Has College Become a Bad Investment?

Jack Hough of the New York Post wrote the provocatively titled “Don't Get That College Degree!” last week, where he argues that the increase in lifetime wages for graduates no longer makes up for the financial burden of university education and the ensuing student loan burden.

Hough's hypothetical model showing the greater financial position of a non-graduate is seriously flawed and leaves out many intangibles such as lower unemployment for graduates, social education, and market fluctuations, but the article does raise an important question about college affordability.

In 2003 when I was lobbying against tuition increases in Arizona, a Republican state legislator argued that a college degree is a personal investment that the students are paying for their own future financial prosperity. This argument has been used by Republicans across the country as an excuse to cut higher education funding and increase the financial burden on students. Former Congressman (D-RI) and current Vice President for Administration and Finance at the University of Rhode Island Robert Weygand makes the counterargument:

Public colleges need to promote and publicize the work they do for the community and their contributions to economic development. Well-publicized proof that they make a difference to the state, and not just the earning potential of individual graduates, is meaningful to lawmakers, even in tough times.

(…)
We need to renew the idea that economic development is based on a quality higher-education system.

While a college degree is not yet a bad investment, the Republican attitude toward higher education is certainly decreasing the value of that investment, as well as pricing out many potential students at the onset. Students are now less inclined to attend 'prestigious' schools in favor local public universities and many families are struggling to keep their kids in college in the wake of the current recession.

The costs facing students entering college will put them in debt for decades, even though the investment will eventually pay off, and future increases could actually lead to a college degree actually becoming a bad individual investment.

Some changes need to be made to stop this trend:

1. State legislatures need to stop balancing their budgets on the backs of students and realize that funding higher education is an investment in the state, not just a personal investment. Wygand: “If you really want economic development in your state, don’t disinvest in the very engine that drives that economic development.”
2. Colleges need to focus less on rankings and more on education. Grade inflation is a result of dumbing down courses, which increases graduation rates (and rankings) but leaves students less prepared for post-college life and frustrates the brightest students. People should be encouraged to rise to the challenge, not rest at the lowest common denominator. When students graduate with more knowledge, skills, and experience, their future salaries will reflect it.
3. Increase grants to students seeking careers in critical yet underpaid professions. The biggest example is students studying to become teachers. Dismal teaching salaries make it difficult to pay back massive student loans.

The United States needs to produce highly educated scientists, engineers, and researchers in order to create the innovative new technologies that will enable it to maintain its status as the leader of the global economy. Funding higher education to keep college costs manageable is a real stimulus plan that will pay dividends for generations. If a college education becomes a bad individual investment, the country as a whole will pay the price.