Posted on 05/31/2015 7:47:51 AM PDT by Kaslin
With debt soaring for college loans and the current generation of post-graduate college students being hogtied by their loan burdens, the question of how much sense this all makes comes to one’s mind. Well, a couple of noted individuals did a detailed analysis of that and came to their own conclusions.
Jaison R. Abel, research officer, and Richard Dietz, Assistant Vice-President for Regional Analysis of the Federal Reserve Bank of New York, cast their eyes on this issue. Unfortunately, repeated requests for an interview were turned down. Their study -- named Do the Benefits of College Still Outweigh the Costs? -- brought to mind one immediate question which is why the New York Fed looked at this issue in the first place.
They came to the conclusion that “once the full set of costs and benefits is taken into account, investing in a college education still appears to be a wise economic decision for the average person.” Once you review their charts and graphs you may come to the same conclusion. The unanswered questions still remain that may make it not so for many college attendees.
Their findings stated that on average, workers with a bachelor’s degree earn well over $1 million more than high school graduates during their work career. A question that would be nice to get answered is whether that is because of the college education or because of the nature of the individuals involved? Certainly many professions restrict your entry into them without a college degree, but that does not mean that the person who succeeds in college succeeds in life financially because of the college degree. We do not have to lurch to Bill Gates or Mark Zuckerberg (both Harvard University dropouts) to know that people who attend even superior colleges don’t often need to attend college to be financially successful in life. When the population of college attendees typically includes the smartest and most motivated people in our country, it follows that they would have higher lifetime earnings than the population as a whole.
But also notice the authors noted that the average earnings are $1,000,000 higher. Let us consider over a 40-year career that would be about $25,000 per year. There certainly are many people who will have either zero increased earnings or something like $10,000 per year on average. Those increased earnings will increase to a higher level as their careers propel forward, leaving these degree holders with little or no increased earnings in the first few years of their career and many harnessed with $60,000 to $100,000 of debt for student loans. I have counselled two young adults in recent weeks with debt exceeding $150,000 for advanced degrees.
This mountain of debt has been documented as being a stall on this generation acquiring homes because of the burden that decreases loan capacity. Also, for many of these people, their burden of debt is stifling them from taking risks to start their own businesses. Both of these issues, home purchases and business starts, are reflective of the costs of college, the debt incurred to attend college, and the resulting sometimes meager increased earnings culminating in casting a giant shadow on the future of many of these young graduates.
One of the questions I wanted to address to the authors of the study was whether people receiving some of the proliferation of degrees that leads them to unknown careers was really worth the time and money to attend college. They did include a section entitled Does Your Major Matter? They clearly stated that certain majors have a greater economic return, while they likewise stated that other majors still gave a great rate of return on investment. What we don’t know is how many of those degrees end up being totally useless because jobs are not available in any shape or form.
As a society we have put a tremendous distorted premium on attending college. Many high school students are told through societal norms that their lives will be a failure if they do not attend college. We have completely de-emphasized training for jobs that are lucrative, but not needing of a college degree. Many of those positions have gone begging in our current environment.
We currently have a person considering running for president for the first time since President Harry Truman who did not graduate from college. Governor Scott Walker attended college for three years, but did not finish. Not finishing college has brought some to question his qualifications to be president. Last time I checked that was not one of the items listed in the Constitution. And the doubters have discounted that his vast experience in government over the last 20+ years might actually be more important than that last year of college. A typical analysis was done by Albert Hunt in Bloomberg entitled Can Walker be President without a College Degree? A discussion like this crystalizes the distorted emphasis on that magical piece of paper.
The authors should have been open to a deeper analysis. It would be nice to address the trillion dollar noose around the neck of college grads for the cost of college. But none of that was done and more needs to be looked at before we continue to give this unbridled premium to colleges -- societally and financially.
What has changed is an increase in "specialty degree programs" -AND- many students do not have the discernment to consider the future earnings, how they would apply the degree, etc when choosing a program.
Soon the bureaucracy will decide your property taxes must pay for college (like k-12) for everyone...IF WE DON’T GET A HANDLE ON THIS! People need to stop voting “for the children”...it’s a scam.
What about the bottle of hand sanitizer in the picture?!
Top 5 Countries Where You Can Study for Free in 2015
http://www.scholars4dev.com/4031/list-of-european-countries-with-tuition-freelow-tuition-universities-colleges/
The 10 Best Colleges With Free Tuition in 2015
http://www.thebestcolleges.org/10-best-colleges-with-free-tuition/
List of low tuition universities in Canada for International students with fees ranging from $5000 to $10000
http://www.study-domain.com/list-of-low-tuition-universities-in-canada-for-international-students-with-fees-ranging-from-5000-to-10000/
Student loans are another burden on the middle class. Low income students will qualify for need based scholarships, while middle class families have to rely on merit based scholarships or loans to afford to send their children to college.
I was very fortunate that I was able to get as far as I did in my career w/o completing my degree.
Then one day in April of 2003, I lost my high paying gig reporting directly to the CIO at a globally known Advertising Agency and found myself competing against folks that had college degrees but a fraction of the work & management experience that I had.
Guess who landed those jobs? NOT ME.
I was fortunate enough six months after losing my job to land a fairly well paying position in a large, global bank who had a very generous tuition reimbursement program. I waited until I completed my first year there to get acclimated to the place, establish good working relationships, etc.. and then took advantage of their tuition reimbursement program. I have to add that my immediate manager (the CTO of the bank) was exceedingly supportive and not only signed off on the tuition reimbursement, gave me the flexibility to work from home or in the office during days around mid-terms or semester finals.
I finished my Undergrad degree in Computer Science in 18 months then went on for my Masters Degree.
The bank (ABN AMRO) exited North America selling of all assets in mid-2007. I was in a position at that time to see about 6 months ahead of time that the bank was being positioned to sell. Not wanting to go through the carnage that was to follow, I contacted three recruiters in the Chicago IT market that I trusted.
I had multiple interviews and was able to pick what I viewed as the best offer at that time, and have been with my current employer since.
Does it pay to have a Bachelors or Masters Degree?
An emphatic YES! from me. The difference in pay before and after I'd completed my Bachelors was night and day. I saw an immediate $30k increase in annual salary when I accepted the offer from my current employer.
So IMO, yes it pays to have a college degree. I will say the difference in pay/benefits for having a Bachelors vs. Masters that I've seen isn't anywhere near as vast as no college degree to having a Bachelors degree.
That's just my experience though.
The country would be much better off if the total funding for higher education was cut in half.
I never see these ROI studies factoring in the effect of taxes, which will dramatically reduce the high school/college earnings differential.
If you come out of college owing $100,000 you will need to earn about $191,000 to pay it off assuming a 10 year repayment period and a 4% interest rate (assuming you will pay with after-tax dollars that have been subject to SS, Medicare, 5% state taxes and a 25% fed tax rate).
The $1,000,000 in lifetime earnings is reduced to $625,000 after taxes and when the $191,000 college loan repayment is subtracted, you are left with $430,000, 43% the amount touted in these studies.
Depends. If it is the typical indoctrination to leftism, NO!
Re:”Perhaps it is different for science, technology, math and engineering (STEM). But by and large, modern colleges are pretty much reduced to Orwellian moron factories. “
They got on the PC wagon later than the liberal arts.
Today colleges have offices of diversity for STEM.
These days larger organizations and govt entities, imho, must check off “college degree” before hiring..experience notwithstanding...smaller orgs have more flexibility
I think with the world wide web available college must be a breeze. I can do research right from my computer. No wasted hours going to a library doing research.
BS you cannot be a professional engineer without out a college degree.
engineering is tech school - see above (money, job)
I received my BS in engineering from a university not a tech school.
Depends on the school and the program.
Ivy league, no.
GLBTQ studies, no.
Liberal arts, no.
Business, Engineering, Medicine, Law, hard sciences, at Christian or non-ivy private schools, yes.
School Teachers should be drawn from retirees or sabbaticals from the above listed professions.
NOT from Liberal Args school graduates.
Absolutely right. I spent a few years working at a large Executive Search firm that catered to C-Level and Board Member folks (Heidrick & Struggles) and they were called "filters" at that time, early to mid 1990's.
It's still largely true today that to get into any decent entry-level job at one of the fortune 500 or fortune 1000 companies a 4 year college degree is a MUST, and a Graduate degree is highly preferred.
I'm starting to look outside of my employer for a new position outside the Financial Services industry and am very much running into "Masters Degree in ....." preferred.
Reading through the role descriptions you can pretty easily tell when "Preferred" means "you better have one or don't bother applying."
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.