For the nearly 18 million high school
students enrolling in college this year, their college education will likely be
the most consequential investment they make.
Sadly, that investment calculus has become
increasingly challenging due to the continuous rising cost, regardless of
whether one attends a leading state college like the University of Michigan,
with an annual tuition cost of $17,000 for in-state residents, or an elite
private college like Yale University, with an annual tuition of $65,000.
Students need to determine whether an institution not only represents the
“right choice” but also delivers the best value or highest return on
investment.
Investing in college has historically
yielded significant benefits, including greater career opportunities, higher
earning potential and a better quality of life for millions of Americans. The
data has also reinforced the value of a college education, both financially and
otherwise. The Economic Data Initiative reveals that the return on investment
of a bachelor’s degree over a 20-year period has been 38.1%, with a lifetime
ROI of 287.7%. Multiple studies have also shown that students gain in
non-pecuniary ways, including enhanced quality of life, a deeper sense of
purpose, exposure to diverse populations and developing lifelong friendships.
But is that still true? As Secretary of
Education Miguel Cardona has advocated, “We need a system that’s inclusive,
that delivers value, and that produces equitable outcomes. … It’s time to focus
on what truly matters; delivering value and upward mobility.”
That question whether higher education is
delivering on its promise of value and upward mobility is under intense
scrutiny given the pending Supreme Court ruling on student loan debt and the
pressures of repayment. Today, more than half of students leave school with
debt, resulting in 45 million Americans holding student loan debt totaling
approximately $1.7 trillion.
Calculating the precise value of education
is certainly challenging as it depends on many personal factors such as a
student’s post-graduation choices and career earnings potential. Some careers,
such as nursing or teaching, may have significant value to society despite not
paying high salaries. Nevertheless, an emphasis on outcome irrespective of job
choice is the right one.
On the downside, students still face
difficulties evaluating the true cost of their college education. Often, the
cost that colleges list for tuition does not accurately represent what most
students will ultimately pay, as the actual amount for each student varies
widely for the same education. According to a recent U.S. Government
Accountability Office report, 41% of colleges do not provide any net price
estimate, and only 9% of colleges accurately estimate the net price of
attending college.
That cost and debt burden has meant more
students are unwilling and unable to make the investment and sacrifice.
According to Secretary Cardona, “Nearly 60% of Black college students and
nearly half of Latino students never complete their degrees, usually because of
financial challenges.”
