One of my favorite questions, the monetary value of a college degree, is back in the buzz. Last week the Wall Street Journal ran an article asking What’s a Degree Really Worth, with the alternate title "Earnings Gap Between College and High School Grads Small."
It seems that for some number of years the College Board, the lobbying
group for colleges, had been citing $800,000 as the difference between lifetime earnings of college and high school graduates. They got that number by taking the difference in average annual salary for high school and college grads as measured by the Census Bureau (about $20K) and multiplying that by a lifetime of work. (Which apparently is 40 years. I would have guessed higher.)
It is a very crude calculation, but then I am not sure that the College Board ever claimed otherwise. According to the WSJ, until December their website did say that
Over a lifetime, the gap in earning potential between a high-school diploma and a bachelor of arts is more than $800,000. In other words, whatever sacrifices you and your child make for [a] college education in the short term are more than repaid in the long term.
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Because it can.
This week the College Board (the SAT people) released their annual survey of college tuition and found what they always find. College got more expensive 
last year. This time ’round public colleges went up 6.5% and private ones 4.4%, both of which are pretty steep increases when compared to the 2.1% decline in the CPI over the same period.
This was a particularly bad year for the tuition vs. inflation comparison, but the overall trend is striking. According to the College Board, over the past thirty years the average tuition cost has tripled in real inflation-adjusted terms. It’s hard to think of anything else we buy that has gone up as much. It would be like paying $12 a gallon at the pump.
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There’s a good post today at Wise Bread making the argument that going to college just for the learning doesn’t make sense. In a nutshell, the post makes the case that, with only some peculiar exceptions, a person can learn 
stuff just as well and a lot more cost effectively on their own. I couldn’t agree more.
Of course, a person should probably go to college anyway. It’s just that learning things is not, per se, reason enough to spend four years and a modest fortune in tuition. There are good dollars and cents motivations for college and keeping a clear head about them is important.
(I haven’t researched this, but I write this blog under the assumption that my readership amongst high schoolers is zero. So to a certain extent this discussion is, you will pardon the expression, academic. Perhaps there are parents of high schoolers reading.)
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Suppose you are a high school senior with a lot of foresight and a bottom line outlook. Naturally, you would want to pick a college based on how much its degree will be worth in future earnings. Conveniently, there is a website called PayScale "a market leader in global online compensation data" that recently 
published a list of median salaries by college. They list both what graduates got right out of school and "mid-career median salary."
The methodology of the survey leaves a lot to be desired. Firstly, it is not a random sample, but based on the data entered by college graduates who signed up with PayScale. That happens to be rather a lot of people, but it is still hard to avoid the assumption that the data is skewed in some way.
Secondly, and maybe more importantly, holders of graduate degrees were excluded. As quoted in the New York Times’ Economix blog, Al Lee, PayScale’s director of quantitative analysis attempted to justify this.
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Our elected leaders are currently working up a head of steam to reform healthcare. Good luck with that. The mere fact that they vaguely call the effort "reform" tells you it’s going to be a very steep hill to climb. What nobody wants to say out loud is that the big problem with healthcare is that we spend so much on it, and we can’t spend meaningfully less on it without getting less of it. Like I said, good luck.
In the US, we spend about 12.5% of GDP on healthcare, a higher percentage than any other developed country. However, I think we can all agree we get 
rather a lot for our money. In contrast, we spend 2.6% of GDP on higher education, also the highest developed world percentage. And of course, we get something for our money here too. I for one am glad our doctors went to medical school. But dollar for dollar I think we’re getting a lot more value from healthcare.
Why do we spend so much on higher education? And why isn’t it considered a crisis worthy of reform? Part of the problem is a cultural attitude that higher education is a kind of higher calling. Attending college is a good thing in an abstract and noble way that doesn’t lend itself to cost benefit analysis. Asking if it is a wise investment in dollar terms just seems tawdry.
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group for colleges, had been citing $800,000 as the difference between lifetime earnings of college and high school graduates. They got that number by taking the difference in average annual salary for high school and college grads as measured by the Census Bureau (about $20K) and multiplying that by a lifetime of work. (Which apparently is 40 years. I would have guessed higher.)
College, Media | Frank Curmudgeon | 
February 9, 2010 12:59 pm | 
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