The current generation of college students is perhaps the first generation not to be asked the question, “Will you be attending college in the fall?” Instead, college attendance is assumed and the question has evolved into, “Where will you be attending college in the fall?” Even one generation ago, simply attending college was a great accomplishment. Now, college seems to have become little more than an extension of high school; it is an almost mandatory part of the American education system. An almost blasphemous question in today’s society is: Is college, and its heavy tuition, worth it?
In the article last month Is College a Lousy Investment? by Megan McArdle, she states the frightening similarities between what she calls the “education bubble” and the well-known “housing bubble” from which our country is still recovering. The housing bubble burst when renting was discouraged and those who were enabled to purchase homes they could not afford were forced, by the collapse of the bubble, into foreclosure. These days, not going to college is similar to the admonishment given to renters that renting your living quarters was just not good enough. McArdle notes that a college education “can’t be repossessed.” But, she warns,
Neither can the debt that financed it be shed, not even, in most cases, in bankruptcy.
Just like homes were considered “safe investments” before the housing bubble burst, a college education is considered an “investment in yourself.” But does this so called investment actually pay off? According to McArdle it does not; she states:
An investment is supposed to generate income to pay off the loans. More than half of all recent graduates are unemployed or in jobs that do not require a degree, and the amount of student-loan debt carried by households has more than quintupled since 1999.”
Recent graduates have been told their whole lives that a college degree will guarantee success, but the college bubble may have burst for these students burdened with debt.
How many times have we seen and heard radio or television adds selling wonderful results from a product or fabulous returns from an investment? Recall how the commercial always ends with an announcer stating in a rapid, often unintelligible voice that “individual results may vary” or “before you invest, you should read the prospectus.” McArdle does not argue that education is unnecessary or to be avoided. Like those announcers, she seeks to put the public on notice that commonly held notions regarding the return on the significant investment in college education may not be accurate and that individual results may very well vary. She admonishes us to look at the facts before investing in a college degree; one should not look at college as merely a natural continuation of high school if one wants to be successful. Rather, the decision on whether and where to go to college must be based upon a serious and honest assessment of the individual, his or her career goals, and an assessment of whether a particular college will further those goals.
McArdle makes a compelling case that students who fail to make this ofttimes difficult assessment may find themselves questioning the wisdom of their investment decisions.
Just as homeowners took out equity loans to buy themselves spa bathrooms and chef’s kitchens and told themselves that they were really building value with every borrowed dollar, today’s college students can buy themselves a four-year vacation in an increasingly well-upholstered resort, and everyone congratulates them for investing in themselves.
McArdle effectively warns that without the critical and honest assessment of pros and cons, too many college students will wind up like so many unfortunate homeowners who are “upside-down” on their mortgages or who have lost their homes to foreclosure. Her article is an insightful look at this issue and a must-read for college-bound students.
What do you think? How should we talk about college education?