The Cost of College - James Surowiecki

As an American who has lived overseas, pursuing higher education in two different countries, I always like to look at policy issues like this from an international perspective. I have read Organisation for Economic Cooperation and Development (OECD) publications about comparative higher education policy over the years, as well as the writings of Mark Blaug, one of the founders of the study of the economics of education.

The submitted article notes that "more than two million college graduates are unemployed." I can remember a high school classmate in the early 1970s who seriously thought that if the government subsidized everyone to go to college, no one would be unemployed, an example of fallacious reasoning about economics. Plainly, just increasing the supply of college graduates does not magically bring about a stronger economy with full employment. The comparison newly independent countries in Africa with newly developing countries in east Asia in the 1950s, 1960s, and 1970s shows, in fact, that the best strategy for national economic growth is to strengthen primary education for all learners rather than to subsidize university studies for a small elite. Productivity growth is built on the capabilities of the masses.

As long as what college major to pursue, and whether or not to complete a degree, is a matter of individual choice, as it long has been in the United States, it makes sense to have much of the financing of higher education rely on individual resources. That's the consistent finding of international studies of higher education: college access improves, and college quality of instruction improves, if students can rely on private credit markets or family savings to fund their higher educations, rather than having all applicants who are admitted gaining a full governmental subsidy for their studies. And as a policy matter, it makes sense to put the decision on whether or not to study for a degree in folklore (a degree progam actually offered at Harvard!) in the hands of the person, the student, who will most be at financial risk if the decision does not result in gainful employment.

The article's conclusion, "Until America figures out its priorities, college kids are going to have to keep running just to stand still," has it about right. If college studies are for workforce preparation, major subjects will be prioritized by guesses about future workforce needs. If college studies are for students to find themselves and become exposed to the world outside high school, that's fine, but that has a low-priority claim to subsidy from taxes that are imposed on all taxpayers, including those who will never attend college. For the moment, college is expensive, but it is not unattainable, and for many students enrolled in college, it appears to have a positive return on investment.

(Basis for knowledge: I'm a Baby Boomer who was going to college during the era identified in the article as the one recent era in which college degrees didn't offer a growing income advantage, who worked my way through a state flagship university with no debt upon graduation. My oldest son now has sufficient scholarships and financial aid actually to put money in the bank at the end of each semester as he studies for his degree, and his degree offers excellent employment prospects even in today's bleak economy.)

"There’s a big flaw in the bubble argument, though: things may look grim for college graduates, but they’re much grimmer for people without a college degree."

No. There's a flaw in the reasoning above. For years in the US, society has perceived that there is something wrong with a young person who did not complete high school. Want to find a good mate? Stay in school. Want a decent job? Stay in school. So, young people, fearing societal judgement and the accompanying disadvantages, stayed in school. Given these judgements, those who did not complete high school likely indeed had something wrong with them or came from families without means. So, a simple comparison of the outcomes for high school graduates vs. dropouts usually has shown significant differences. What percentage of these differences can be explained by the selection bias of the sample pools vs. actual effects of the treatment (a high school diploma)?

The same selection biases hold true for a college education. Few with ambition have considered skipping college. Without any metrics on the abilities, goals, etc. of those skipping college, we can not determine whether differences are the result of selection bias or treatment.

My Hungarian in-laws "dropped out" of high school in 1956 to come to the US. During the revolution, they escaped across the border into Austria and eventually got to the US (Green Cards effectively handed out when they got of the plane). My father-in-law attended a few night school classes over the years, but never obtained any formal degrees. He retired as the CEO of a small manufacturing organization for which he still consults -- a good outcome for anyone by most accounts. The difference between him and the average middle class American teenager was that it took a certain level of ambition and risk tolerance to decide with only a few days notice (the revolution was sudden and short-lived) to leave his home country for an uncertain future. Not entering into a degree program was an active choice -- not a passive result of low ambition.

I am annoyed with the popular press's continued assertion that education has value simply because the outcomes of those with education are better. Unless someone measures various personal characteristics and then randomizes the treatment (education vs. workforce entry), I won't buy into claims about how valuable education is.

Ironically, I have two graduate degrees.

That article was written in the future!

I'm a pretty high-ranking editor at a large publishing company and I did not go to college, so I am very lucky. However, I feel for those who are in serious debt because of school. I believe that next year, 40% of all student loans will default. That's terrible.