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  • Writer's pictureJoanne Jacobs

College is a gamble: Will you graduate? In what major? Owing how much?

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."

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Bruce Smith
Bruce Smith
12 sept. 2023

The Obamas' "Reach Higher" initiative sure looks like disastrous advice in retrospect, having increased the students' demand for higher education faster than that of employers, which demand raised the cost of attendance without much increase in the returns for the degrees, while the average American, who experiences "some college" but doesn't earn a degree, was worse served by such counselling than anyone else.

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Invité
11 sept. 2023

I would suggest that prior to 1980, a significant number of college graduates were pursuing degrees that added value in the workforce - engineering, science or pre-med. Those professions can still add a considerable wage value. Too many college graduates are not and have never been working at jobs that really require anything they learned in college, and in prior decades they would have been doing exactly the same work without the debt and opportunity cost of a 4 year degree.

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Invité
12 sept. 2023
En réponse à

The percentage of liberal arts degrees was much higher in 1970 than today. And the percentage majoring in business or engineering was no higher than today. The issue is that employees did not have mandatory credentials today compared to previous years. Look at few people majored in healthcare in 1970 versus today.

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Invité
11 sept. 2023
"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."

Which indicates that all the value of going to college is in the magic parchment. Since if college was providing useful knowledge and skills in the classes all along, those who attended but didn't graduate would have something useful to trade on. Or do professor withhold all the economically useful secrets until the 400-level classes?


Going to college is not what is economically valuable, it is getting that checkoff on the HR spreadsheet for college. Or for higher level jobs, being a "ring knocker…


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