Is it risky to go to college?
Who doesn't think college is a good thing? In their "100 Hours" agenda, the House Democrats say they'll try to cut interest rates on college loans in half. One Washington Republican complains to me this "won't help anyone go to college... it's nothing but throwing money at the middle-class for voting D." But even among conservatives, the conventional wisdom is that post-secondary education and retraining can help Americans cope with the "creative destruction" of jobs and businesses that comes with globalization and technological change.
Still, going to college is no guarantee of economic success. In fact, it's actually a risky thing to do, says Yale political scientist Jacob Hacker.
This sounds weird--nearly every middle-class kid has it drilled into his or her head that college is mandatory--but it makes perfect economic sense. You can't have reward without risk. And of course the potential rewards of going to college are enormous.
In a recent interview with me, Hacker was at pains not to say that going to college is a bad idea. On average, those who go to college do better than those who don't. But look past the averages: The range of outcomes for college grads has been getting wider. In other words, if you look at college grads as a group, the richest grads are getting richer than the poorest grads.
Hacker points to a couple of reasons that college is becoming more financially risky. First, it's a significant money investment. In his book The Great Risk Shift, he observes that in 2003, some 58% of public-university grads had student loan debt, up from just 25% in 1993. Tuitions at public colleges have been climbing at a fantastic rate in recent years. Obviously, the more you pay to go to college, the more it hurts if you don't have a successful career afterwards.
Also, many careers today require highly specific skills, many of which you learn in college. But some skills can become obsolete. "A person who works as an advanced technician in the computer software industry has invested [his] human capital in a specific line of work," says Hacker. "If that line of work dries up, those investments are stranded."
The widening gap between the most successful and least successful college grads isn't altogether surprising. The percentage of American adults with a college degree has more than doubled in 30 years. With more kinds of people going to college, you should expect more kinds of results. (A point Clive Crook makes far more elegantly in this subscription-only Atlantic article summarized here.) But that just means that there's even more at stake when we talk about higher-education policy.
We could reduce the risk of going to college by making it more affordable, or, as Hacker suggests, by providing better social insurance to protect people who have found that their training is now outdated. We may also have to do more to ensure that we're getting our money's worth. The Bush administration has been pushing for higher standards in higher ed; New Democrats Bruce Reed and Rep. Rahm Emanuel would tie increased college aid to greater accountability from colleges with regard to graduation rates.
But let's not just focus on the high-cost, four-year residential college model. We need to be less snobbish about community colleges, which provide real training for real jobs, at a fraction of the cost. Which is to say, with a fraction of the risk.
Update: Speaking of financial risk and college...
Has there ever been a discussion on this site about how increased student aid results in higher tuitition rates? God bless Rahm, but he is just going to make college less affordable if he does this.
I graduated in 99 and did well for myself. However, I know too many people who went to college to party or to pursue they're dream of becoming a (insert underpaid occupation here). Too many people look at college as a self esteem building experience instead of a business proposition.
One reason for the increase in differences in how well college grads do is the increase in the number of majors which have little of no relevance to the job market and, in many cases have not true academic standards. Graduates of these majors have a difficult time finding a job which pays well.
Excellent and informative article. The only flaw is the author using the term "successful" when what he means is "lucrative."
Yes, college is very risky. Somehow the university doesn't like it when I tell our students this. The best advice I've found to give to the students is to tell them to always go for the highest paying job - after they have wealth, they can do whatever they want for fun and challenge - taking a low-paying job because it looks like it will yield career opportunities down the road is a trap.
Risk is simply part of the game of life. What we have to do is evaluate our risks and determine what is acceptable. If more education about the risk or outside help is needed, then get it. Even so, we still need to save for a rainy day (which might include a mid-life career change). Sometimes, that means we'll have to make do with our PS2 or Xbox when we want the new PS3 or Xbox 360. Sometimes that means driving a basic Ford mustang when we want to drive the Chevy Corvette.
Second part, the article talks about areas drying up. People in the IT world are always learning new things, technologies, ideas, etc. But, more importantly, we each need to look at where we can apply what we know. For example, I am a network/server admin whose job has been outsourced. Instead of looking from someone to blame (the company, any political party, any politician), I'm looking at where I can apply what I know. There happens to be a high paying field where the people in it are having major difficulties with technology. It call our legal system and right now there are legal professionals grappling with how to apply technology in law and how to apply law to technology. While I won't be administering Microsoft's Active Directory, I will helping the courts apply the laws of the country to AD.
When I was in school, a business professor once told me that he saw all of us going to school three times in our lives. The first was to get our first career started. The second was to get our mid-life career change started. And, the third was to help us get our retirement started.
I can relate to this article immensely. In fact, I have had many discussions about this issue with my friends and classmates. As a recent graduate with a degree in economics, my natural intuition is to make a cost/benefit analysis of going to college. In some situations I feel that simply attaining several years of industry experience would replace the need for a college degree.
As far as the cost of getting a college degree, it is no secret that costs are soaring. People like me, who have to rely on federal loans and other ways to finance our education, have to struggle harder to make ends meet. Now that I have finally graduated I am finding that even a starting salary barely makes it possible for me to service my debt � and I live quite frugally.
This article�s mention of the disparity between rich grads and poor grads really gets to me. The reason is that Jacob Hacker is right on point with this. Every one of my friends who has been fortunate enough to come from a wealthy background has done very well.
This is the truth. I graduated Carnegie Mellon Univ. (one expensive school) four years ago and I cringe everytime I log online to pay for my tuition loans. It isn't till last year did I start making the amount of money that I thought was worth my and my parents' investment in education. The ROI is definetly something to look at.
Having a degree is never a bad thing, no matter what the degree. In fact what the degree actually is, is almost irrelevant, especially in the IT industry.
Having a degree shows that you can work hard, on your own time, without supervision, as well as play well with others - many degrees require collaboration on year long projects.
So the subject doesn't really matter, as most probably don't really have anything to do with actual work. The best thing you can do is get a degree, preferably in some sort of science, math or computing area - then take professional certifications at a tech institute when you get your job.
These certifications, Cisco, MS Networking certification, etc have tremendous practical value, and can often be obtained on your company's dime. It is hard work, selling the certification as well as the actual course itself, but it's well worth it.
Also, you can often make a good case to re-certify, especially if your company paid for it, as letting certifications become obsolete is a bad waste of money.
So my 2 cents say that almost any degree is worth having, more for what it says about you as a person than the actual course content, then add some professional certification to your resume, something that can be updated and upgraded as jobs and work within those jobs change, and you'll always be a step ahead of those competing for your job.
I completely agree that we need to become much less snobbish about people having a college degree. I think a lot of high school graduates would do a lot better if they took some entry level job at 18 and went to community college at night then wasting 4-6 years at a traditional school.
The trick is going to be how today's companies can find the students they want to hire out of the graduating senior classes.
High education has a ripple effect on the economy. Causes everything to cost more to recoop costs for their training and educational loans.
Suze Orman has seemingly been saying the same thing too for several years now.
RE: Suze Orman has seemingly been saying the same thing too for several years now.
I think Liz Pulliam Weston on MSN has been doing so as well. Recently, she wrote an article about weighing the cost of the degree to what job opportunities were in the discipline/field of study. She said something like it doesn't make sense to get a degree in music at a private college if you have to take out massive loans to do it; the likelihood of your paying back the loans with a job you acquire from the degree is slim.
Isn't it cheaper to import a brain rather than to educate one at home in their own country.
Canada, eh? I was imported there for a job that could've easily been given to a local graduate -- although they sold it as if they'd leverage my 'unique personal skills'. I like to think it was so I didn't go to a competitor here in the U.S ;-)
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