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. The College Board says that a private four-year university charges $29,056 just for tuition and fees yearly. That doesn’t include living expenses. Adjusted for inflation, this is 2.3% more expensive than 10 years ago. The only way for most students to attend is by heaping on student loans. Americans owe a total of $1.2 trillion in student debt. This exceeds even credit card and auto loan debt.
And Congress isn’t making it much easier. Right before the Independence Day recess, they allowed interest rates on student loans, starting this fall, to double from 3.4% to 6.8%. This large one-time jump only compounds the problem. Young people look down the barrel of increasing tuition, a very tough labor market for inexperienced workers and now higher interest costs to boot.
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 recent recession soured feelings about current employment and future financial well-being. The latest 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.
Peter Thiel, the co-founder of PayPal, raised eyebrows 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.
Is 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 Internet 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.
All you have to do is look at Census Bureau data to see the relationship between education and salary. In the 2012 Statistical Abstract of the United States, we find that in 2009 (the most recent survey year), the average high school graduate earned just $30,627. The average bachelor’s degree holder pulled down $56,665. The average Ph.D. earned $103,054, and those with professional degrees such as law or medicine earned an average of $127,803.3
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.
I think that it’s unwise for us to simply give up on college education and expect young people to all start successful Web businesses. Higher education still makes a difference, so let’s hope that Congress fixes loan interest rates to make college more affordable before it’s too late.