This
article from The Economist looks at a recent study conducted
by PayScale, a research firm, which collected data from graduates of over 900
universities and colleges on their degree and earnings. The results of the
study are consistent with much of the recent rhetoric; the return on investment
for higher education is less than the return on the decision to forgo college,
unless you study a lucrative field or attend one of the best universities.
Prestigious universities like UVA, Georgia Tech, and Harvard have average
annual returns after 20 years of over 15 per cent, whereas schools like
Fayetteville State University and Shaw University have double-digit, negative,
average annual returns after 20 years.
By the way, OWU ranks 191 with an annual ROI of 5.7% (8%
with aid) and Denison ranks 565 with an annual ROI of 4.6% (6.8% with aid).
Not everyone needs to go to college and many people waste their years there. It is not necessary to have a degree for every job and in fact much of the work force is composed of people that do not need a degree. They would make more economical use of their time to just join the work force directly out of high school.
ReplyDeleteThe return on investment for higher education is decreasing can be attributed to more people attending college these days. There are not enough jobs for those who are currently enrolled or graduating college. Too many people earn a degree and never receive a better job opportunity than if they had never even gone to college.
ReplyDeleteI agree with what Matt is saying. The lack of jobs seems as though it is creating an increasing trend in which high school graduates are forgoing college due to the idea that if they don't make money "right now" they will be in a worse situation if they are to attend four years of college.
ReplyDeleteI think the natural process of markets adjusting to a more stable equilibrium amount of college graduates is proceeding. For some time, the returns to a college degree increased demand for a degree at all levels of quality (and price). The certainty of enrolling a full class also allowed universities to increase costs. Understandably, the supply also increased, and newer, less distinguished universities came on the scene to serve students with lower academic credentials. These degrees were worth less than other degrees, which brought down the average ROI. The declining ROI, as you showcase Chris, is causing people to rethink attending college. This is a rational decision and the demand curve is going to return to a more normal place. The federal government has not done this market-like mechanism any favors. By giving individuals low interest (or no interest!) college loans, the government lowered the opportunity cost and accounting cost of attending school. Without that money, people would have likely wised up much sooner, and we would already be at better place: fewer, better colleges and universities and (on average) more valuable diplomas.
ReplyDeleteAlthough college is not compulsory, people go for better jobs because having a degree or certain title (s) is a great advantage in obtaining a vocation. It's easier so people send their sons and/ or daughters to college.
ReplyDeleteHowever this research makes it rather irrelevant and since there are so many people earning degrees and there aren't enough jobs for them either.
To add on Lucas's point, it seems that if you want a good job or a job at all after college, more and more people need to go to graduate school or enroll into other post-school programs. This just adds to more debt, and with the average college tuition going up every year, it becomes less and less important to go to college.
ReplyDeleteIt is true that going college isnt the only way for people to be successful. However, going to college and then to graduate school will increase the likelihood of individuals to obtained better and high ranking positions in various business. A more qualified individual is more likely to get better jobs. Colleges just have to be sure that the money their students are paying are worth what they are providing them.
ReplyDeleteThe college degree is a kind of signal for the employer,meaning a student can proof their ability among candidates. I think it is true that the value of higer degree generally decreased. One of the reason is incresing the number of people having higer degree. In other word, if people doesn't have higer degree, the income should be decreased. Now, global economy makes the income of worker of rich countries decrease. So, It is natural the income is falling. And this doesn't means the college education is meaningless.
ReplyDeleteCollege depends on the needs and wants of the individual. If you go to college for the wrong reasons or just because everyone is going, you are not going to get the benefits of it. Thats why I think the numbers are not as good to people who benefit from it more then the people who do not.
ReplyDeleteI think the decision of what to major in can sometimes be more important than the decision of where to study. There are certain majors that "All doubtless nourish the soul, but not all fatten the wallet." Students need to decide whether they want to pursue something that they truly love and are passionate about or will bring them money...or is it possible to do both?
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