Posted on 05/15/2010 8:21:34 PM PDT by SeekAndFind
Felix Salmon was nice enough to pick up my recent post on the Creative Economy (Note: Felix blogs for Reuters and I am doing video commentaries for the new Reuters Insider service, which makes us colleagues of a sort). However, he does put in a plug for a college education:
The long-term trend is inescapable: the returns to education are large and growing, and if you’re not a college graduate and you don’t own your own company, it’s becoming increasingly difficult to maintain a middle-class lifestyle.
He’s certainly right about the long-term trend, and I’m paying big bucks to put my children through college (hear that, kids? No slacking now).
But we have to be alert to possible changes in the economics of college. Take a look at this chart, which compares the average earnings of a young college grad with average annual tuition, room and board charges at 4-year colleges.
In 2000, the average young adult with only a bachelor’s degree earned about 4 times the annual cost of a 4-year college. By 2008, the average young college grad was earning less than 3 times the annual cost of college. Going to college is still a good idea–but the payback period is longer.
Here’s another way of seeing the same thing. This chart compares the real cost of 4-year and 2-year college (tuition and fees) with the average earnings of young college grads, young associate degree holders, and young high school grads. I’ve adjusted for inflation, and indexed these numbers to 1998 to make the trends clearer.
f you spend a bit of time with this rather complicated chart, you can see that young adult earnings in real terms have had a slight downward trend over this period for high school, associate, and college grads (FYI, advanced degree holders seem to be doing better, but that’s a different post).
Meanwhile the real cost of higher education has been increasing. Once again, the conclusion is that the payback period is likely longer, though a full analysis would require looking at unemployment rates and the value of the option to get a higher degree.
I tend to view this divergence between rising real college costs and flat or falling real earnings for young college grads as insupportable over the medium term for an economy like the U.S. Either real pay for college grads has to pick up (perhaps because of a surge of innovation), or the real cost of higher ed has to stop rising.
I am hoping that the next business cycle will bring more innovation and more high-paying opportunities for young college grads, and better times for high-education metro areas. But there are no guarantees, and unfortunately, current economic policy does not seem to be doing much to help.
I imagine the trend line will continue downward as all children are guaranteed a cradle to grave education. When something is had by everyone, it loses value; even a degree.
I got a 404 from the posted link, but found another version: http://innovationandgrowth.wordpress.com/2010/05/12/the-creative-economy-and-college-grads/. Perhaps the link should be corrected?
There have been a host of articles recently contending that the tipping point has been reached, regarding college costs. The amount charged is just too great to be worth it, especially for graduate degrees. People are graduating with impossible debts.
Part of the problem is the student loans themselves, guaranteed by Uncle Sam. They are too easy to get so colleges know they can get the money no matter what they charge. Schools raise their rates more. No biggy get bigger student loans. Cycle repeats.
So even in a down economy schools can raise rates while everyone else takes pay cuts and/or job losses. Don’t matter student loans are available all you have to do is pick a college, and what better time to go to college or back to college then when the economy is down so you can’t find a job. Take another loan from Uncle Sam, that’s okay.
Masters is the new Bachelors.
In this day and age of free healthcare, why are we still paying exhorbitant college tuition and associated costs every year? /s
As college degrees become more like idoctrination certificates administered by poorly socialized creeps, their value in the market will decline.
bookmark
I just paid $147 for a 400 page paperback textbook. Paperback. Couldn't believe it.
And of course it's the same text as last year (5th edition oooh), but with a different cover, but have to buy the new one, not the old used one.
RICO I tell you.
When I finished school, back in the mid-1990's, I paid off my modest student loans in about two years. Now, surely 10 years is the norm...maybe longer.
exactly my point.
My oldest got his technical “diploma” in personal fitness and is now a personal trainer. He has the “it” factor (great personality, great body, great looking all around guy) and does really well for himself in this field. He will go far. Total cost (he paid) under 300 bucks.
Middle son is planning to enter seminary in the fall.If accepted, will be fully paid for by our diocese for 9 years of schooling and I believe, 2 bachelors degrees (one in theology, one in a different art). It is required to be a priest.
Youngest finishing up homeschooling this year, plans to take online computer courses so he can write software ( I think thats what he wants to do, but his explanations cause my eyes to glaze over, so I may not have it exactly rightLOL) but we will not send him to “college” to get a technical degree, he can get that either online or at a tech school.
Hubby went in the military to get his education in HVAC/R several decades ago, and it has served our family well. No college loans to pay back, and he kept me home while raising our boys. He worked his butt off and we didn’t see much of him for alot of years, but those were the choices we made. College is a waste for most people, I hate to say it, but its true. If you are entering a field like doctor, lawyer, engineer, or a fiduciary position, like accounting, financial planning,then yes, you need a degree from university. If not, go to votech schools, apprentice, or work your way up from the mailroom/receptionist spot. Be valuable and you will move up.
Not all degrees are created equally.
Some graduate degrees are funded. Of course, those degrees tend to be heavily concentrated in the hard sciences and engineering.
IMO one of the things that is hurting the value of a college degree is how easy it is to get one these days if you have the money to pay for it. Also, there is no doubt in my mind that the students being turned out by many institutions (especially online but still in traditional ones as well) are receiving useless degrees that don’t teach you anything usable, not even how to learn.
For the most part (I’m sorry for the generalizations), but unless you receive a degree in a true science (physics, chemistry, biology, etc.) or in engineering, a BS or BA doesn’t prepare you for the employment market.
I see so many young military officers with useless bachelor’s degrees that serve only to open the door for them to receive a commission....but they don’t know anything and aren’t good at REAL learning.
Anyway, I guess my point is that steps need to be taken to raise standards as to what trully constitutes the minimum requirement to earn a BS or BA degree. The cost keeps going up, but the quality keeps going down. The result is there are too many “college” graduates in general subjects that have no application in reality.
As much as I despise government interference....we need a better (country wide) standard for accreditation. Also, we need to crack down on many glorified diploma mills.
you are correct, rab. Some positions will always require a degree. As I said in my later post, MOST people do not need one, and because they do not need one, yet most will get one, it will dilute the value of all those who don’t really need one but got one to give themselves an edge. Another poster said it best; a masters is the new bachelors.......
Tell him to join the IEEE-CS, ACM, and USENIX (the three professional societies, although USENIX tends to pick up more practitioners) and maybe look into the IEEE CSDA certification. He may, at some point, benefit from a B.S. in Software Engineering, Information Systems, or Comp. Sci.
The other racket that colleges have is “continuing education.” Many employers require that you take courses (leading to a degree or a certificate, or stand-alone courses in your field) to remain employed, get raises or to advance up the career ladder. It never stops! True, many employers also have tuition reimbursement, but you’ve still lost more hours of your life to lectures.
I would go even further than that. If you compare 50 years ago to today, the PhD is the new bachelors.
Unfortunately, this chasing of increased credentials doesn't really solve the problem. Degrees (credentials) will only open the door; if there's nothing (or the wrong something) behind the degree, then the degree holder isn't really worth much to the prospective employer, right?
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