$1 million in earnings: Why the cost of a college degree makes sense

As the cost of college has risen in the last 25 years, so have doubts about whether or not students should mortgage their futures to obtain a degree.

In an August 2 interview on CNN Money, Michael Crow, president of Arizona State University, is asked if going to college still pays off. His answer? “Unequivocally yes.” Mr. Crow goes on to say;

Our calculations and those of economists say the return on investment for a college education, in terms of additional earnings, is about 12% per year over your lifetime.

(Read the whole story.)

A ticket to the middle class

Having a bachelor’s isn’t as rare as it was in the 1960’s and 1970’s, but not having one could prevent upward mobility–and cost roughly $1 million over the course of a lifetime. Michael Gagne, education reporter for the Fall River, MA Herald Newsmade this point clear in a recent piece highlighting the benefits of having a college degree even in industries where they were once superfluous.

In 1968, few mechanics had earned an education further than a high school diploma. Same with factory workers, and other blue collar laborers.

But according to the United States Bureau of Labor Statistics, today’s employers in the automotive industry now prefer to hire mechanics who have undergone a postsecondary education program. In 2007, more than one-third of auto mechanics had postsecondary degrees or certifications of some variety.

The piece goes on to quote Jeffrey Stohl, of the Georgetown University Center on Education and the Workforce, who notes that, in 1970, two-thirds of people in the middle class had only a college degree. Today that number has dwindled to 45 percent.  “Entry into the middle class, for all intents and purposes, necessitates a college degree,writes Gagne, paraphrasing Stohl. (Read the whole story.)

Students’ starting points make all the difference

The phrase “entry into the middle class” is key. Given the cost of college, it’s easy to argue that for low-income students, maybe it’s not worth it. That’s exactly the wrong takeaway. Especially for low-income and first generation students, a college degree is clearly worth the cost. As Ninfa Murillo, a member of the Dell Scholars Program team and a first generation graduate whose parents both worked in food processing plants, wrote in a post last month, college degrees can open up “new doorways for [low-income students], their families and their communities for generations to come.”

A college degree at any cost? No

Another point: While a degree is worth a lot, it’s not worth mortgaging a students’ future. Students and their families need to be savvy consumers. The actual cost of college depends on a wide range of factors, including the structure of loans, the financial aid available from schools and scholarships, in-state versus out-of-state tuition expenses, and more. As Michael Crow notes, the published price of in-state tuition may be $100,000. The average cost of tuition is closer to $3,800 a year.

Net-net: Especially for students striving to break out of the cycle of poverty, college degrees are worth it. The trick is identifying the right college at the right price and devising a long-term plan to stay the course.

Read Pat Regnier’s piece, “Does college still pay off?” on CNN Money.