Is a University Education Worth the Debt?

blr-editor | June 12, 2011 | Comments (0)

Is the crushing debt that comes with a B.S. degree worth it ?

There has been a rash of articles recently asking the question whether it is worth being saddled with tons of college loan debt to obtain a college degree.

Much of the new-found attention in the usefulness of a college degree has arisen from a recent Pew Foundation study that shows 75% of Americans believe that university education is too expensive. Also, 57% believe that higher education fails to provide value for money.

The dissatisfaction with higher education stems partly from the current recession, which has pushed millions of families nearer, or over the poverty line and made higher education a pipe dream for them.

The cost of a university education often seems to pay no attention to national inflation measures. For example, the college tuition inflation rates in 2008 was almost 10% and over the previous decade, always exceeded the Consumer Price Index (CPI).

For 2010-2011, the national increase in college tuition was 4.5%, lower, but still well above the CPI.

The Pew study also noted that record numbers of students are leaving college with substantial debt, making it difficult to pay all their bills in the first years of working.

On the flip side, the US Census Survey found that a college degree adds $19,950 in yearly salary to a graduate, compared to workers without a Bachelor’s degree.

So the question remains: is a university education worth it today?

Pros and Cons

The best way to ask the question is to clarify the question — is a university education better than what? It certainly would be better than four years spent sitting on a couch and most likely better than four years of flipping burgers.

However, the more serious question might be whether it is better than direct entry into the workforce as a technology (or other) trainee or two years vocational training in a cheap community college plus two years in the workforce.

Given the outrageous costs of many universities these days (some with over $50,000 yearly tuition), the answer is very nuanced. In a recession where legions of unemployed and underemployed recent grads exist, the scale may tip even further towards skipping university in favor of community college and/or an early entry into the workforce.

In addition, many new technology-related institutes that award two-year degrees teach technology courses (especially information technology) that are more advanced and industry-relevant than many college courses. That is the industry’s dark secret.

Thus you can learn outdated technological skills and a ton of irrelevant (in the eyes of many) liberal arts for four years – ending up with $150,000 or more, or learn contemporary technology skills in 2 years for $20-30,000 or less in debt and a two year head start in the workforce.

President Obama recently disclosed that he and Michelle Obama had almost $125,000 in loans for their undergraduate years and Harvard Law School which were only paid off ten years later after Obama signed a $1.9 million book deal in 2004.

In any event, if you are intent on a college degree, but money is an issue, do what millions of savvy college kids are doing these days. Do your first 2 years in a community college and transfer to a 4-year university for the last two years.

This will save you a king’s ransom and reduce the burden of college debt that you’ll carry.

Is a university worth it in today’s world? What do you think?