For about the last decade, partially as a result of a set of studies by the College Board, college leaders have argued that a college degree is worth about a million dollars more than a high school diploma over a life time.
There is some data that makes that credible. On average college graduates do make more money than high school graduates. Especially when you add in people above a BA. But the College Board model is crude.
Were I to build a model here are some considerations I would take into account.
#1 - What is the discount rate of the value of foregone income during the time the student is in college? That has to be averaged over a lifetime.
#2 - Is there an anomaly in the data for the last couple of decades? As we increased the number of college graduates their marginal incremental value should have decreased. That might well be mitigated by the number of expected retirements of all the boomers who will begin to retire in large numbers in the next couple of years.
#3 - What is the net present value and change in buying habits caused by students who take out loans to finance their educations? Many students come out of college with $20,000 in debt or more. That needs to be factored in. Student loans may delay things like housing purchases which could well change the value of certain other inputs in the economy.
#4 - Do various degree programs offer a higher or lower premium? Engineers and nurses have a higher starting salary but there is at least some evidence that liberal arts graduates may have a longer term advantage - that may also be related to where you go rather than what you study.
#5 - What are the long term effects of delayed graduations? We know that students in community colleges, state colleges and lower selectivity independent colleges take longer to get a degree. Ditto for part time students of all types. What are the effects on the shape of the economy for those delays? What are the economic effects of having a fairly large number of students who enter but do not graduate from college?
There are clearly some huge societal benefits for having more students graduate from college. But the simple minded calculation based simply on income is increasingly silly.
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I would like to see a study taking these points into account, especially the increasing debt students are taking with them after graduation.
Your first point is interesting as well. I would think that as college graduates continue in their fields, they have the credential to move higher up the ladder to better paying positions, thus eliminating the "head start" of those working immediately after high school. Those without degrees eventually hit a ceiling, if they are not entrepreneurs. It would be interesting to see if the research bears that out. And of course, what of those returning to college much later, once they are in their fields, to get degrees?
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