I ran across a message the other day which basically said "I worked very hard to pay for my school costs and my parents worked hard and we all worked hard to pay off student loans and I don't see any reason why current and future students shouldn't have to do the same thing."
I can empathize -- that's a lot of work that had to be done -- a lot of sacrifice. It should not have been required or necessary but it was.
But things are different now. For one thing -- as my children love to remind me -- the times are not the same as when I was going to college. In 1975-76 (my first year of college), it cost $540/yr, on average, for tuition and fees at a public university ($2290/yr for private college.) For 2018-2019, that cost for public university was $10,280/yr and private university was $35,830/yr. Now, of course, because of inflation, that $540/yr would be $2521/yr (4.47x inflation factor between 1975 and 2018). But $2,521 is still 1/4 of what it costs per year in 2018. University costs have gone up four times as much as inflation. Or, take minimum wage -- which was $2.10/hr in 1975 and $7.25/hr in 2018 (these are unadjusted dollars -- if you use inflation-adjusted dollars, minimum wage went DOWN). That is, minimum wage went up by a factor of 3.45 in the same period that the cost of college went up by a factor of 19.
So, tuition and fees within the US have risen extremely over the past 50ish years and growth in wages and the ability to pay has not come even close to catching up.
This does not include room and board. I haven't found a good analysis of that cost but, for my son, room and board at a public university is about 130% of the tuition and fees. So, a grand total of about $24,000/yr. Because of general increases in costs for private schools, a 220% cost total for private giving about $78,800/yr.
But, college is still worth it, right? The investment will pay one back in income over the post-graduation years? Well, the answer to that is -- it depends. In spite of words of appreciation, beginning teachers are not paid well -- an average of $39,000/yr just starting out as a secondary school teacher in the US. On the other hand, a computer science bachelor's degree in the US (not true in other countries) may bring in $94,000/yr as a cybersecurity analyst. And students that land a job on Wall Street might get $300,000+/yr.
Assume that you went to a public school and borrowed to get your degree. It cost you $100,000 ($330,000 for private). At 5% interest (may not stay that low for long), you will pay about $6,441/yr ($21,155/yr for private) to pay it off in 30 years. For a starting secondary school teacher, that would be about 1/6 (or 55% for private) of their GROSS salary -- not even allowing for taxes, medicare tax, social security, local taxes, etc. Maybe possible but very hard to do. Not nearly as hard for the cybersecurity analyst and pocket money for the Wall Street person. But, what about the many who are not able to use their degrees in a directly applicable career area? What about those who are getting minimum wage and working full-time (unusual -- most minimum wage jobs are part-time)? That $15,080/yr means that payback of the student loan is about 43% of their GROSS wages. Not doable -- period.
And -- say that your family has been saving like mad for your entire life and you were able to pay for college without taking out any loans. The cost is STILL about the same as having taken out a loan because the money you saved and spent on college could not be used in other ways to increase the capital. You save the interest from the college loan but are down the cost of not having been able to use the money in other ways.
We have now covered both the extreme rise in cost for post-high-school education in the US as well as the lack of adequate increase of income to pay for it. Is it worth it? Well, for the individual, once again, it depends on where their career path takes them. For a lot -- probably most -- of the students -- no. They will probably pay more for their education that the increase in their wages justifies. That did not used to be the case -- it is now.
How about being worth it to society? Probably. Our world of work continues to change. Unskilled labor has a much harder time finding jobs (and even harder finding jobs paying a living wage). Opening positions require a higher base level of education. Without that education they are likely to be unemployable and that means a dependency on families or taxpayers. Once again, we are talking about investment -- but this time it is investment by society FOR society.
So, paying for our own post-secondary education in the US is farther and farther out-of-reach for more and more families and is no longer cost-effective as an investment. BUT, it is cost-effective for the country as a whole to have better educated, skilled, people within the economy.
