Making College Cost Less

Career College Central summary:

  • A report by PayScale, a research firm, tries to measure the returns on higher education in America. They vary enormously. A graduate in computer science from Stanford can expect to make $1.7m more over 20 years than someone who never went to college, after the cost of that education is taken into account. A degree in humanities and English at Florida International University leaves you $132,000 worse off. Arts degrees (broadly defined) at 12% of the colleges in the study offered negative returns; 30% offered worse financial rewards than putting the cash in 20-year Treasury bills.
  • Most 18-year-olds in America go to college to get a good job. That is why the country’s students have racked up $1.1 trillion of debt—more than America’s credit-card debts. For most students college is still a wise investment, but for many it is not. Some 15% of student debtors default within three years; a startling 115,000 graduates work as caretakers.
  • If the job market picks up, this dismal picture will improve. But there is another obvious way to increase the returns on a college education: make it cheaper. The price of college has risen more than four times faster than inflation since 1978, easily outpacing doctors’ bills. Much of this cash has been wasted on things that have nothing to do with education—plush dormitories, gleaming stadiums and armies of administrators. In 1976 there were only half as many college bureaucrats as academic staff; now the ratio is one to one.
  • By the universities’ own measures, this has produced splendid results. Students are more than twice as likely to receive “A” grades now than in 1960. When outsiders do the grading, however, they are less impressed: one study found that 36% of students “did not demonstrate any significant improvement in learning” over four years of college.
  • In time, digital education is likely to put the squeeze on universities. Online courses can be provided more cheaply than traditional ones, since they do away with the luxury-hotel aspect of college and involve no assistant deans for campus climate. Already, courses from the Massachusetts Institute of Technology (MIT) are available online, free. Ever more online educators will offer qualifications that employers both understand and value. As that happens, traditional universities will have to provide better value for money—perhaps with a mix of online and in-person tuition—or go out of business.

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THE ECONOMIST
 

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