I read an interesting article recently titled “Is College Tuition Really Too High?” by Adam Davidson. It is common knowledge that the cost of a college education has increased at a much greater pace than the increase in inflation. The other side of the equation is that, even with the increased cost, college educated workers receive a good return on their college investment through increased income over their lifetimes.
Mr. Davidson suggests that college education also has benefits for society as a whole. Educated workers are more productive, which translates into growing companies and a growing economy. In addition, those with college educations are generally healthier and more involved in their communities. Thus, college-educated workers have a decreased need for welfare, health care assistance and the criminal justice system.
The question for society could then be, how do we ensure a greater portion of our population is college educated? The answer is two-fold, according to Mr. Davidson.
First, we need to commit more of our resources to funding higher education. This is a difficult sell given that our federal and state governments are struggling financially. Many government officials see cuts in higher education as a means to balance their budgets. However, studies show that this is only a short-term fix. Walter W. McMahon in his book “Higher Learning, Greater Good,” showed that “a post-secondary degree has a return on investment of roughly 15 percent a year.” The additional tax revenue generated through the college graduate’s higher income more than pays for the cost of the education.
Yet, the amounts spent on higher education don’t achieve much benefit if the student drops out of college and doesn’t graduate. The second part of the answer, then, is student support. Many of the students who drop out of college come from families and communities without many college graduates. Most are poor and have to choose between paying for college or paying for their daily expenses like food, housing and transportation.
One possible answer to this dilemma is an experimental program at City Universities of New York, a community college system. This program supports students not only with tuition and fees but also public transportation. In addition, and probably most importantly, the students receive “mandatory and intrusive guidance” from counselors to help them navigate through college.
The use of this program has increased City Universities’ graduation rate from 16 percent to 52 percent. Plus, students directly involved in this program are twice as likely to graduate as those not in the program. The cost of this program is relatively high: $19,000 per student. However, the potential benefit is much greater. It is estimated the students graduating from this program will pay an estimated $165,000 in additional taxes over their lifetimes and will save $40,000 in health and public assistance costs. Even with inflation, the program will more than pay for itself.
Here’s the full article: http://www.nytimes.com/2015/09/13/magazine/is-college-tuition-too-high.html?_r=0Judith Ackland has more than 26 years of experience in accountancy and financial planning, including seventeen years as a CFO of a diverse business. She started Crystal Financial in 2010 to help a wide array of individuals, families, and business owners better understand their finances and how good financial management could help them achieve their goals. Judith has an MA in Professional Accountancy from the University of Nebraska at Lincoln as well as a Certified Public Accountant Certificate and a Certified Financial Planner designation.