For decades, politicians and higher-education leaders have pushed college as a great investment for students as well as a means of turbo-charging the economy. Obama said that it had to be a national goal for the U.S. to lead the world in the percentage of people with college degrees.
Huge numbers of students swallowed that, plunging into debt (and often draining off family wealth, too) to graduate (or not) with credentials of dubious market value. That’s the point of a recent study by Preston Cooper, who finds that while college appears to be a good choice for some, it’s a waste for many others. In today’s Martin Center article, Jay Schalin looks at Cooper’s work.
Schalin writes, “Initially using a simple measure of ROI that contrasts the expected lifetime earnings of high school graduates with those of college graduates, Cooper found a median ROI for all college ‘students who graduate on time’ of $306,000. But Cooper added an extra step to account for the fact that many students drop out of degree programs without gaining any skills or credentials that increase ROI. And, ‘after accounting for the risk of dropping out,’ the median average ROI drops to ‘only $129,000.’ Given that the lifetime earnings for students are based on 42 years of working, the increased income for roughly half of all degree programs is a paltry $3,000 a year—or less.”
Cooper’s analysis also belies the notion that graduating from a prestige school is necessarily a boon; some of the students at top institutions find themselves with credentials of little worth.
Furthermore, “Another factor he accounted for is the way many students have their degrees partially subsidized by various government agencies, such as direct student grants or state appropriations. As Cooper wrote, ‘a program that delivers a positive earning payoff only with a significant outside subsidy might not be worth subsidizing.’” Good point. State taxpayers cover much of the cost for students, but their tax dollars are largely squandered.
Schalin concludes, “At the very least, the reduction of or elimination of underperforming programs according to ROI are possibilities that must be explored by policy makers. For too long they have bought into myths and propaganda regarding the returns to society by state university systems. Cooper’s study gives great pause for thought about the value of an education and how state governments should respond to the insight he brings.”
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