Summary of the Article
Although higher education has traditionally been perceived as the most reliable path to socioeconomic mobility, increasing uncertainties heralded by student loan programs, high sticker prices, which refer to the published or advertised cost of attending a college or university, such as tuition, fees, room, and board before any financial aid, and the increasing distrust in and for institutions have led to questions regarding whether college is still worth it. In the wake of these questions, various studies have been conducted to provide empirical evidence into the true value of a college education or its lack thereof. These studies have specifically focused on comparing long-term earnings, employment rates, and the overall economic benefits of college graduates to those who have only acquired a high school diploma. Daly and Bengali’s (2014) study “Is It Still Worth Going to College?” is an example of such studies.
In the study, Daly and Bengali ((2014) examined the benefits and value of obtaining a four-year college degree in an era where students face the challenge of rising tuition costs and graduates contend with uncertain job prospects. The study utilized data from U.S. workers, focusing on the difference in earnings between those with a college degree and those with a high school one and the associated costs of obtaining a degree including tuition fees and lost wages while attending school. This data was obtained from the Panel Study of Income Dynamics (PSID) (Daly & Bengali, 2014). The results indicated that college education term financial benefits of college education exceed the initial investment and opportunity costs. Their results indicated that the benefits of higher earnings significantly outweigh the costs of tuition and lost wages during the years spent in school. In particularly, the earnings premium that accrues to those with college education averaged about $20,300 annually over the past decades and has even increased for recent graduates (Daly & Bengali, 2014). The results also indicated that college graduates enjoy lower unemployment rates compared to high school graduates.
The Value of Going to College
Based on the findings of Daly and Bengali’s (2014) study, it is still worth going to college, especially for the average student. The substantial earnings, the fact that the costs of attending college are fully recouped by age 40 for an average graduate, and the lower unemployment rates associated with obtaining a college degree provide a compelling argument regarding the value of going to college. However, the case of LeBron James is unique. His decision to skip college and go straight to the NBA presents a unique case that cannot be generalized to the average students. James has an extraordinary talent that many people do not have, and which allowed him to secure a highly lucrative career without the need for a college degree. For most individuals, such opportunities or talents are rare, which makes the financial security provided by a college degree more reliable. Therefore, although LeBron James made the right decision given his unique circumstances, it is not a model that applies broadly.
Opportunity Costs for Going to College
Although going to college is beneficial, it is associated with various opportunity costs. One of these costs involves the potential earnings that individuals forfeit if they were to obtain a job or engage in an income-generating activity instead of attending school. The cost of paying for tuition and other associated costs, including purchasing textbooks, housing, meal plans, and other fees, comprise another opportunity cost as the money used could be invested in stocks or starting an income-generating business. However, these costs vary depending on individual circumstances. Notably, the type of institution that one attends and the field of study influences the amount of money that would be spent. For example, a student who attends a high-tuition private college will incur higher opportunity costs compared to one who attends a more affordable public institution. In addition, students in high-demand fields like engineering, law, or medicine might recoup their costs faster than those in lower-paying fields. Moreover, decisions regarding seeking a college education are unique and vary from one individual to another. Various factors influence this decision, including career goals, the financial situation, and personal preferences. Therefore, although existing evidence from studies like the one by Daly and Bengali (2014) supports the value of obtaining a college degree, every individual should consider their unique context. Some individuals might opt for vocational training or start a business because these pursuits align with their goals better, while others might choose a college education based on the belief that it will provide them with better opportunities.
Conclusion
The article by Daly and Bengali provides strong evidence on the value of a college degree as an investment for most people. Despite the high costs associated with higher education, the long-term benefits in terms of increased earnings and lower unemployment rates make it a worthwhile investment. Although there are exceptions like LeBron James, they are the exception rather than the norm. For the majority of people, higher education provides the most viable and reliable to financial stability and socioeconomic mobility and success. In addition, although the decision of every individual varies, there is general consensus that college offers significant advantages that are difficult to ignore.
Reference
Daly, M. C., & Bengali, L. (2014). Is it still worth going to college? FRB SF Weekly Letter, 13, 1–5. http://councilofpresidents.org/docs/r_d_docs/fedReserveBank_econLetter_5_14.pdf
