Is College Worth It?

Education is very important to my family. As far as my parents were concerned, our job was for us to get into the best schools we could, and their job was figuring out how to pay for it. 

I went to a great private high school which we couldn't afford, but since it was probably the best school for me to go to, my parents made it work. I was able to get a combination of scholarships and grants to pay for all but ~$2K per year. My parents could pay half of that, and the rest I borrowed, so I already had about $4K in high school student loans going before college. Borrowing for my education was already an established, albeit abstract, concept for me by that time. 

So the deal continued. I got into the best school I could which didn't come cheap. I graduated with about $25K in college student loan debt. Back then my university's annual tuition was about $17K. With fees, materials (books & art materials add up), room & board, etc. probably came close to $24K a year. My parents paid as much as they could, I worked ~20 hours a week from a combination of multiple part-time jobs, and I borrowed the rest. I didn't really understand what student debt really was, I just assumed this is what you did given the opportunity. It took me almost 18 years to pay off all my loans, but my investment paid off.

Fast forward a couple decades, and the cost of education has grown substantially. My high school's tuition is about 375% of what it was and my university's is over 300%. Compare that growth to median household incomes in the U.S. which has only grown to about 150% of what it was: around $33K in 1995 to around $50K today. What is going on? 

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I saw this video of a panel discussion from Vice News' Business of Life program, hosted by Michael C. Moynihan, and it inspired me to share some thoughts on the issue. I applaud them for hosting the panel since it's a topic that is well worth discussing. The three guests are: 

If you haven't seen the video, watch it below: 

Unfortunately I don't think that they actually got around to answering the question of "Why is college so expensive?" Allison Schrager very lightly hit on a couple points:

  • Not every school is $63,000; state schools & community colleges are cheaper.
  • They're all getting more expensive due to administration, fees, facilities, and general inflation.

I'll ignore the first point since it doesn't really answer the question at all. 

As for the actual costs, yes, they have been getting more expensive; tuition increases over the past 20+ years have been higher than general inflation, but significantly more for private institutions. 

How about the costs of administration? Why have they grown so substantially? What "fees" are we talking about? And why are facility costs growing so fast? Is it the free market at work, where universities are caught in a competition to provide a better college experience through better facilities, nicer amenities, better sports stadiums, rockstar executives, etc.? 

I think that her point about American universities being the best in the world needs further discussion as well. We do have some of the best in the world and people from all over do everything they can to attend Harvard, MIT, Stanford, Yale, CMU, Princeton, etc. Why? Why are our universities compared so favorably to others around the world? Is it because our higher education system encourages exploration over focus (i.e. the German approach)? Is there something about the differences in culture? Is it the funding model? That might have a direct impact on the discussion about cost. 

Examining the cost of higher education requires more than a series of rapid-fire, 30-second sound bites; I'm sure there was a lot lost in editing, and the event itself may have had much more in depth discussions. There are way more relevant details that they could have shared, but then again, they're the journalists running a business; maybe it's true that people online just don't have the attention span, you need the eyeballs to survive as an online news source, and that's just how it's supposed to be. I'm just someone writing a blog. Anyway

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John Oliver hosts a mathematically representative climate change debate, with the help of special guest Bill Nye the Science Guy, of course. (go to 03:29)

As with many of these panels that attempt to have a "fair & balanced" representation on a topic, I think that Dale J. Stephens got to play a rather outsized role in the discussion. I don't want to detract from his impressive accomplishments, but he is an outlier; dropping out of school is not a well-known recipe for success. The way the panel was set up reminded me of John Oliver's piece on the "debate" on climate change being caused by human activity, where he attempts to remedy what he sees as the false equivalence in much of the discussion when there's an equal number of representatives in the discussion when the data isn't quite so even. 

I AM NOT COMPARING HIM TO CLIMATE CHANGE DENIERS. 

To be fair, Dale didn't recommend that everyone avoid college, just that there are options aside from college. He should also avoid denigrating the social scene of college as simply being about getting drunk and having sex; summarizing it in such terms reduces his credibility significantly. 

I wholeheartedly agree that going to college isn't the only path to success, but there's a lot more that needs to be done to make other paths (i.e. apprenticeships, trade schools, etc.) more viable than they are currently, at least in the United States. As it stands, research shows that people with a college degree do much better economically than those with just a high school or associates degree. The evidence strongly says that going to college pays off. 

This 2014 study from the Federal Reserve Board of San Francisco estimates that the difference in income between a college graduate and high school graduate adds up to over $800,000 over the course of a career. Some estimates put the average 2015 college graduate's student loan debt at $35,000. So in very broad terms and average numbers, the economic case for getting a college degree is strong. 

Of course there are outliers on both ends of the spectrum. Probably two of the most famous examples are Mark Zuckerberg and Bill Gates who both dropped out of Harvard decades apart. Steve Jobs attended a few classes, including calligraphy, but dropped out of Reed College to "think different". We hear of the dropouts that make it, but we definitely don't hear much about the innumerable college graduates who don't. Just because there are exceptions doesn't mean that the underlying logic isn't sound. 

I think it's irresponsible for people, especially those that clearly beat the odds, to provide blanket advice that could harm more people than it can help. This makes me think of the Dunning-Kruger effect. It's better known as the cognitive bias that explains why "stupid people don't know they're stupid", but it also explains why highly competent people underestimate their own competence, so they think that "if they can do it, so can you!" Unusually intelligent, driven, connected, or talented people may not need what a college education offers, but for the rest of us mortal folk, all other things being equal, a college education may be a more reliable way to get a shot at the American Dream. 

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All that being said, the cost of a college education and the debt that many young people are incurring in its pursuit should be a major concern for everyone. Just because the math still adds up doesn't mean that the costs are reasonable, but the discussion can't simply be about the cost but about the entire system and culture that we operate within. 

Don't settle for misdirection and half-answers. Hold those in power responsible. But don't just sit there, wring your hands, and do nothing. If people truly want education reform, I would echo Zak Malamed: vote for and support those politicians who are trying to do something about it. Or if you're so inclined, do something about it yourself.