Is College Worth The Cost?

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My church is full of college students. I have sat down and talked with many of them about how they are going to pay for their loans when they get out of school or now that they are out of school. It is sad how few of them understood what they were getting into when they signed on the dotted line.

In constant 2010 dollars the cost of a college education at a 4 year public institutions have increased 145% from 1990 to 2010. (http://nces.ed.gov/fastfacts/display.asp?id=76). That seems like a lot and since the jobs young people are promised when they graduate are not so easily found many people are questioning the decision that for so long has been a given.

Image from: http://www.finaid.org/savings/tuition-inflation.phtml

How does that compare to general inflation? Not very well if you are the one looking to fund an education. Inflation, the purchasing power of your money has been out paced by the increases in college costs.You can think of inflation as the amount the price of consumer goods increase on average. Either we can remember or our parents have told us stories of how things used to cost less. That is the effect of inflation. The price of consumer goods tends to increase for various reasons over time. However, this chart shows that the cost of college has increased much faster than general inflation, somewhere in the area of 150%-200% faster than general inflation, depending on the year. (http://www.finaid.org/savings/tuition-inflation.phtml)

Does all of this mean that college is no longer the deal that it once was? Not at all. The earning potential of the average college graduate is still much higher than that of the average high school graduate. According to G. Scott Thomas over at BizJournals:

Adults with bachelor’s degrees in the late 1970s earned 55 percent more than adults who had not advanced beyond high school. That gap grew to 75 percent by 1990 — and is now at 85 percent.

That alone could mean the difference around 1 million dollars over the course of a career, assuming one pursues a career that pays reasonably well in the first place.

For the question “Is college is worth the cost?” A fine arts degree may be your hearts desire but there is no guarantee it will pay the bills.

In my opinion the question is “Could I pursue my passion in another way?” Could you pursue an apprenticeship of some sort to learn what you need to know? With the rise of online learning could you learn what you need to pursue your career. I have heard from a few managers in my field that they don’t even pay attention to the education section of the resume in many cases because it matters more what you have actually done in the field.

Maybe you could start your own business or be self employed depending on what you want to do, you can certainly hire yourself without a degree.

Image from BusinessInsider

My fear in working with so many students struggling with college is that I really think we may be on the edge of some sort of education bubble. If you compare the increase in tuition to that of housing prices a few years ago it is staggering. The small bump that we saw in housing prices is noting compared to the skyrocket in costs of tuition. I don’t know that we will see degree foreclosures but I think something may be seriously wrong with they way we are doing higher education. Easy credit and government guarantees are helping more people take out loans but it is also making colleges more expensive as many are building resort style facilities to attract students who bring with them more government backed money. It is a spiral very similar to what we saw with housing I just hope it doesn’t crash as hard or many of us will be hurt in the process.

There are many variables in deciding if college, or what type is best for you and there are many ways to reduce your costs if you take your time and make wise decisions. But, we shouldn’t assume that a four year degree is right for everyone and it is fine if our children make different decisions as long as they are making wise ones. After all it is they who will have to work off that debt in the long run.

Here are some questions to consider:

You loan payment will be approx $100 per month for every $10,000 that you borrow. Can you get a job to make that much with the degree you are pursuing? $100,000 in debt to be a youth pastor ($20k a year) not a good idea.
Is there a different way I can pursue my passion without incurring large student loan debt?
Is the traditional four year college even the right choice for me and what I want to do with my life.
Do I want to work for someone else the rest of my life?

By the time my girls are reaching that age there are a lot more viable options for higher education than pushing everyone into the same college mold. But who knows what the future holds for education.

Cover image by TaxCredits

Is College Worth The Cost?