Is A College Education Still Worth The Price?
Higher education in the United States is the best in the world. Our universities have traditionally produced an immensely large share of the world鈥檚 research output, created new innovations that have left indelible marks on humanity and, last but certainly not least, educated many young Americans so that they can gain stable and highly remunerated employment and be informed citizens. Moreover, public universities, because they are heavily subsidized, have been able to fulfill this role for a relatively low price, thereby, allowing them to be engines of social mobility.
Some may say that college degrees are becoming increasingly less valuable due to rising tuition costs and dimming job prospects. However, this is not borne out in the data. In fact, the returns to a college degree are high and have remained stable for the past 35 years. A nice discussion of this is provided by Michael Greenstone and Adam Looney in a piece .
They say that, while it is true that tuition has increased from about $56,000 for four years at a university in the 1980s to $82,000 today (adjusted for inflation), the benefits of a college degree have increased as well. One caveat that must be given is that there has also been a large increase in financial aid over this period and so, the rise in education costs may actually be overstated by many of the statistics. With regard to the increased benefits of a college degree, Greenstone and Looney say,
Even if we assume that all students actually pay tuition at the published rates, the bottom line is this: while college may be 50 percent more expensive now than it was 30 years ago, the increase to lifetime earnings that a college degree brings is 75 percent higher. In short, the cost of college is growing, but the benefits of college鈥攁nd, by extension, the cost of not going to college鈥攁re growing even faster.
Because of this, the authors estimate that the returns to a college degree have held steady at about 15% for the past 35 years. In short, not only do universities provide an essential public good with their research, they also provide access to a much better life for those who attend them.
Unfortunately, public universities have been under assault. In our state, the Legislature spent a non-trivial proportion of its time taking University of Hawaii administrators to task for rising tuition costs and high administrative salaries which they erroneously believe are causing the tuition increases.
There are many rebuttals to this misconception. First, according the , roughly 35 executives at the university earn over $200,000. If we reduced their wages by $50,000 each and re-allocated this to 15,000 or so UH students (roughly the size of the Manoa undergraduate population), it would produce a tuition savings of about $100. It is not the administration that is driving up tuition.
Second, since 2008, the UH budget has been cut in a Draconian fashion 鈥 by about $46 million. If this was entirely borne by the Manoa undergraduates, it translates to a tuition increase of about $3000. On top of this $46 million cut, the State recently refused to fund $22 million in salary increases over the next two years.
Because contracts must be respected and budgets must be balanced, this once again will fall on the backs of the students; expect another tuition hike that will surely face a harsh censure from the Legislature.
Finally, while lawmakers are rather fond of harping about tuition and executive salaries, there is never a parallel discussion about the potential benefits that the university could confer on the state. No mention is ever made of time to degree, graduation rates, extra-mural funding, publications, national rankings, faculty accolades, etc.
The Legislature appears to be single-mindedly fixated on micro-managing inputs at the same time that they are oblivious of the outputs that these inputs actually produce.
As a consequence of this meddling, including the aftermath of the so-called 鈥淲onder Blunder,鈥 the Western Association of Schools and Colleges wrote a letter to President Greenwood that raised concerns about the university鈥檚 autonomy from the state government.
The organization also suggested that many of the events of past year threaten the accreditation of the university. In response to these concerns, WASC requested a meeting with top UH officials, the governor and key lawmakers.
Much is at stake. First, we risk reduced access to higher education for the people of this state which could result in less social mobility. Second, the university risks losing autonomy which could put our accreditation in jeopardy. Finally, the university鈥檚 ability to attract talented people has been severely compromised. This is a high price to pay.
About the author: Tim Halliday is an Associate Professor of Economics at the University of Hawaii at Manoa.
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