It seems everyone is questioning the value of a college education. Is it worth $140,000? Is it even worth $30,000? It’s a good question, because in the last few years, the rising cost of education has significantly outpaced changes in the economy, making the value equation balance differently than it did before.
Unfortunately, the Consumer Price Index doesn’t line-item the cost of higher education in the CPI data we see every day. (Kidding–who sees this data every day?) Though if you keep clicking and reading, you’ll find it a little deeper in the Education and Communication group. The cost of education in December 2010 was up 3.9 percent from November 2009. (Full PDF report.) Meanwhile, the CPI for All Items Less Food and Energy has been declining since mid-2006, and hasn’t topped 3.0 percent in more than ten years (I didn’t look at data from before 2000). So the cost of higher education is growing faster than the cost of every day goods, and that must be why I’ve seen so much press on this topic.
Though the relative cost to the student is increasing, enrollment is higher than ever. In October, 2009, more recent high school graduates were enrolled in college than ever before (since the Bureau of Labor Statistics started keeping track). Changes in college enrollment have historically demonstrated a strong correlation with recessions. We go to school when there are no jobs to be found.
I don’t mean to ponder the value of a college education. But I am curious about the impact on our decisions henceforth. I’m not the only one. Peter Thiel, the famous venture capitalist and co-founder of PayPal, recently funded the Thiel Fellowship to give 20 people under the age of 20 $100,000 to forgo college and pursue their entrepreneurial dreams, claiming:
People can’t do anything entrepreneurial or innovative or even nonprofit—anything that’s not safe and well-paying—because they have this mountain of debt. And so education is something that has become a retardant to technological innovation and progress, even though the common perception is the exact opposite.
Of course in the last few years “safe and well-paying” is more of a moving target than we’d like. That’s probably why, as I’ve been interviewing recent grads, the themes of security and career paths come up frequently. I never considered that it may stem from college debt just as much as it stems from seeing thousands of people laid off from their target employers.
Another part of this equation is the volume of high-profile entrepreneurs who started young. Though just as many young adults started companies in the 1970s and 1980s, the advent of the Internet, the convergence of news and media, and a 24/7 news cycle places recent successful entrepreneurs in our face every day. I suspect young adults these days are more keenly aware that they could avoid the beaten path altogether. While they may not start PayPal, they could still pay their bills.
The question is more interesting now, given recent relative changes in the cost of an education and the obvious alternative options, which is why I just posted a poll in the right feature column. I think I’ll keep it up for a while.
- Drop Out and Innovate, Urges VC Peter Thiel (news.slashdot.org)
- College debt meets real life (startribune.com)
- Students rally against tuition hikes at Capitol (startribune.com)