Tue, September 21, 2010

College Board Claims Benefits of College Degrees Continue to Grow

As in 2004 and 2007, this year’s report is entitled “Education Pays: the Benefits of Higher Education for Individuals and Society.” The report highlights the individual and social benefits of higher education, something that the board is obviously committed to in its role as a provider of standardized testing resources. 

Among the benefits of a bachelor’s degree, the report noted that college graduates’ median annual earnings of $55,700 in 2008 exceeded those of high school graduates by $21,900/year.  Most of the benefits noted in the report are undoubtedly correlated with, rather than caused by the posession of a college degree: college-educated adults are less likely to be obese, less likely to smoke, and more likely to engage in volunteer activities.  The report does not attribute these benefits directly to college attendance, but it seems likely that the authors hope readers will infer cause-and-effect.

The 2010 report is informative, but for most families the primary issue regarding college has to do with cost.  With total charges at public four-year colleges averaging $15,000/year and private colleges at $35,600/year, most people find that the cost of educating a child has become so high that a college education is almost unattainable unless significant debt is incurred. 

The board does try to tackle this issue by showing that after 11 years of employment, the increased income gained as a result of having a college education is sufficient to pay for both the income lost while in college and the cost of borrowing enough to pay for four years at a public college. 

Still, this seems to obscure the fact that a massive shift has taken place in the cost of education in the last 30 years.  The education that I received at a private college cost about $5,000/year in the late 1970s.  If I had started full-time work at that point, I could have earned an annual salary equal to five or six times the cost of a year of college.  Today, a year at the same school costs more than $40,000; if the median salary of a four-year college graduate is now $55K, the differential between college cost and earnings potential has shrunk significantly.

Helpfully, the board also provides two other reports:  “Trends in Student Aid,” and “Trends in College Pricing;” both of these will likely be of interest to parents of college-bound children.