College Is An Economic Gamble That Doesn't Pay Off

In 2005, young people (ages 18-25) in the US gambled $67 billion. Not in Vegas or online poker rooms, but on a betterment program called college. REEF's economic analysis shows that college is a financial mistake for more than half of the American young people today. A college education is an extremely poor economic investment for private universities and while better for public institutions still poses a meager return when compared to typical investments. Read more at:
http://www.aboutreef.org/is-college-worth-it.html

Comments

[Kevin Guidry]

Hold on a minute - some of these numbers don't make sense to me.

The assertion that "private schools cost more" is repeated in several places and is used as a fundamental basis for both calculations and conclusions based on those calculations. The author acknowledges that public institutions "receive substantial sums of state and federal tax money defraying the cost to the student" but he doesn't seem to factor this into any of his calculations. Comparing the subsidized cost of a public education with the full cost of a private education and then concluding that "public education is cheaper!" just doesn't seem honest from any perspective but that of an individual (and somewhat selfish) student. I understand that this analysis is written and the calculations made from that perspective but to separate the role of a student from that student's role as a taxpayer (and the generations of txpayers that have come before and after and those who pay taxes but do not attend college) seems to be quite silly, to put it lightly.

I also do not understand how he arrived at the asserted "average costs" of a bachelor's degree (and let's not forget that this article only discusses bachelor's degrees). He states at the bottom of the article that he obtained the average annual cost of a year of college and the average number of years to completion from the College Board. First, he was willing to use data from the College Board when he explicitly rejected data from the institutions themselves in favor of Census data. That raises some concerns about methodological soundness and consistency. Second, there is an implicit assumption that students are enrolled full-time for the entire time during which they are earning their degree; that assumption appears to be unsupported by any evidence. Maybe it's true but it seems a bit far-fetched that the average time to completion for full-time students is as high as the author states (6.2 years in public institutions and 5.3 in private institutions). The cited source for this claim certainly does not support this claim.

If the author's claim that the time-to-completion statistic is based on uninterrupted full-time enrollment is incorrect then it represents a huge flaw in this article and the calculations on which it is based. If there is evidence supporting that assertion, I have missed it. Further, multiple studies confirm the common-sense notion that part-time enrollment or lower course-loads (often, but not always, leading to lower annual costs) lead to longer time-to-completion: http://eric.ed.gov/ERICDocs/data/ericdocs2/content_storage_01/0000000b/80/24/9c/d7.pdf http://eric.ed.gov/ERICDocs/data/ericdocs2/content_storage_01/0000000b/80/22/01/89.pdf and http://eric.ed.gov/ERICDocs/data/ericdocs2/content_storage_01/0000000b/80/11/29/95.pdf to name a few.

In sum, I believe there are multiple serious methodological problems in this article and its calculations. This is far too complex an issue with many subtle nuances that can not and should not be glossed over, downplayed, or ignored. It sure would be nice to boil down the costs and benefits of higher education to simple dollars and cents but you can't. And you certainly can't compare those costs and benefits with the financial gains or losses made possible by speculative financial investing or trading. You're not just trying to compare apples and oranges - you're trying to compare rocks with pine needles.

As a "true believer" in education, I am very biased and more than just a little skeptical of this article's claims. But from a scholarly point of view it seems to be very shaky and methodologically unsound. Am I wrong? Is my defensiveness misplaced?

[Jeff]

Think knowledge is expensive, try ignorance.--Abraham Lincoln