The college penalty

What school will make you poorest? asks Jordan Weissmann on Slate. Every year, Payscale surveys college graduates to assess their earnings relative to their college costs. At almost two-dozen colleges, the average graduate’s “earning power won’t increase enough to justify the cost of tuition,” writes Weissmann. “To be blunt, these schools make students poorer.”

“Payscale doesn’t compare the alums of low-ranked colleges to demographically similar high school grads,” notes Weissmann. So colleges that enroll less-capable students will do worse at raising their earnings.

The Atlantic looks at colleges and majors that are the “biggest waste of money.” For example, “the self-reported earnings of art majors from Murray State are so low that after two decades, a typical high school grad will have out-earned them by nearly $200,000.”

Here are the degrees with the lowest 20-year net return, according to Payscale. Bold names are for in-state students. There are a lot of education degrees on the list.

Unless you’re attending a rigorous, high-prestige university, an arts degree is a risky bet, points out The Economist.  “Of the 153 arts degrees in the study, 46 generated a return on investment worse than plonking the money in 20-year treasury bills. Of those, 18 offered returns worse than zero.”

The Payscale study overstates the financial value of a college education, warns The Economist. It compares graduates’ “earnings to those of people who did not go to college—many of whom did not go because they were not clever enough to get in. Thus, some of the premium that graduates earn simply reflects the fact that they are, on average, more intelligent than non-graduates.”

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  1. Richard Aubrey says:

    The ed degree thing might be understated. Most public ed jobs include substantial benefits, including pretty fat retirement–presuming the entity has the money by then.
    I used to do some benefits work. The cost to the employer is substantial, and the presumptive benefits to the employee ought to be considered.

    • palisadesk says:

      A substantial percentage of those graduates with education majors *never* go into teaching, so that is undoubtedly a factor. Also, both salary and benefits vary tremendously by state and district. In some areas teachers qualify for food stamps and state-paid medical aid for their children.

      I had a 2 degrees in classics and post-graduate ed qualifications. I’m happy with both my “wasted ” time spent studying the humanities (minor in sciences), and with economic return on investment. I’m not in one of the highest-paid districts, but I don’t need food stamps, and the medical plan is good. Good thing I earn enough to buy all my own instructional materials; I would be unable to get the results I do with what the district provides.

      My thought is that people should study the subject(s) that really interest them; trying to plot career paths way ahead of time is a dicey business except in fields like medicine. If you develop mastery of challenging subjects/fields, you will be equipped to do the same in a new area if necessary.

  2. Michael E. Lopez says:

    Once again, while this is good data to have and I’m all in favor of running economic analyses of different sorts of life decisions, there ought be more to college than economic return.

    You might think — and I realize that this is heresy in some circles — that one ought not go to college in the first place if one can’t afford it –in the sense of being happy with the economic outcomes. This might mean being independently wealthy and studying what you wish, it might mean accepting the reduced economic opportunities that come with studying art, wining a scholarship, going to a state school instead of Williams or Amherst, or it might mean only going to college to pursue economically lucrative fields of study. but like everything else it’s an economic choice, which means it’s a choice about happiness.

    In fact, you might think that this is a general rule for life activities.

    But we get into trouble in our thinking about college because people “go to college” not because it’s something they want to do, but because they are told that that’s “what comes next.” College is taken as a given, an inevitable part of our lives. Thus we find ourselves not arguing about whether some particular person or another can afford to go to college, or whether WE can afford to go to college, but whether college is affordable as an institution, and whether or not its costs are justifiable in terms of the larger economy. And then, once we start evaluating college in terms of economic benefit, we start worrying about things like ROI as if they were a *problem* rather than a cost that may or may not be paid to do a certain thing.

    But here’s the God’s honest truth: you’re not supposed to get rich with an art degree. You’re supposed to learn about art. You’re supposed to get *enriched* with an art degree.

    And depending on how attractive a life enriched with the focused study of art is to you, that may or may not be worth sacrificing a good chunk of your life’s earnings.

    • Roger Sweeny says:

      “you’re not supposed to get rich with an art degree.”

      I’m not sure who decides what an art degree is supposed to do. I’m not sure who decides what is supposed to get you rich.

      I do know that high school students are constantly told that if they don’t go to college, they probably won’t get rich–and that they don’t really deserve to.

      • Michael E. Lopez says:

        Oh I don’t know…. Plato, Aristotle… pick someone. No one I can think of with anything to say on the matter says that pursuing, studying, or engaging in art has as its end financial prosperity.

        • Roger Sweeny says:

          Perhaps you should diversify your sources 🙂

          Seriously, there are very, very, very few 18-21 year olds who have made the eyes-wide-open choice, “I am pursuing/studying/engaging in art, knowing that it has no connection to financial prosperity, and that’s okay.” Most assume that somehow it does. And there are lots of people in the education business who will enable them: “You’ll have a degree, and everyone knows that people with college degrees make more money than people without one.” “You’ll be developing transferable skills. ” Etc.

          • Michael E. Lopez says:

            This is, of course, an argument for more philosophy classes at both the college and high school levels. People should think hard about the ends of their actions, and the reasons for their decisions.

  3. Florida resident says:

    Somehow the emphasis in the publication (which I still to read) and in the post by dear Ms. Jacobs is on “_schools_ making you poorer”, not on “_you_” in this sentence.
    That very small percentage of kids of Chinese descent, are they made poorer by these schools ?
    Selection of students entering these schools is evident factor in forming the results of study. Somehow the post never mentions this factor.

  4. Richard,

    You forgot one minor issue, the concept of fat retirement checks after 20 (or more years of service) will become less and less likely, as states already are going broke by having to try to fix pension programs (city/county/state) which are woefully underfunded, and retirees were given boosts in pensions by politicians wanting to get elected but failing to understand that eventually these things have to be paid for
    (usually by the taxpayer).

    In Illinois, the taxpayers (already broke, per se) are already on the hook for 90 BILLION in pension benefits, and many people are leaving that state (along with businesses) due to the taxes simply killing them.

    It has been well known that liberal arts/education, etc have a lower rate of return on investment, as the job market usually doesn’t pay enough for a student to actually pay off 100K (or more) of student loan debt over the course of 30 years.

    • …well known that liberal arts/education …

      Last I checked, physics, mathematics and such qualified as liberal arts. There are pockets of green in the liberal arts.

      Now, philosophy and medieval history is a bit dicey; unless you’re Carly Fiorina.

      It’d be nice if we could pursue enlightenment without regard to cost. Unfortunately, the way the game is set these days, it’s pretty expensive to pursue enlightenment American style.