More than ever, going to college is a good idea. At least that’s the sentiment from a couple recent studies. According to recently published research from the Federal Reserve Bank in San Francisco, over the past 40 years, despite fluctuations, “college graduates always earn more.” The authors reach a firm conclusion: “the boost to earnings from a college degree is large and persistent.”
A study from Georgetown’s School of Public Policy that Poets&Quants recently reported on revealed college graduates make an average of $1 million more than high school graduates over a lifetime. Still, a Wharton professor thinks parents and high school students should think twice before automatically pouring time and resources into a college degree.
“Fundamentally, I was concerned the rhetoric was way too optimistic,” says Peter Cappelli when asked about the motivation behind his recent research for a soon-to-be-released book called Will College Pay Off? “(College) is a huge investment for families and it’s not exactly a secure bet.”
A huge investment, indeed. According to The College Board, a non-profit devoted to expanding higher-education access, the average cost for a year at an in-state public institution for 2014-2015 was $23,410. That number accounts for tuition, living expenses, and books. For a private college, families can expect to spend $46,272. “Kids see an incredible assault of advertising telling them to go to college and get a job,” Cappelli says. “The first issue is will the kid actually graduate. That is far more uncertain than people think.”
The National Center for Education Statistics says about 41% of college students fail to gain a four-year degree within six years. “That’s pretty astonishing,” Cappelli says. “But only the first thing.”
DEBT AND A ‘BOOM AND BUST’ JOB MARKET CAUSE FOR HESITATION
Next, Cappelli says, is the issue of student loans. College graduates are leaving with a degree – and an average $30,000 in student loan debt. Specifically, 70% of college graduates in 2013 exited school with $28,400 in debt. “There’s a lot of pressure on parents that to be a good parent, you need to send your kids to college,” Cappelli says. “But the people making that case are not explaining how you pay for all of this.”
Cappelli also nods to the current employment market. “It’s very unpredictable. For a lot of fields, it’s boom and bust, boom and bust, boom and bust,” says Cappelli. He points to the highest-paid degree, petroleum engineering, as an example. Once a bust, petroleum engineering now yields $4.8 million over a lifetime, thanks in large part to the development of fracking. Petroleum engineers can expect to make about $136,000 a year.
“Those guys (with petroleum engineering degrees) used to just wait tables,” Cappelli says. “What brought it back was fracking and the fact that everyone gave up on the field. Now kids will start pouring into these programs and there will be too many seeking jobs and it might go bust. It’s just hard to predict those things.”
TAKING AN INTROSPECTIVE LOOK
Cappelli does believe college is a worthy investment for the right people—as long as families cover all of their bases. First, Cappelli says, families should be thinking long-term, which is admittedly difficult for a 17-year-old. “You don’t want to be picking your career when you’re 17 years old,” Cappelli explains. “People change. You don’t want to say ‘I want to be this kind of engineer’ and then go to a college that is only good at that. It’s not the smartest thing to do because careers shift and majors change.”
One way to combat this issue, according to Cappelli, is to spend time researching what the college is good at and the support of the career service office. “Parents should ask, ‘Is it the kind of school where my kids will learn a lot and get an exposure to all sorts of different things?’” Cappelli says. “Look at their career placement stats and office. What kind of support do they offer? Where do they have sophisticated ties? Who is coming to campus to recruit? Are they really helping the kids get jobs or just turning them loose?”