Does College Provide a Return on Investment?

June 7, 2013
graduation cap

I’ve been reading more and more articles calling into serious question the economic sense of completing a college degree. I’m a Gen-X guy and grew up hearing that an undergraduate degree was the new high school diploma. It was a minimum educational standard for “real world” preparation. In college I struggled as one heavily dependent on student loans with the decision to take courses that might best position me for success in the business world and classes I found interesting and intellectually stimulating. Those two things are not mutually exclusive for everyone but at the time, they were for me. In retrospect, a good deal of my “education” came from this struggle. It’s hard to quantify the value of knowing an E.E. Cummings poem if that knowledge doesn’t translate into a hard skill. A liberal arts education anymore it seems has become a means to an end and for those who have a hard time coming up with the funds, college and areas of study in college have sadly become business decisions.

Business week ran a good piece a year ago on this trend. http://www.businessweek.com/reports/business-schools/college-investment-does-it-pay. As the article points out, it still pays to get a college degree. Kids who graduate earn almost a million more in lifetime-earning on average than those who only had high school diplomas. However, many students are avoiding degrees in areas that don’t pay as much out of school, especially as tuition continues to rise and student loan debt makes lower-paying jobs in non “hard science” fields untenable. Check out this WSJ piece on Harvard’s decline in Humanities majors. This is the football equivalent to the NFL switching to an option style of offense. Article Here.

There is a growing debate about the role of higher education. Some feel that education should prepare students for economic success after graduation where others feel, that the humanities make for well-rounded citizens play a role in the market economy as well. Tuition increases have been the greatest at 4-year private colleges and universities. Real tuition at the 4 year institutions has more than doubles since 1980. The question as I see it is will we reach a point where businesses need to liberalize their standards of on-paper qualifications if we see a rise in people entering the workforce without a 4 year degree? Will the decrease in students studying humanities and liberal arts re-define the caliber of an average, college-educated employee in any industry?