The True Value of College: Stepping Away from the Roses

As the result of the stagnation in the hiring of college graduates in the aftermath of the Great Recession, a debate about the economic value of pursuing and receiving a four-year college degree in the United States has emerged. For most Americans in the post-World War II era, a college education was an unquestioned economic good but, as society has increasingly transferred the cost of such education to individual students (and their families, who often assume large debt to defray these costs), this assumption has come under increasing scrutiny.

Generally speaking, and to no one’s particular surprise, economists, academics, the mainstream press and establishment figures are generally rising up to defend the value of pursuing a college degree. Recent examples of these defenses, typical of most, have appeared in the Huffington Post, the New York Times, CNN Money and the Economic Letters of the San Francisco Federal Reserve Bank.[1][2][3][4]

On a more colloquial level, anyone who has had the misfortune to have to sit through a droning academic administrator’s address at a convocation, faculty meeting or commencement will have heard him or her voice some version of the assertion that “a college degree is worth more now than ever.”

Overwhelmingly, these defenses fail to be convincing on several counts.

First, statistically, such analyses treat “a college degree” as an undifferentiated, single entity largely because they all rely on aggregate data from the Bureau of Labor Statistics. Thus, economic results concerning MIT engineering graduates and social services majors from, say, Minot State University are averaged together. Conclusions drawn from such macro-data are likely an inapt source of guidance about the true prospects of the latter, a much smaller institution with a lesser-known brand than MIT. A finer analysis, considering both the characteristics of individuals who receive degrees and the institutions that grant them, is needed before offering meaningful, individually significant advice regarding the value of pursuing postsecondary education.

Second, studies defending the value of attending college are based on the “value added” by doing so — that is, the earnings premium enjoyed by a college graduate over someone with only a high school diploma, either in absolute or relative terms — after the cost of pursuing a bachelor’s degree has been subtracted from earnings differences. Rarely in such studies is the possibility mentioned, much less quantified, that the observed difference owes more to the decline in real wages for high school graduates than to the growth in constant dollar earnings for college graduates. In fact, constant dollar earnings of college graduates in aggregate have stagnated over the past decade.[5]

This point is significant.

In advising people to follow the traditional college model on the basis of such earnings-difference evidence, we’re perpetuating the current model and ignoring and abandoning the idea that we might construct meaningful educational alternatives beyond secondary school, outside of the conventional four-year-college paradigm, which will be a more efficient means for many students to achieve their economic goals.

Finally, studies about the lifetime earnings of college and high school graduates are necessarily retrospective. Conclusions drawn by those who seek to demonstrate the continued value of going to college for those yet weighing the decision are, of course, about the future —  the unknowable future. Obviously what has already happened is the only empirical evidence we have for determining how to proceed into the future but, as any statistician of value will tell you, caution is needed. In this case, the dynamic recent changes in the world economy generally and the domestic job market specifically should severely dampen our enthusiasm for making confident predictions that the near future will look like the past. Moreover, again, by committing to a dichotomy of prediction, the prospects of college graduates as against those with only a high school diploma, we’re foreclosing the possibility of a future in which other, better alternatives are constructed. Indeed, such alternatives already exist elsewhere in the technologically-advanced and economically privileged world, in Germany for example.

I don’t suggest that I have a ready answer about how to proceed. I think a reasonable first step is to get a clearer picture than we currently have of what becomes of college and high school graduates, across institutions and individuals, once they’ve graduated and enter the economy. I don’t dismiss the non-utilitarian value of postsecondary education. However, from many years of teaching mathematics at a wide variety of postsecondary institutions, I think it fair to say the economic motive for study is the predominant one for most students. Thus, it should receive primary attention when we consider how to construct, or reconstruct, our system of postsecondary education.

Restructuring will not be easy. A large institutional infrastructure has built up around the current higher education model, an educational-industrial complex so to speak, consisting of administrators, staff and faculty, none of whom is likely to be well-disposed to radical departure from the status quo ante. As such, change will be difficult and unlikely to succeed unless a widespread societal consensus emerges that change is needed and that the proposed changes represent improvement.

That’s difficult to imagine in the current political environment. Moreover, unless the structure of our economy changes to provide meaningful work for more people, and those who hire are prepared to accept a reformed system of postsecondary education and concomitant credentialing, any changes we make in our educational infrastructure will be unlikely to have significant benefit for very many students.

Guaranteed, however, is that no positive change will happen until we acquire a more detailed understanding of the current connections amongst individuals, educational levels and institutions, employment and the economy. And we will not gain that understanding so long as those who should know better reflexively crouch behind the mantra that “going to college is always better.”

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References

[1] Ricardo Azziz, “The Great Debate: Is College Still Worth It?”, The Huffington Post, January 9, 2014. Accessed at http://www.huffingtonpost.com/dr-ricardo-azziz/debate-college-worth_b_4561068.html

[2] Dave Leonhardt, “Is College Worth It? Clearly, New Data Say”, The New York Times, May 27, 2014. Accessed at http://www.nytimes.com/2014/05/27/upshot/is-college-worth-it-clearly-new-data-say.html

[3] Annalyn Kurtz, “Yes, a College Degree Is Still Worth It”, CNN Money, June 24, 2014. Accessed at http://money.cnn.com/2014/06/24/news/economy/college-worth-it/

[4] Mary C. Daly and Leila Bengali, “Is It Still Worth Going to College?”, FRBSF Economic Letter, May 5, 2014. Accessed at http://www.frbsf.org/economic-research/publications/economic-letter/2014/may/is-college-worth-it-education-tuition-wages/

[5] Heidi Schierholz and Lawrence Mishel, “A Decade of Flat Wages, the Key Barrier to Shared Prosperity and a Rising Middle Class”, Economic Policy Institute, August 21, 2013. Accessed at http://www.epi.org/publication/a-decade-of-flat-wages-the-key-barrier-to-shared-prosperity-and-a-rising-middle-class/