WALL STREET CHEAT SHEET: What’s the Real Value of a College Education?

Career College College Summary:

  • Rising college tuition rates have many questioning the real value of a college education today, as well as how that value has changed. The cost of a college education, whether at a public or private institution, a community college, or a for-profit college, is not what it used to be. After the GI Bill in 1944, there was a radical shift in accessibility to higher education. A college degree was no longer reserved for the wealthy. But in 1970, another turning point came when public investment in higher education dropped off, and students and families started borrowing to pay for the college education they now saw as a “ticket to the middle class.”
  • Since then, Americans have started borrowing more money than ever for higher education. Student loan debt in the U.S. is now bigger than credit card debt. Since the recession, tuition and fees have skyrocketed. In Arizona, parents and students have seen a 77% increase in costs in the last five years. In Georgia, it’s 75%, and in Washington state, 70%. Overall, tuition expenses have grown 1,225% in the last 36 years, compared with a 634% increase in medical costs and a 279% increase in the consumer price index. The higher cost can’t be disputed. To the question of whether college is still “worth it” today, there is certainly no consensus.
  • Unfortunately, along with the rising costs, students have a terrible job market to reckon with. And alarming rates of student debt are no help. The Project on Student Debt says that 15% of borrowers default within three years of entering repayment, and at for-profit colleges the rate is 22%. And largely, the problem is that students are having trouble finding high-paying jobs to pay back that debt. Recent estimates have 25- to 34-year-olds at higher unemployment rates than the general population.
  • Public attitudes on the current value of college are mixed. According to a Gallup poll in 2010, 77% of parents said it was “somewhat likely” or “very likely” they would be able to pay for college for their oldest child. In 2014, the number dropped to 69%. But while they are struggling to afford it, polls often suggest that Americans still see a college education as an essential.
  • A 2012 study from the Pew Research Center showed that 57% of Americans said colleges fail to provide students with a good value for the money spent, and 75% said college is too expensive for most Americans to afford. At the same time, 94% of parents expected their child to go to college, and 86% of college graduates said they believed their schooling had been a good investment. This suggests that while Americans acknowledge that college has become too expensive, many are still willing to pay for it, even if it means taking out large loans.
  • A more recent Pew Research study pointed out that it is much more costly not to go to college. According to the study, compared to those with only a high school diploma, college graduates aged 25 to 32 working full time earn approximately $17,500 more annually than their peers who have only a high school diploma. Thus, when comparing college grads to non-college grads, the choice may appear simple. However, this issue all depends on the perspective you take.
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