With U.S. presidential contenders such as Bernie Sanders proposing tuition-free education at public universities, I will examine a series of increasingly relevant education issues through an economic lens. Is it worth paying rising tuition bills at universities? What alternatives might one pursue to four years at an undergraduate institution and why? How much, exactly, is a bachelor’s degree worth?
First, a monetary analysis. According to the College Board, in the 2015-16 academic year, the average cost of tuition and fees was about $32,000 at private colleges, compared to roughly $9,000 for state residents at public colleges. Out-of-state residents at public colleges fared significantly worse than their counterparts, with a price tag similar to private colleges at $24,000. At Columbia, this year’s sticker price was about $66,000– more than double of the average private college!
With the Fed’s decision to raise interest rates in December and economic instability abroad captured by events such as the Shanghai Composite’s recent crash, it is no surprise that many people are increasingly questioning the monetary viability of a bachelor’s degree in today’s climate. For their part, universities are quick to point out that college degrees empirically pay off. For example, in 2014 Georgetown released a study arguing through Census Bureau data that the average college graduate makes one million more dollars over a lifetime. This is corroborated by a briefing paper from the Economic Policy Institute, which finds that college is especially worth it for young people, as young college graduates are unemployed just 7.2% of the time versus high school graduates at 19.5%.
There does seem to be some empirical basis, then, for the claim that attending college is worth it, provided that one can afford those four years. That barrier to entry though, does seem to be the issue for many people. According to the National Center for Education Statistics, “The percentage of first-time, full-time undergraduate students at 4-year degree-granting institutions receiving financial aid increased from 80 percent in 2007–08 to 85 percent in 2012–13.” When the vast majority of students are on financial aid, the question switches from whether college is worth it to a question of if college is a viable option at all.
Fortunately, there do appear to be other options. In the past, vocational school was a popular alternative for students seeking to be involved in niche job markets. Many of these jobs even pay well above the national average, with PayScale reporting salaries of $58,227 and $69,749 for nursing instructors and high school teachers respectively, compared to a median household income of $51,939. Another popular alternative has been military service, with the starting salary of an American Army soldier at $21,095 to $80,901. Rather than becoming career servicemen, many soldiers have opted instead to take advantage of the GI Bill, which offers significant financial assistance in attending school after service.
With the latest Census Bureau data indicating that about 39.9% of 18- to 24-year-olds are enrolled in college while 40.4% of all students enrolled being over the age of 25, it is clear that much can and ought to be done to improve matriculation rates. Whether the solution is to funnel public debt from one sector, such as the military, to education or instead to slash public spending in favor of private student-sponsors (who gain a percentage of future earnings in exchange for paying for tuition) remains uncertain. Whichever presidential candidate is able to construct the most compelling narrative for conferring that one million dollars in a bachelor’s degree will likely be rewarded accordingly in the polls.
One could further argue that the intangible benefits stemming from a college degree – social opportunities, personal growth, and so on – necessitate much more than a price tag. But, strictly speaking from an economic perspective, the data does seem to indicate that a bachelor’s degree is worth quite a lot. Only time will tell whether more people will be able to access the benefits of college, but the data seems optimistic. Since 2000, there has been a 4.5% increase in the number of 18-to-24-year-olds enrolled in college. Particularly worth noting is that many of these increases can be traced to minority enrollment, with the percentage of black college students rising from 11.7 to 14.7% and Hispanics from 9.9 to 15.8%. There is good hope for the future. And, at least in the status quo, a college degree does seem to be worth it.