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photo: Getty images (STUDENT WITH BOOKS & STUDENT IN LIBRARY)
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The Value of College
By SUE SHELLENBARGER As millions of students dream of getting into college, and their parents sweat over how to pay for it, a nagging question keeps coming up between them.
Is a college degree really worth the price? Polls show that students are increasingly skeptical about the value of a college degree. The proportion who are willing to borrow money for college if necessary has fallen to 53% from 67% in the past year, based on a survey of 800 college students by Sallie Mae, the student-loan company. Parents, too, are zeroing in on the cost-benefit question and thinking harder about why they sign big tuition checks. The real answer, of course, depends on what families are looking for from the college experience, and how they choose to measure the results. Here are some perspectives: A PATH TO A BETTER-PAYING JOB College graduates in general earn at least 60% more than high-school grads on average, both annually and over their lifetimes, and the income gap has grown, says a 2007 report by the College Board. Beyond that, students who major in science- or math-related fields tend to earn more right out of college, compared with other majors, research shows. Phillip Hamilton, a St. Louis stockbroker, values the earning potential of a degree from a top professional school for his son, a high-school junior, over any prestige or network a degree from an elite liberal arts college might confer. “Is a degree in sociology, English or communications from a ‘door-opening’ school really going to help with that landscaping job that awaits you?” he asks rhetorically. He hopes his son, 17, chooses a college based on the quality of its engineering, food science or accounting program, and majors in one of those subjects. “Then, if you decide to work at a surf shop after graduation, you can still snap out of it at 27 and get a real job,” he says. For families who want to refine the cost-to-income analysis, a new tool is available that predicts how much money a student is likely to make after graduating. The online calculator, HumanCapitalScore.com, will generate a 10-year range of students’ likely postgraduation income based on their test scores, high school and college attended, grades and major. Developed by lending company People Capital as a tool to predict students’ creditworthiness, the calculator can also be used to compare the likely outcome of various possible choices of colleges and majors. It makes projections based on data from more than a half-dozen sources, encompassing hundreds of thousands of grads I tested the calculator by entering information on six actual college graduates who voluntarily shared their data, and comparing the HumanCapitalScore projections to the grads’ actual earnings. The grads’ pay fell within the range projected by the calculator in five of six cases. The exception was a young entrepreneur who chalked up a mediocre record at a little-known college but blossomed later. The projections are based on what “an individual with certain attributes can reasonably expect to earn,” says Alan Samuels, People Capital’s chief product officer. “The projections are likely to be accurate about 80% of the time, he says. HumanCapitalScore’s projections can also help a student figure out how much money to borrow for college. Many experts say total student loans shouldn’t exceed a grad’s first-year income after graduation. PREPARING FOR A RICH, WELL-ROUNDED LIFE To Megan DeLamar Schroeder of Texarkana, Texas, planning the college experience based entirely on future income demeans its true value. “The intangible benefits ... cannot be reduced to some kind of short-term cost-benefit analysis, as though one is purchasing a piece of property or an expensive sports car,” she says. She borrowed $40,000 to earn an economics degree from Stanford University in the 1980s, which landed her only an entry-level job at a bank upon graduation. She spent 10 years paying off her student loans. But the experience was worth every penny, she says. The opportunity “to ‘marinate’ for four years in an amazing environment” served as a “springboard to lifelong learning and inquisitiveness,” she says. She will encourage her 10-year-old twin daughters to hew to similar values when they start their college search, she says. Research supports Ms. Schroeder’s viewpoint. College grads generally show higher rates of civic participation, engaging in volunteer work and donating blood at more than twice the rate of high-school graduates, says the College Board study. In a 2005 survey by the Pew Research Center; 42% of college grads reported being very happy, compared with 30% of those who only finished high school or less. FINDING WORK YOU LOVE James Landon, Apache Junction, Ariz., says this is a good reason to attend college, and he sees big public universities as the best and most cost-effective place to conduct such a search. Four of his five children attended big public universities. Two of them had no idea as freshmen what they wanted to do, Mr. Landon says, and the universities’ broad offerings of programs, majors and facilities helped them figure it out. One wound up in finance and is a successful real-estate broker; the other majored in psychology and political science and is now pursuing a foreign-service career in graduate school. College degrees can guide students’ career choices in subtler ways. Jason Wotman, 24, loves his work as a co-founder of Tailwaiters, a startup that runs tailgate parties for clients at sporting events and concerts. “It’s mine, it’s my baby,” he says. His degree in human and organizational development from Vanderbilt University helped launch him as an entrepreneur, he says. His courses in marketing, human-resource management and leadership equipped him well to size up opportunities and run a startup. “Taking it from an idea to an actual business, I felt like I had the tools,” he says. GAINING AN INFLUENTIAL NETWORK Many graduates of elite colleges swear by the value of their network of campus buddies in opening doors after graduation, and say striving to gain admission to such schools is worth the effort. However, a long-term study published in 1999 by the National Bureau of Economic Research found graduating from a college where entering students have higher SAT scores—a sign of exclusivity— didn’t pay off in higher post-graduation income. What matters more, it seems, is a student’s personal drive. In a surprising twist, a stronger predictor of income is the caliber of the schools that reject you. Researchers found students who applied to several elite schools, but didn’t attend them, are more likely to earn high incomes later than students who attended elite schools. The Bureau says that “evidently, students’ motivation, ambition and desire to learn have a much stronger effect on their subsequent success than the average academic ability of their classmates.”
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