The conventional wisdom is that a college degree is the minimum criteria for entry into the middle class. However, what is generally considered to be a no-brainer is being challenged by various stories in the media about people who have accumulated crushing student loan debt. Here is one example about a woman who accumulated almost $100,000 in debt while earning $22 an hour. Here is another about a man who accumulated $150,000 in college debt but is unemployed. There are countless other similar stories out there of people with mountains of student loan debt who are struggling with the payments. After reading a couple of these stories, you have to wonder if the conventional wisdom is really true. Is college really a worthwhile endeavor?
Certainly, there are plenty of studies which prove that a college education is a very valuable commodity. Graduates of four-year institutions generally make more over their lifetimes than high school graduates. With the decline of blue collar manufacturing jobs here in the U.S. that can provide a middle class lifestyle, this gulf will only get wider. Most of these stories about crushing student loan debt should not be viewed as a indictment of a college education.
A college education has two main sources of value:
1. The credential.
2. The education itself.
By credential, I mean the value in having the piece of paper (also known as a degree) in your hand when you are applying for a job. There are many fields where a college degree is required for entry. Can you imagine getting a job interview with Boeing for a position as a design engineer without an aerospace engineering degree? Sure you can teach yourself all of the fluid mechanics, structural analysis, material science, and propulsion theory that you would need to be a successful engineer. However, without a piece of paper from an accredited school which proves that you acquired that knowledge, your resume is going to end up in the circular file.
This is true of many, many other fields. Want to be a nurse? You'll need a nursing degree. Want to be a CPA? You'll need an accounting degree. Want to go to law school or medical school? You'll need a 4 year degree for those as well. The bottom line is that there are many careers where a college degree is the credential which is going to get you a job.
The second source of value that I mentioned is the education itself. What I mean is that in the course of proceeding through the course of study to get your degree, you will obtain knowledge that will benefit your career that you may not have been able to obtain if you didn't get the degree. Going back to my aerospace engineering example, while you are obtaining your degree, you will be taking courses which will make you a better aerospace engineer. That knowledge that you obtain will be valuable to a potential employer. There may be some schools which are better able to impart this knowledge than others. Therefore potential employers may be willing to pay more for people who went to a particular school.
Putting the credentialing aspect aside, one could argue that you could get the same education without attending college. You could read the same books and do the same problem sets on your own without having to attend college and pay the tuition. Heck, some schools will provide you with the same lectures, the same course material, and the same exams that a paying student would receive for free. Why pay for an education that you can obtain on your own?
The difference is that in a classroom setting, you are given motivation to work and study, through the use of grades. You can get feedback and interaction with the professors who are teaching the course to help you to assimilate the material. You can benefit from the interaction with your fellow students through discussion groups, study groups, or motivation through competition with them. These additional supporting structures are things that you can't get as easily through pure self-study.
In reading some of these student loan "sob stories", the problem isn't with the value of a college education. The problem stems from two factors:
1. Poor college selection.
2. Poor major selection.
People view college as being some noble ivory tower pursuit which is worthy at any cost. However, back in the real world, college has to be viewed from an economic standpoint. One must consider how college will enhance one's job prospects. If attending college is going to enhance your future earning potential, then the cost is worthwhile. However, if you are going to pay $200,000 for a degree which will lead to a $22/hour job, then maybe you should reconsider your choice of college and major.
Now the idealists will throw out platitudes like "education is priceless" or "knowledge for knowledge's sake". Well, if those idealists are willing to pay off the six figure student loans of people featured in the stories to which I linked, then I might willing to listen to their arguments.
Star Money Articles for the Week of May 22
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