I agree with the author that there are too many people in college now (many don’t belong there) and some degrees aren’t worth squat. But the stats still show that college graduates do much better of the course of their lifetimes than non grads. Does that mean this is always true? Of course not, but you have to go with the averages. If you want to be an electrician or a plumber, then don’t go to college.
Also, it not always about dollars and cents. Some people might actually like French Lit, whether or not they can get a job with a degree or not. And some women still go to college to get their MRS degree. In the end, its people’s money. They can do with it what they will.
The author is not dealing with those who are receiving degrees with skills that businesses in the 21st century needs, but those that don’t have such skills after 4 years.
He asks -— what do you get for your money? No one knows for sure. Certainly college grads make more on average than non-college grads. Less than $5,000 per year initially, on a take-home pay basis. That’s not much, and it’s the reason why you don’t typically break even on tuition until the age of 35.
It’s also one of the reasons for the new “broke at 30” and “boomerang generation” trends. It is impossible to know exactly how much of that small difference in income is due to the degree and not due to the talent and tenacity of the graduate. The author went for the conservative estimate and assigned $2,000 per year to the degree.
Some critics complained that this is an initial earnings number, but that’s how price-earnings ratios work. They’re supposed to be based on cash flow, not hope. Over time the college degree earnings surplus (College Education) generally grows, but so, generally, do stock earnings. So, generally, do non-college-degree-holders’ earnings.
He also Of acknowledges that some degrees are better than others. Generically a bachelor’s degree holds a value of roughly 100 to 1, price to earnings, but an engineering degree is certainly more attractively valued. Accountants and actuaries are also looking at a better proposition, as are a number of other generally mathematically demanding careers.
But in finishing the math: If the average P/E hovers somewhere around 100 and there are occupations which represent a much lower P/E, then by the simple logic of averages, there must be a countervailing set of P/E’s over 100. In other words, the more vehemently you make the case that a chemical engineering degree is a great deal, then the stronger is the case that sports communication (e.g.) is a rotten deal. That’s the only way to keep the average where it is.
Of course, there are the difficult to quantify social benefits. And there are the impossible to quantify intangible benefits. But precisely how much money are we willing to allocate for these incalculables?
Assuming a parent had $200,000 for a kid’s college education in an expensive private university, what would be the better proposition, setting him/her up in her own business (maybe a franchise), or having him/her major in English or French literature?
the stats still show that college graduates do much better of the course of their lifetimes than non grads
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If the parents contributed $125,000 to a bond and the child worked for five years at $20,000 per year, there would be $225,000 in a bond. 40 years later that bond would be worth something like $2 million.
So if the kid has plans to get a degree in Marxist Propaganda, then the parent might want to influence the kid into a trade school.
I agree, only IF the family has the money to spend on college. It would be utter cruelty to have a kid go ibto serious debt with student loans only to study lit or sociology.