 when he paid 24 collegians $100,000 each to drop out and start up tech firms. In a New York Times op-ed piece that summer, Thiel said that “learning should be done throughout life, and technology creates more ways to learn every year.”
He wrote that, in the near future, a conventional four-year college education “will be revealed as an antiquated debt-fueled luxury good.” While still letting the world know that a traditional college education is all but obsolete, Thiel signed up to teach at Stanford University.
Was Thiel on to something? After all, titans of business such as Bill Gates, Paul Allen, Mark Zuckerberg, Michael Dell, Richard Branson and Larry Ellison don’t seem to regret dropping out of school. If Zuckerberg concentrated on his grades rather than building Facebook, he might still be struggling with debt rather than running a major global company.
Now keep in mind that those fellows are exceptional outliers. Less-educated people almost always earn less than well-educated people. And remember, even without a degree, each of those famous outliers are extraordinarily intelligent.
Education and Salary
All you have to do is look at data from the U.S. Department of Labor to see the value of college:
Average Salary with a High School Diploma
- Median Weekly Earnings: $746
- Median Annual Earnings: $38,792
- Average Unemployment Rate: 3.7%
Average Salary with an Associate Degree
- Median Weekly Earnings: $887
- Median Annual Earnings: $46,124
- Average Unemployment Rate: 2.7%
Note: Associate degree holders earn more than $7,300 more per year than their peers whose education stopped after high school – a substantial increase, which translates into more than $293,000 over a typical 40-year career.
Average Salary with a Bachelor’s Degree
- Median Weekly Earnings: $1,248
- Median Annual Earnings: $64,896
- Average Unemployment Rate: 2.2%
Note: Bachelor’s degree holders will earn an average of $18,772 more each year than associate degree holders. Over the course of a 40-year career, this equates to more than $750,000 in additional income.
And One More Thing…
You get more than earning potential out of the college experience – which delivers more than what you study in your major. The traditional, liberal arts-grounded university education gives you social skills, cultural literacy and an invaluable refinement of critical thinking. The friendships made in college may last a lifetime as well, with a positive effect on your career path. You also have the chance to discover who you are, and to possibly live on your own for the first time.
It’s unwise for us to simply give up on college education and expect young people to all start successful businesses. Higher education still makes a difference.