ABSTRACT
Higher education costs have increased greatly in the last thirty years, in part because of increased federal and state spending and growing enrollments. In the recent recession, though, high unemployment and student debt among graduates have raised questions whether a four-year degree is still worth the investment. In certain fields, particularly science and technology, university graduates will have higher lifetime incomes than those with high school diplomas, but this is not the case for those with liberal arts degrees. Universities have been reluctant to change their policies in an era of reduced public spending, despite government demands for lower costs, although the current economic difficulties are already causing major changes in higher education.
Getting a college education in America in 2013 is an expensive proposition. According to Neal Conan, NPR news commentator “college tuition and fees rose over 400 percent between 1982 and 2007”, which is a 400% increase in just 25 years (NPR 2011). Not surprisingly, “75 percent of Americans say college tuition is too expensive” and wonder if a four-year degree is still worth the cost. Clearly it is not for everyone, given that 40-70% of students that enroll in college today will never finish yet they are still saddled with high debts. For those who have technical, professional or scientific degrees, lifetime earnings will be much higher than those with high school diplomas, but that is never going to be the case for those with liberal arts degrees. They will just continue to b a cohort of overqualified people filling jobs that really do not require higher education. All of this raises questions about whether the cost of higher education is still justified in an era of high costs, high unemployment, reduced salaries and lower federal and state expenditures on education. Even with all of these factors, completing a college education will still pay off in the long run. Students in higher education will have to carefully consider all these factors in the present-day environment, including the need to keep their student loan debt as low as possible. A liberal arts degree is probably not ‘worth it’ in purely economic terms, nor is attending an expensive private university when cheaper public alternatives are available. This means that all prospective students should do their own cost-benefit analyses of whether a given degree program is really a good investment of time and money.
Over the last thirty years, the cost of American higher education really has risen out of the reach of many working class and middle class families, even though more people are enrolled that ever before. No other Western nation spends as much on colleges and universities as the U.S., although the actual number of four-year degrees granted has not increased greatly (Harris, 2013, p. 3). Although the majority of people surveyed realize that the higher education system is “going in the wrong direction”, there are no simply measures to reduce costs under the present circumstances (Adam, 2012, p. 58). In education, increasing class sizes and course loads has a highly detrimental effect on overall quality and productivity. Full-time faculty members have an average of $74,000 per year, while part-timers make $16,000, which are not extremely high salaries by private-sector standards (Harris, p. 8). In four-year colleges, two-thirds of all courses are taught by full-time faculty, and the graduation rate might increase by as much as 10% is all of them were, while quality would also improve with more spending on student services, counseling, healthcare and remedial classes (Harris, p. 11). Given that cost-containment possibilities are very limited in higher education, however, many people are concerned that the ultimate payoff simply would not be worth the expenditure of time and money. Nevertheless, about 86% of college graduates surveyed report that they have personally benefitted from their degrees (Adam, p. 59). Those with four-year degrees on average earn $20,000 more per year than those with high school diplomas, according to 2010 Census Bureau data. Provided that student loan debt is minimized or eliminated, most four-year graduates will have greater opportunity and earning potential compared to those who only finished high school.
About half of students in California had loans in 2010, while only half did ten years before, and the loan sizes have increased up to $8,000 in the first year. This is even higher at private and for-profit universities averaging $9,100 compared to $5,200 at public colleges and universities. In California, costs have remained |relatively low, and financial aid policies have kept the debt load smaller than the rest of the nation” (Dulaney 2013). Those who graduate with four-year engineering degrees have a median salary of $96,000, while teachers earn $57.000, compared to only $39,000 for high school graduates. In California, those with four-year degrees will have double the lifetime earnings of people with high school diplomas, and about one-third the level of unemployment (Dulaney 2013). Yet in the present recession, good jobs are in very short supply for recent graduates, and nearly half have taken jobs that do not require university degrees. Finding positions is also easier for those with professional and specialized degrees than liberal arts graduates. At the same time, California will have a shortage of one-million college-educated workers by 2025, particularly those with specialized and technical degrees. Over the last ten years, state subsidies to four-year universities and community colleges fell by $4 billion (Dulan2y 2013).
There are skilled jobs available to those with only high school diplomas such as plumbers who make six-figure incomes. Not everyone can or should go to college, although they will tend to make more money over their lifetimes, while there are also “lower crime rates among the educated, healthier social interaction and the higher likelihood of participation in the public square” (Dulaney 2013). On average, a four-year degree costs $102,000, but yields extra income of $600,000 to $1 million over a lifetime. Today student loan debts are over $1 trillion, and about 70% of students in community colleges and 49% in four-year universities drop out without earning a degree. Even so, in almost all cases they are forced to pay off student loans for many years. Students have to be very careful in choosing the right kinds of schools and degrees, or risk spending a great deal of money for no return. Both public universities and exclusive private schools offer the highest returns on investment, although the latter also have the highest costs. Degrees in science, technology and mathematics will always lead to the highest incomes, while those with liberal arts degrees may end up making less than high school graduates. Even more important than certain skills, what employers need most today are “graduates who can demonstrate that they know how to think. That means simply repeating back information to a professor may get a great grade, but not a job” (Dulaney 2013).
Richard Vedder, an economist, argued that no free market existed in higher education, which did not obey the ‘rules’ of a market economy in any case. Apart from the relative small for-profit sector in higher education, universities did no behave like corporations, and their administrators and faculty did not “get rewarded by being efficient, by teaching more students for the same amount of money or whatever, by using buildings efficiently, six, seven days a week” (NPR 2011). Their goal is not to reduce spending but increase it so they attract more students and reduce faculty teaching hours. They also receive a lot of government and nonprofit money as well as charitable donations, so they should never be confused with regular businesses. Often the donated money is for a building named after someone, which involves prestige and ego more than purely economic questions of profit and loss. Prestige and success is also associated with being very selective about students and the ability to turn away 80-90% of applicants, which has become more common at elite institutions like Harvard (NPR 2011). Wal-Mart or McDonald's on the other hand take any customers who come through the door and can hardly afford to be too selective with employees either. Higher education is also the type of profession where department heads and administrators have to please the faculty, and will lose their jobs if do not. Universities do make full use of their equipment and physical facilities like private businesses, since they are almost closed for three months of the year, as well as on evenings and weekends.
Public universities are still cheaper than private ones, and graduate schools have more money for research, teaching assistantships and scholarships. Public universities cost about $17,000 per year compared to $40,000 for private universities, although the costs of both have increased far above the inflation rate in the last thirty years (NPR 2011). According to the President of George Washington University, Steve Trachtenberg, only a minority of the students enrolled pay the posted price”, but the rest have grants, scholarships, loans and work-study (NPR 2011). Very wealthy people pay full tuition, but not those from poor and working class backgrounds. Trachtenberg personally believed “that people who can afford to pay for a quality private education ought to, and some of that money ought to be used to discount the tuition for outstanding students who can't otherwise attend” (NPR 2011). Universities also have higher costs than thirty years ago because of the new technology that has been developed in that time, which often has to be updated and replaced, while counseling and security services cost far more than in the past, especially with the increase of young people on medication. Debt burdens are increasing greatly because graduates are unable to find jobs in the present economy, but universities have no control over that. Tuitions would also be lower if the U.S. had a national health insurance system, since the cost of providing health insurance adds thousands of dollars.
In the 1960s, higher education spending was about 1% of the economy compared to 3.5% today, serving a much larger and broader student body. Far fewer working class and minority persons were able to go to college in the past, and this is bound to increase costs. In 1970, the federal government spent about $1 billion on higher education compared to $100 billion in 2010, yet this did not keep up with the rising costs of tuition (NPR 2011). At the same time, the actual number of jobs requiring higher education have not increased at the same pace, so “we now have a mismatch between the number of college graduates and the number of jobs of the traditional kind reserved for college students, college graduates - managerial jobs, technical jobs, professional jobs” (NPR 2011). Even 25% of airline attendants have a university degree, and this is hardly the type of job that really requires high education. Universities produce research because the faculty has to in order to be tenured, but Vedder questioned whether society needed 21,000 books on William Shakespeare in the past twenty years (NPR 2011).
High education costs have increased greatly over the last 30 years, and while state and federal expenditures have grown as well, they have not kept pace with the higher price of a four-year degree. Colleges and universities have only limited means to reduce these costs, given expanded enrollments, the high costs of student services and new technologies, and the problem of already having too many adjunct and part-time faculty members. These costs have increased the student loan burden to over $1 trillion, which is a higher level of indebtedness in any other area except mortgages, and unlike private debts it generally cannot be reduced or eliminated through bankruptcy. In an era of high unemployment and falling incomes, many families wonder whether making the huge expenditure of time and money for a four-year degree is really worth the cost. This is especially true because the majority of people enrolled in colleges and universities no longer finish their two and four-year degrees, but they still have to pay the costs. Clearly higher education is not for everyone, and there are skilled jobs available to high school graduates that are well-paying—at least in good economic conditions. An expensive, four-year degree in liberal arts from a private university is certainly not a good option for most students from working class and middle class families. For the most part, they have to consider lower-cost public colleges and universities instead, where the burden of student loans will not be so high at the end of four years. In addition, they would be well-advised to pursue technical, scientific and professional degrees that are more valued in the marketplace. Under these criteria, a four-year degree is still more valuable than a high school diploma, but this is a matter that requires far more careful planning and consideration than thirty years ago.
References
Adam, M. (2012). “Is College Worth It?” Education Digest, 77(6), 58.
Dulaney, Josh (2013). “Despite Debt Load, College Still Called Good Investment.” The San Bernardino Sun, June 5, 2013, p. 7.
Dulaney, Josh (2013). “College Still Deemed a Smart Investment.” Daily Breeze (Torrence, CA), June 5, 2013 News, p 1.
“Does a College Education Have To Cost So Much?” (2011). Talk of the Nation (NPR).
Harris, D. N. (2013). “Stretching the Higher Education Dollar: Addressing the Declining Productivity of Higher Education Using Cost-Effective Analysis.” American Enterprise Institute, Special Report.
