Is college worth it?

David Leonhardt of The Upshot, a data blog which is the New York Times’ attempt to channel Nate Silver’s FiveThirtyEight site without Nate Silver,wrote this week about some recent studies that tackle the question, “Is college worth it?” With student debt looming over the heads of college graduates, it’s a question worth asking.

Leonhardt features an article, published in Science Magazine, by David Autor, an M.I.T. economist. The article makes the case that the decision NOT to attend college is indeed a costly one. He points out that the demand for cognitive labor, as opposed to physical labor, has only increased throughout the twentieth and twenty-first centuries:

As physical labor has given way to cognitive labor, the labor market’s demand for formal analytical skills, written communications, and specific technical knowledge—what economists often loosely term cognitive skills—has risen spectacularly.

Autor also highlights economic data that shows the ever increasing earnings differential between college graduates vs. high school graduates, which you can see in the chart below. (On a depressing side note, the chart also underscores the significant earnings differential between men and women).

 

CollegeVSHighSchool

C. Avery, S. Turner, Student loans: Do college students borrow too much—or not enough? J. Econ. Perspect. 26, 165–192 (2012).

 

Autor skirts one issue that plays an important part in the college value conversation: Does college, in its current iteration, actually provide the education that students need to make it in today’s society? We see past evidence that college did play an important part in upward mobility, but what about now? Leonhardt insinuates that perhaps the media is focusing too much of its attention questioning college’s current value. By doing so, the media has perhaps played an active part in discouraging students from considering college. He writes:

It’s important to emphasize these shortfalls because public discussion today — for which we in the news media deserve some responsibility — often focuses on the undeniable fact that a bachelor’s degree does not guarantee success. But of course it doesn’t. Nothing guarantees success, especially after 15 years of disappointing economic growth and rising inequality…. from almost any individual’s perspective, college is a no-brainer. It’s the most reliable ticket to the middle class and beyond. Those who question the value of college tend to be those with the luxury of knowing their own children will be able to attend it.

That said, the value of college is a question that won’t go away. Will college continue to be a financially beneficial investment when you consider high student loan debt and underemployment of recent graduates? In the coming years, will rising college costs and low wages for recent graduates diminish the long-term financial benefits of college? While college may have been a good investment in the past years, will that trend continue?

college

And perhaps there are other cost-effective alternatives out there.  Leonhardt discusses the wage differential between college graduates and high school graduates, but he doesn’t make the distinction between a “regular” high school graduate, and a high school graduate who also receives vocational training.  We would be interested in seeing the wage differential between college graduates and high school graduates who study in a trade program (but not college). Many European countries are moving toward a model where a company puts a high school graduate through an intensive training program for a highly skilled trade (which combines both physical and cognitive labor). These programs are much less expensive than college (often paid for completely by the company) yet usually lead directly into guaranteed employment. It would be interesting to see data showing the difference in wages between a trained/skilled H.S. graduate and a college graduate. Current data from the American Community Survey, which is often used to track wage differences based on completed levels of education, does not make that differentiation between college graduates and trade school graduates.

Therein lies the rub: Is college worth it or not?

NOTE: Leonhardt also mentions recent work from the Economic Policy Institute that provide additional support to Autor’s claims, but unfortunately does not provide a link to the report. A search for this report in the Economic Policy Institute has so far yielded nothing.

You may also want to check out FiveThirtyEight’s response to the article.

Anna Wright also contributed to this post.

2 comments on “Is college worth it?

  1. Pingback: Life after college? - WCA - Children By The Numbers Blog

  2. Additionally, there is the question of whether private institutions are worth their price tag, over public universities. As many students invest in the name brand universities, their hope is that the name provides signals to future employers in order to obtain higher paying jobs, enabling those students to get out of debt faster than students who opted to not go to college or who went to public schools over private schools. I feel that the students should make an investment in the best education possible because it will only bring good results for our economy and communities.

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