Americans have soured on the value of a college education, writes Paul Tough in the New York Times Magazine. Ten years ago, 86 percent of graduates said college had been a good investment and nearly all parents expected their children to go. "Now almost half of American parents say they’d prefer that their children not enroll in a four-year college."
The college wage premium remains high: College grads earn 65 percent more than high school grads. But that doesn't take student loans into account, writes Tough. The college wealth premium, which includes assets and debts, shows a different picture: It's declined sharply for younger graduates.
White graduates born before 1980 accumulated two or three times as much wealth as high school grads of the same race and generation, Tough writes. "But younger white college graduates — those born in the 1980s — had only a bit more wealth than white high school graduates born in the same decade," and they're not projected to pull ahead.
The downturn started earlier for blacks: The wealth premium is small for those born in the 1970s and nearly invisible for younger graduates.
Why aren't millennials building wealth? High college costs are the obvious answer, writes Tough. "Carrying debt obviously diminishes your net worth through simple subtraction, but it can also prevent you from taking important wealth-generating steps as a young adult, like buying a house or starting a small business."
Since 1992, the sticker price has almost doubled for four-year private colleges and more than doubled for four-year public colleges, even after adjusting for inflation. . . . After financial aid, the average net price for private-college students is about $33,000 a year; at public institutions, it is about $19,000. Total student debt stood at $500 billion in 2007, and is now $1.6 trillion.
Higher education is a gamble, says economist Douglas Webber. Whether it's likely to pay off (in dollars, not love of Renaissance poetry) varies by academic ability (will you graduate?), college major (engineering or fine arts?) and cost.
Forty percent of students who start college don't earn a degree. "Students who borrow money to attend college but don’t graduate" are big losers in the higher education casino, his research shows. Financially, "they were doing worse than adults who had never gone to college at all."
Choosing a business or STEM degree is a relatively safe bet, even for those paying $50,000 a year, Webber calculates. It's high risk for other majors. "If your degree is in the arts or humanities, you’re likely to lose the bet even if your annual college expenses are just $25,000."