Is College Still a Good Investment?

NY Times "Economix" offers a look at the value of a college education from those who didn't go to college.  Apparently high school graduates are finding their job market awful and think college grads have it better.

Debt is an issue for college grduates in  the U.S. today.  But debt taken on for investment purposes is preferable to debt taken on for consumption purposes.  Higher education is an investment, although there are consumption aspects as well--football games, parties, friends, and hopefully, some classes.  When looking at the success of recent graduates in getting good jobs, we have to consider more than raw numbers. For example, the college or university attended, the major chosen, and whether the graduate is willing to relocate.

College costs have risen faster than inflation for some time. There are several reasons for this. One is Baumol's Law--some activities are inherently more labor-intensive than others.  Science students still need time in laboratories and writing skills will not be enhanced in a class of 500. Technological improvement that increases labor productivity in manufacturing does not have the same impact in education. But colleges have to provide wages that reflect opportunity costs of working in industry. A second reason is that the percent of personnel in colleges and universities that are involved in teaching has fallen over several decades. Some of this is due to government regulations regarding discrimination, safety, and other issues. Some of it is due to competition--providing student activities, sports teams, and so on.

College remains a good investment for most students. But, if a student cannot go without taking on debt, he or she should consider carefully some decisions: what are my plans after college and how does my major/minor and nonclassroom activities aid in achieving those plans? Can a cheaper college be found? For example, a student going to a state university will spend more if attending a state university from a different state than his or her residence.  Also, read carefully the acceptance letter that contains the aid being offered.  Make sure you can distinguish aid from loans.