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August 02, 2011

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Hmmm.....that sounds good. For me, I know too many college graduates that earn very low salaries. I think it depends on the major and career chosen. As far as other intangible benefits (not financially related) I guess you can say it's worth it.

The more relevant analysis would be to look at different majors as $100K for an engineering degree should pay off, but will it for a history major?

It would be more valuable to know the break even costs for all the different majors so you could decide if going to college in a particular major makes financial sense for you.

But there is a more fundamental question: Why has it gotten so much more expensive?

Tuition has been growing at far more than the rate of inflation for years... but didn't universities get along just fine with much lower (inflation adjusted) tuition in the past?

I suspect class sizes aren't significantly smaller and that professors’ salaries haven't skyrocketed... so where is all that extra money going? If anything administrative costs should have dropped due to technology (i.e. registering via the web instead of filling out forms).

Couldn't a university stand out by cutting the non-educational expenses to the bare minimum and just charging for the education?

-Rick Francis


"Warren Buffett recently told Columbia Business school students, 'Right now, I would pay $100,000 for 10 percent of the future earnings of any of you.'"

He was talking to students at a prestigious business school -- would he have said the same to a group of communications majors from a small state university?

I agree with Rick's comment above. I'd also like to see the break-even point for different majors. To me, it seems that some students end up "under water" with their student loans, paying far more for their education than the education is worth in earnings -- and quality of life -- over time.

I mention quality of life because of those folks I know who financed both bachelor's and master's degrees, in fields that will top out at $60k/year (maybe). After making their student loan payments, there's not a whole lot of money left in their monthly budgets. This means they're often living paycheck to paycheck, and dealing with the stress which comes with that lifestyle.

Some jobs simply can't be obtained without a college degree(s). I'm thinking of things like a research biologist. The more degrees you have, the better your chances to advance (to a point), so a master's or PhD degree can really pay off. You can certainly succeed with just a BS degree, but the road to better salary & plum projects will be harder & more competitive. It depends on what you want to actually do in your career. At the end of such a career now, I feel my many years in college really paid off in terms of satisfaction in what I do & in salary. However, I also believe that there are many ways to succeed, not just the ones that society puts on a pedestal. Being frugal & hard-working have helped my career as much as anything. If you don't go to college, invest in yourself one way or another--get trained in something, somehow, and be a good employee/business owner!

One of the other things that has to be considered is the expense side. Those who earn more typically run around with a different group of friends and typically spend more on prestige items. So while earnings are much higher with college grads, their lifelong habits are likely to be much higher as well.

I have known 2 people who were way above average in the high school diploma world. One is a woman in our church who has retired from the State of California as a social worker. She never went to college, but her work did pay for some courses to help her out. She started in a small, Midwest area, and worked her way up in a social service office. When she moved to CA, her experience got her a job and she moved up again. Of course, at the way things are going now, college will be required for many more jobs.

The other person apprenticed to a builder. He has a select crew of workers and does top notch jobs. In fact, he does not accept any jobs that are less than $1 million to complete. He has done work in the White House, for other very wealthy people, and for the president's residence in a So. American country.

As to college costs, Rick F., have you ever read any articles by Thomas Sowell, a very knowledgeable economist from Stanford. He says that whenever a third party in admitted to a mixture, it automatically sends prices soaring. For medical it was insurance and for education it was guaranteed student loans. The practitioners can ask for any amount of money and be assured they will get "some" of it. I attended college for 2 years at our church college. This was a year or two before student loans. My entire cost for the whole 2 years, for full load tuition and room was $1,600. That is $800 a year. I just paid more in 2008 for 2 courses & books at a community college - $860 - than for a year at a church college.

Another reason why the Columbia MBA students will earn so much ($120k?) is they'll be working 70+ hour weeks on stressful projects. You have to compare apples with apples. Someone in a trade with lots of overtime could earn just as much.

Just for the record, I'm not against college. I tend to agree with what FMF usually says about college, i.e. it can be a very good investment but you'd better think it through.

Correlation doesn't equal causation. My friends who went to college were usually a little ambitious or something -- my friends who didn't almost always were complete failures already. I'm pro-college for most smart people, but these kinds of statistics are meaningless.

The cost of higher education has been debated for many years. However, the nature of the debate has been changing and rightfully so.

Return on Investment is an interesting way to look at this issue. Years ago I started a business and worked hard at raising capital to fund the business. I talked with many private investors, angel investors, potential business partners, etc. I can tell you that nobody would have been interested in investing in my company if my business plan only showed a 15 percent rate of return. So I say that a 15% return is the wrong motive.

In addition to preparing a student for a career, I believe one of the most important reaons for a college education is that it is instrumental in developing the person. College will equip the student with knowledge, but more importantly, it helps to develop discipline, self reliance, people skills, relationships, and problem solving skills. These are issues that reflect a preparatinn for future living and future relationships. This in my mind is the essential reason for a college education.

We have a fundamental problem in this country. The cost of higher education is way too high. A college education is important but far fewer people are able to afford it without the aid of scholarships, federal grants, etc. I don't know the answer, but this is a fundamental problem that needs a solution and soon. Just look at the student loan fiasco. This is a major financial bubble in this country and it's about to burst because students can't find jobs coming out of college. Without a job, how can they pay off their student loans.

The reason I believe the nature of the debate has been changing and needs to change is that our economy is sick. Just look at the real unemployment and underemployment numbers. We need to see a focused effort on increasing the jobs in this country for everybody. Regardless of whether you're a college graduate, a vocational school graduate, or a high school graduate you need to have access to employment. Without a dramatic shift in unemployment, it's hard to justify spending well over $100,000 for a four-year college education.

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