Everyone knows college is getting more expensive every year. The average cost of tuition and fees for 2014-15 was over $31,000 at private colleges and over $9,000 at in-state public colleges. (And this is low, as even a cheaper school like Central Michigan University is $12,000 per year.) You can then add another $10,000 per year for housing and food and $1,000 per year for books. This means even a student attending an in-state public university will spend $20,000 to $25,000 per year for college.
It’s no wonder students are going into so much debt. A part-time job and scholarship money are not enough to cover $100,000 over four years, so students are forced to take out loans. The average student loan debt is $28,000, which results in a monthly loan payment of at least $300 per month over 10 years after college. Some say this is not a bad deal, as the average starting salary for a 2014 college graduate is around $49,000. But this is an average of graduates from all fields. For every engineering degree making $70,000 per year, there is someone making $30,000 per year.
Selecting the Right Degree
So is college an “affordable and excellent investment” as many people say? Well it depends on the degree. The claim that a college degree increases lifetime earnings by a million dollars must be qualified by saying this is “on average.” Some degrees are worth the investment, while others are not. Most of the highest paying bachelor’s degrees are some form of engineering, while the lowest paying bachelor’s degrees include education, ministerial studies, psychology, social work, and animal science.
Of course, education is about more than getting a job after college. Education ought to shape a person as a human being and as a citizen, and a broad liberal arts degree should contribute to this. But are these benefits worth loan payments for ten years and possibly having to delay marriage and buying a house? There are other ways of attaining such education, including reading books regularly. This gets at the issue of why we need educational reform at both the high school and college level. High school ought to be providing a good basic education for all citizens, as it used to, while college ought to provide more in-depth study in chosen fields. Instead, we have watered-down high schools that pass everyone through, and we have universities that provide a mix of liberal indoctrination and subsidized job training for big business.
Accepting the reality that college today is ridiculously expensive, it is therefore important for students to select a good major. Degrees that are good for jobs right out of college include engineering, computer science, business, economics, and nursing. Something unique like classical studies can also make a person very marketable. But sadly, most majors today make it hard to find a job after college. Even many of what would be considered strong degrees, such as science and history degrees, require further schooling in order to get a decent job. So it is important to choose wisely.
Options Other Than College
It must also be emphasized that there are other options besides going to a university for four years. If someone wants a college degree and wants to save money, a community college may be a good option for the first two years. This allows a person to get core classes out of the way and pay a lower tuition (as well as live with parents and save on room and board). A self-driven person can also take advantage of things like the CLEP exams. These exams are less than $100 and can provide three college credits for each test passed. The trick is that you have to prepare for the tests on your own, but there are resources out there.
There are also many high paying careers that do not require a college degree, such as the skilled trades. For example, the average master plumber earns over $50,000 per year (with the best making over $80,000). Though an apprentice earns less than this, the employer usually pays an apprentice’s wages and training. This leaves no tuition payments or debt, and it earns more starting pay than many low paying college degrees. A person who does not like school but likes working with his or her hands ought to consider becoming a plumber, electrician, construction worker, hair stylist, etc. College is not for everyone. And for many, it is simply a bad investment.
Why College Is So Expensive
The cost of college has gone up 1,225% since 1978. So why is it so expensive? Much of the problem is government interference in the market. Public universities receive tax dollars with the goal of subsidizing college tuition for state residents. Unfortunately, many of these colleges irresponsibly use this money for excessive administrative salaries and unnecessary buildings rather than to keep student tuition low.
The market should force universities to be responsible (as universities with excessive tuition ought to lose students to cheaper schools), but the government has further interfered by handing federal grant money out to students and by providing low-interest student loans for lousy degrees. This allows students to take out loans that are bad investments—loans that would never be given out in the private sector. So we are left with the universities colluding to charge astronomical tuition rates and loads of students ready to pay these rates because of available government money. Josh Grossman explains:
The root of the problem is intervention by the federal government in providing student loans. Since 1965 when President Johnson signed the Higher Education Act tuition, room, and board has increased from $1,105 per year to $18,943 in 2014–2015. This is an increase of 1,714 percent in 50 years. In addition, the Higher Education Act of 1965 created loans which are made by private institutions yet guaranteed by the federal government and capped at 6.8 percent. In case of default on the loans, the federal government — that is, the taxpayers — pick up the tab in order for these lenders to recover 95 cents on every dollar lent. Loaning these funds at below market interest rates and with the federal government backing up these risky loans has led to massive malinvestment as the percentage of high-school graduates enrolled in some form of higher education has increased from 10 percent before World War II to 70 percent by the 1990s. Getting a four-year degree in nearly any academic field seemed to be the way in which to enter or remain in the middle class. But just as with the housing bubble, keeping interest below market levels while increasing the money supply in terms of loans — while having the taxpayer on the hook for a majority of these same loans — leads to an avalanche of defaults and is a recipe for disaster.
Until the government fixes this problem (or more likely, until the bubble bursts), students need to be extremely wise in their educational and financial decisions.