Does going to college pay? Answer isn't simple (More questions about astronomical tuition fees)

If you check www.collegeboard.com, you'll find a reassuring study showing that education really does pay.

Without considering the intangibles, the study shows that each additional level of education draws a higher lifetime income.

While the median high-school graduate age 25 and older earns about $26,000, the median college graduate age 25 and older earns about $42,000. That's annual income premium of about $16,000, or around 60 percent.

Not bad, particularly when you consider that the difference also allows you to escape doing heavy lifting.

Yes, the college grad will spend years paying off loans. But eventually the earnings net of loan payments will pull ahead of the high-school graduate's. So, case closed. It may hurt to write the checks, or borrow, but college pays.

According to the College Board, it takes 14 long years before the college grad's income, net of loan payments, starts to beat what the high-school grad earns. During all those 14 years, college doesn't pay. High school pays.

The real question isn't which choice pays on an annual basis, but which choice pays on a lifetime basis? Which choice permits a higher lifetime living standard — a question the board conveniently doesn't ask or answer.

The answer depends on costs of borrowing and amount you need to cover. Today's student-loan rates are really high if you need to cover the full ride.

And the price tag for attending college is astronomical. The College Board approach to evaluating the economic value of college education may overstate the benefits. If you take a consumption-smoothing approach, which you can do with financial-planning software such as ESPlanner, you can see how cost of higher education interacts with factors such as lifetime taxes, Social Security benefits at retirement, loan repayments, etc.

Looking at net income, you might be right, but as soon as those college loans are paid off, that more educated income starts paying off. If one had only a high school income, that would continue.

One problem is that kids so desperately want to have an edge that they push to try to get into Ivy League or big name colleges, and are willing to pay the exorbitant tuition, when it's likely a second tier private college, or a State School would do just as well, for a lot less money. There are some exceptions, of course. If a student is going to a big name school for a particular discipline, because that school has the best program in what they want to do, that's a good investment. But dropping $40K or more on an Ivy League school to major in Liberal Arts is just silly. Our #1 son attended UMass Amherst, because he was offered a full tuition scholarship. He was also accepted at two top tier colleges, and the only question we had was would the State School allow him to get into a Master's program or Law School, if he wanted to do either of those at a big name school later on. We found the answer was yes, so our son did his undergraduate without having to incur loans, then went on to Cornell Law School. He did get loans for those three years, but is now employed as an attorney with a nice salary that will help pay them off.

Our #2 son, on the other hand, wanted to major in Computer Science, and knew he wanted to go to Carnegie Mellon. He got in, and got his loans, and finished with a double major in Comp. Sci and Psychology in 3 1/2 yrs, because of his AP courses in high school. He's now in Grad School, and wanted to teach college upon graduation, but realizes he'll have to do some work in the real world first, to pay off the loans he's amassed. He'll do fine, though, because CMU was the best school for his undergrad work, and his fellowship at UT Austin is serving him well, too.

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