Is Higher Education Worth The Cost?

(Video length 00:05:37)

In this video, I’ll look at whether higher education is worth the cost.

Tuition in the United States is soaring. Look at this chart from the American Enterprise Institute using data from the Bureau of Labor Statistics:

[Chart shown at 0:16.]

Naturally, student debt is soaring as well.

The February 2017 Quarterly Report on Household Debt and Credit from the New York Fed:

[Report cover shown at 1:10.]

Reported: “Outstanding student loan balances increased by $31 billion, and stood at $1.31 trillion as of December 31, 2016.” The $31B jump was in Q4 alone.

It’s a growing percentage of overall debt:

[Chart shown at 1:36.]

And its delinquency rate is rising:

[Chart shown at 2:15.]

Why might this be? Presumably, the cost of college is rising because the value of the education it bestows is worth more, right? Wrong.

The Washington Post reported in December 2013 that between 2003 and 2012, the median income of US college graduates with bachelor’s degrees dropped from almost $52,000 to just above $46,000, both in 2012 dollars.

Four years later, how do things stand now?

According to the Class of 2016 Student Survey Report from the National Association of Colleges and Employers, “just over 46% of 2016 graduates received a job offer before graduation, down from 51% from the Class of 2015.” The median salary offer was $47,358, which is 4.9% less than the inflation-adjusted 2012 figure of $48,388.

High cost, high debt, falling compensation = no good.

Television host Mike Rowe put it aptly:

[Mike Rowe quote shown at 4:07.]

Why don’t the jobs exist anymore?

The short answer is that they’ve been outsourced or automated, and the latter trend is picking up steam. Algos and bots are the workforce of tomorrow.

Knowledge is never a waste, but we need to stop thinking about higher education as job training, and reprice it accordingly.