Friday, September 10, 2010

The ROI of College

A lot of buzz about the cost versus benefit of going to college and I have to agree. It is basic economics since the cost of a degree has far outstripped inflation - so salaries have not kept pace with the rising cost of a degree.

Today it is the Washington Post with an article from Sarah Kaufman: "Some say bypassing a higher education is smarter than paying for a degree". The premise is that going to college is basically a due to a herd mentality and there are smarter ways to spend $200,000

A friend of mine, Dr. Richard Vedder has the money quote (pun intended):
"In 2008, the median annual earnings of young adults with bachelor's degrees was $46,000; it was $30,000 for those with high school diplomas or equivalencies. This means that, for those with a bachelor's degree, the middle range of earnings was about 53 percent more than for those holding only a high school diploma.

But a lot of college graduates fall outside the middle range -- and many stand to make considerably less.

"If you major in accounting or engineering, you're pretty likely to get a return on your investment," Vedder says. "If you're majoring in anthropology or social work or education, the rate on return is going to be a good deal lower, on average.

"I've talked to some of my own students who've graduated and who are working in grocery stores or Wal-Mart," he says. "The fellow who cut my tree down had a master's degree and was an honors grad."

So - if you are going to an elite school and getting a marketable degree, the investment is sound. As I said in a recent blogpost on higher education, if you are going to NYU to earn a degree in Women's Studies, you would be better off putting your money elsewhere (or in that case not piling on $100,000 in debt to work as a photographers assistant in New York at $12 a hour).

The degree is not the problem - the knowledge is required to really have a great career. The salaries are not the problem - they are in line with the work. It is the cost that is the problem which is why high quality, less expensive schools like New England College of Business and Finance are enjoying such success.

Go to school - just don't pay $200,000 for something that should, and can, cost $60,000