For the first time in my life, I am questioning the value of certain college degrees. For an economist, life is simple, if the benefit exceeds the cost, do it or buy it or sell it! Average student debt upon graduation is just under $30,000. If you go to a state University, such as my alma mater, UNH, a year at college with tuition, room and board, fees and books will cost approximately $35,000, out of state will be $53,000. A school like Bentley will cost $70,000. I am aware of some Bentley grads who have graduated with over $200,000 in debt. By 2023, 40% of borrowers are expected to default on their student debt. More families are saving for college than in the past. Nearly 20 percent of children under age 18 have 529 plans, or other education investment funds, compared with less than 4 percent in 2001, according to SavingForCollege.com.
A recent survey of 500 college graduates by GOBankingRates revealed some intriguing data about how Americans really feel about the value of their college degrees:
The survey found that, of the respondents polled:
–36% can’t save for retirement
–32% can’t go on vacation
–28% can’t be financially independent
–21% can’t own their own home
–17% can’t pursue a job they’re passionate about nearly 10 percent of those polled carry more than $50,000 in student loan debt, and 37% more than $15,000.
-25% are working in a job that doesn’t require a degree
That is not surprising when you consider the total amount of student loan debt in America is in excess of $1.5 trillion and impacts nearly 45 million people.
If they could do it all over again:
–1 in 4 graduates said they would choose a different major
–19% wish they had studied harder
As for whether college was worth the debt accrued, 58% of adults said yes
As for whether college was worth the debt accrued, 58% of adults said yes
The survey found that, of the respondents polled:
–36% can’t save for retirement
–32% can’t go on vacation
–28% can’t be financially independent
–21% can’t own their own home
–17% can’t pursue a job they’re passionate about nearly 10 percent of those polled carry more than $50,000 in student loan debt, and 37% more than $15,000.
-25% are working in a job that doesn’t require a degree
That is not surprising when you consider the total amount of student loan debt in America is in excess of $1.5 trillion and impacts nearly 45 million people.
If they could do it all over again:
–1 in 4 graduates said they would choose a different major
–19% wish they had studied harder
As for whether college was worth the debt accrued, 58% of adults said yes
As for whether college was worth the debt accrued, 58% of adults said yes
Is it worth it?
It depends on the degree and where you go to college. Let’s first talk in generalities and then move on to specifics. Four years at UNH will cost roughly $140,000. From the attached chart, the average college grad with a bachelor’s degree makes $1173/week or $60,996/year whereas the average high school grad makes $37,024; a difference of $23,972. Doing some quick math, $140,000/$23,972 = 5.84, your education is paid off. But keep in mind, the attached chart is for 25 year old grads and a 2017 article reports that by age 34, you will recoup your college tuition costs. In other words, you will have earned enough money to repay the cost of your degree and make up for your time out of the workforce by the age of 34.
However being an economist let’s look at it another way an include opportunity cost. In other words, if I wasn’t going to college, I would be working; so by going to college, I’m foregoing a year’s salary. Again generalities, as a high school grad, I would be making $28,000/year times 4 years equals $112,000 dollars that I am foregoing by going to college bringing my total cost of college to $252,000. We know divide this by $23,972 (the difference in earnings at age 25) and breakeven is now 10.5 years.
It depends on the degree and where you go to college. Let’s first talk in generalities and then move on to specifics. Four years at UNH will cost roughly $140,000. From the attached chart, the average college grad with a bachelor’s degree makes $1173/week or $60,996/year whereas the average high school grad makes $37,024; a difference of $23,972. Doing some quick math, $140,000/$23,972 = 5.84, your education is paid off. But keep in mind, the attached chart is for 25 year old grads and a 2017 article reports that by age 34, you will recoup your college tuition costs. In other words, you will have earned enough money to repay the cost of your degree and make up for your time out of the workforce by the age of 34.
However being an economist let’s look at it another way an include opportunity cost. In other words, if I wasn’t going to college, I would be working; so by going to college, I’m foregoing a year’s salary. Again generalities, as a high school grad, I would be making $28,000/year times 4 years equals $112,000 dollars that I am foregoing by going to college bringing my total cost of college to $252,000. We know divide this by $23,972 (the difference in earnings at age 25) and breakeven is now 10.5 years.
Let’s now talk specifics. Bachelors in Engineering have a starting salary between $60,000 to $80,000, which definitely makes the degree worthwhile. Business majors are in the vicinity of $53,000 to $65,000. Generally marketing and management degrees start off at the lower end, and Economics, Accounting and Analytic degrees start at the upper end.
But what about some other degrees that are offered, such as Women Studies and Philosophy. To no surprise, liberal arts majors are at the lower end, generally in the mid-thirties. Besides Women Studies and philosophy, these include History, English Psychology, Social work and Elementary Education. Assuming a starting pay of $35,000, compared to a HS graduate of $28,000, I would have a breakeven of $252,000/$7000 of 36 years including opportunity cost, or without opportunity cost $140,000/$7000 of 20 years. Clearly to me, a Liberal Arts Major at UNH is not worth the cost. As an afterthought, what jobs does a women studies major qualify?
But what about some other degrees that are offered, such as Women Studies and Philosophy. To no surprise, liberal arts majors are at the lower end, generally in the mid-thirties. Besides Women Studies and philosophy, these include History, English Psychology, Social work and Elementary Education. Assuming a starting pay of $35,000, compared to a HS graduate of $28,000, I would have a breakeven of $252,000/$7000 of 36 years including opportunity cost, or without opportunity cost $140,000/$7000 of 20 years. Clearly to me, a Liberal Arts Major at UNH is not worth the cost. As an afterthought, what jobs does a women studies major qualify?
What then, is a person to do? There are a number of alternatives. The first is community colleges which are increasingly turning out students with quality degrees. In New Hampshire, community college tuition has increased only 2.4% in the past 8 years and a total price for 2 years at a community college is under $15,000, compared to $70,000 at UNH. For a good student, there is a clear path to a 4 year college after graduating from a community college such as Great Bay in Portsmouth or Northern Essex College located in Haverhill Ma.
Another alternative is an online course from a University such as SNHU, Southern New Hampshire University. At SNHU, an online course will cost $960, significantly lower than a course at UNH at over $4000. My personal preference is a face to face class, but given the cost, and the ineptness of some prof’s (especially those with tenure who concentrate on research as opposed to teaching), the benefit exceeds the cost.
What then, is a person to do? There are a number of alternatives. The first is community colleges which are increasingly turning out students with quality degrees. In New Hampshire, community college tuition has increased only 2.4% in the past 8 years and a total price for 2 years at a community college is under $15,000, compared to $70,000 at UNH. For a good student, there is a clear path to a 4 year college after graduating from a community college such as Great Bay in Portsmouth or Northern Essex College located in Haverhill Ma.
Another alternative is an online course from a University such as SNHU, Southern New Hampshire University. At SNHU, an online course will cost $960, significantly lower than a course at UNH at over $4000. My personal preference is a face to face class, but given the cost, and the ineptness of some prof’s (especially those with tenure who concentrate on research as opposed to teaching), the benefit exceeds the cost.
Two last considerations which will addressed in next month’s blog: why has costs risen so dramatically in colleges and is it worth sending our children to an institution that is a hatchery not for liberalism, but extreme liberalism. Stay tuned!
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