Summary: A Tipping Point? - What good is college? A college degree from a selective four-year private school costs families around $240 thousand dollars, give or take. There’s literature out showing that lifetime earnings of college graduates are higher than non-graduates, but it’s unclear how much of that advantage is inherent in the education itself, and how much is signaling: the degree becomes a marker, shorthand for “this person is intelligent and/or diligent enough to obtain admission and complete the curriculum at U of X.” But there is a significant disconnect between the content of what people study in college and what they do in their commercial lives. The cell biology class I took my junior year seems particularly irrelevant to my work as a financial analyst. So is that time and money wasted? Some people think it is. That’s why college completion rates are so low. Federal statistics indicate that just a little more than a third of all enrollees graduate from four-year schools (although that number is much higher highly selective institutions). If the classes seem irrelevant and it takes so long that life gets in the way, why spend the time and money? Still, college is a way for young people to develop habits of mind, patterns of life, and social skills and connections that will enable them to be life-long learners and prepare themselves for tomorrow’s economy. But the price tag makes it impossible now for middle-class kids to “work their way through school” as some did in the past. If a four-year residential degree is to be anything but a marker of privilege, schools had better cut their costs. Douglas R. Tengdin, CFA Chief Investment Officer Follow me on Twitter @GlobalMarketUpd
