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    Is your BA really BS?

    Is your BA really BS?

    Kathleen

    I’ve written before about how higher education is the next bubble, and I’m glad that Mark Schneider of AIR has done some research on behalf of AEI to really hit the nail on the head. Here are your talking points, folks:

    average lifetime earnings advantage for college graduates is well below the million-dollar figure when forgone wages and the cost of a college education are factored in.

    • Incorporating those figures and using the Department of Education’s 2003 Baccalaureate and Beyond Longitudinal Study, Schneider estimated that the lifetime earnings advantage for college graduates ranges from $150,000 to $500,000.
    • The differences reflect earnings from open admissions schools to selective private schools.

    And of course the premium isn’t consistent across industries or employees:

    • The Census Bureau’s 2009 Current Population Survey shows that 20 percent of individuals making less than $20,000 per year have bachelor’s or master’s degrees.
    • Recent graduates, age 24 and under, are experiencing a jobless rate of nearly 10 percent.

    Even more problematic for future generations is that the gains from college aren’t growing over time.

    • In 1991, young workers with bachelor’s degrees earned, on average, 1.48 times the amount that those with only high school diplomas earned.
    • Young college graduates’ earnings peaked in 2000 at 1.68 times that of diploma-holders, then declined to 1.54 percent in 2009.
    • Keep in mind that the price of tuition increased nearly 300 percent during this same period.

    Right now, a bachelor’s degree is still a good option for many students. However, as prices continue to rise and gains in academic achievement and lifetime earnings stagnate, the bubble — the discrepancy between cost and value — will inflate further.

    I’m dreading the day when it will burst, though.

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    Comments



     
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    Just a guy | May 9, 2011 at 3:08 pm

    Tuition at universities in Washington State have gone up 40% over the last 3 years, and the fringe left nutters running the Legislature have just given them unlimited tuition setting authority… combined with allowing my alma mater the right to cut in-state slots by 150 for the next class in favor of illegal aliens and out of state students… as if our taxes didn't go to support these dens of inequity enough. http://seattletimes.nwsource.com/html/localnews/2014986635_tuition07m.html

    It's like giving an oxy-addict the keys to the pharmacy. And the end result will be the pricing out of the market most students not considered "rich," or the provision of yet another generation of graduates sunk under an additional layer of debt beyond that which they already bear from Obama.

    Kathleen, it would seem that there is a glut of college educators and it shouldn't be long before very cost efficient degree programs can be established that use distance learning for the large majority of the school/student relationship. I think the problem will be the status quo loving gate-keepers at the accreditation bureaus. If groups like the US Chamber of Commerce can be encouraged to evaluate and endorse low cost distance learning degree programs, then the accreditation gate-keepers will become irrelevant. Of course it will be difficult to field a football team and fill a stadium with distance learners — and it will be even harder to fill out a schedule if everyone goes to Google U.


     
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    Messes With Texas | May 9, 2011 at 4:44 pm

    Academic inflation would seem to mirror health care inflation in its frequency and severity. I wonder if they may share a common root cause, ie. distancing market forces from the equation.

    The majority of health care is paid not by the individual patient, but by an insurance company or county, state or federal government.

    Likewise in this age of grants, tax credits and government backed tuition loans, direct immediate cost to the student and his family whether by paying directly out of pocket or through merit to gain a scholarship have been minimized.

    When a student and his family are not required to put up front much of their own stake in education, it seems inevitable that the value of an education would be cheapened. Look at what has happened to housing prices since the advent of 0% down subprime mortgages.

    Since 1982 higher education costs have gone up 439% while the average family income has increased only 147%. (see page 10 of this study: http://www.webcitation.org/5yId89Igj)

    Not to mention that 40%+ of entering students don't get a degree. (http://www.nytimes.com/2010/07/23/education/23college.html) So, it's wasted time and debt for them.

    As you point out, Kathleen, even for the favored 60%, it's not peaches and cream.

    U.S. higher education is a bloated, overpriced, incompetent system that is just starting to face much needed tough questioning.

    Kathleen, another thing I found interesting; checking on the starting salaries of law school graduates, I learned that a graduate of Harvard Law School (which produced Obama) makes a couple of hundred less a year in starting salary than a graduate of the University of Texas Law School. But tuition for Harvard is about three times the tuition for UT.

    What is happening is that the loans, etc, are making a university education available to even those who should persue other fields of labor. When everyone has a Bachelor's degree, it won't be worth the paper it's written on. Me, I would rather see my son become a journeyman plumber @ $40/hr.


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