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Wednesday, Feb. 21
The Indiana Daily Student

With the tuition increase, many students ask the question, 'Is college worth it?'

Tuition Graphic #2

When the IU Board of Trustees voted to raise tuition by 5.5 percent for resident students  and 6.7 percent for nonresident students in May, it was just the beginning of a summer characterized by uncertainty for students.

IU President Michael McRobbie received a 12 percent pay raise that irked some students and staff, while financial cuts and reorganization led to layoffs across IU libraries.

A new Indiana law went into effect requiring students to verify their citizenship or pay the higher tuition of a nonresident student.

Then the United States careened toward defaulting on its national debt. A last second deal was made, raising the debt ceiling but at some cost: the loss of subsidized loans for graduate students.

With much of this leading to higher costs for students and the unemployment rate struggling to remain below 10 percent, some are starting to ask if college is worth the cost.


“This is something that really gets asked every 10 to 15 years, since at least 1950,” said Don Hossler, executive director of the National Student Clearinghouse Research Center and an education professor at IU.  “You get these studies comparing high school graduates with college graduates to see if it’s worth the investment.

“They look at not only the money spent on college, but also the money you are not earning while you’re there. The opportunity cost.”

With college, the opportunity cost can be anything you’ve given up to go
to school. For example, the hours you could be working instead of studying for class, the money you could be putting in the stock market instead of paying tuition or the cash you could be spending on food instead of spending on books.

Peter Olson, an economics lecturer at IU, said it’s important to consider not only the opportunity cost, but also the direct cost of tuition.

“You balance those costs against the benefits,” Olson said. “The return for an additional year of schooling has historically been around 7 percent. In the 90s, it went up to 9 or 10 percent.”

The degree itself has an additional 9 percent rate of return, Olson said. Those percentages are increases in earnings.

But for someone to have earnings, they’ll need a job first.


In 2010, the unemployment rate for those with a bachelor’s degree was at 5.1 percent — the highest rate since records have been kept. This year, it’s around 4 percent, according to the Bureau of Labor Statistics.

The national unemployment rate rose to 9.1 percent this summer. In Indiana, the rate improved from last year, but still hovers around 8.3 percent.

Hossler said during the recession of 1973 to 1975, the country was in a similar situation and asking itself the same kinds of questions.

“There was an issue of TIME Magazine, and the cover showed two students digging ditches,” Hossler said. “We’ve been through these cycles before; but the evidence suggests that while things are not as positive as they were five or seven years ago, there is still a good return rate. The rate for master’s degrees is even higher.”

There’s even a possibility that, within the next few years, undergraduate degrees will become even more valuable, he said.

“Some predict that there will be a shortage of college education degrees,” Hossler said. “People like me will be retiring. And there are not enough people in the pipeline to replace these folks.”

There’s also the possibility, however, of another change. And this one isn’t
as positive.

“Unless the payoffs increase, the return goes down,” Olson said. “You have a lot of people talking now about an educational bubble, just like any other asset bubble.”

While there has not been an educational bubble before, the effect would be like when any other economic bubble bursts, such as real estate or internet companies in the late 1990s.

The value of that asset would be downgraded, Olson said. Entry-level salaries would be smaller and lifetime earnings would be lower.

“College wouldn’t be worthless,” he said. “It would just be worth less.”


Of course, all of this rides on whether you even get a degree. Going to college and graduating from college are two very different things.

In a recent report co-authored by Hossler and released by IU’s Project on Academic Success and the National Student Clearinghouse Research Center, plenty of people are still finding college to be a necessity they are willing to pay for.

During the recession, a time when many thought higher education would be a casualty of the sinking economy, public four-year universities saw hardly any change at all, the
study showed.

Enrollment at community colleges actually increased.

Colleges across Indiana are seeing record enrollment this year, the state’s Commission of Higher Education reported, but the graduation rate remains relatively low.

Within four-year programs, only one-third of students actually complete college in four years. Even after six years, only half of the students in the program graduate.

Across Indiana and the country, only 25 percent of students complete two-year programs in three years.

Many students never graduate at all.

“We encourage someone who wouldn’t go to college to go to college,” Olson said. “The question is: Is that actually beneficial?

A lot of people don’t finish school. If these policies encourage people to waste a year or two of their lives, I’d consider it a misguided policy.”

There are many different aspects to consider when looking at how successful a college graduate will be, or even if they’ll graduate, Hossler said.

Different colleges have different policies to help with retention, he said, and different students have different backgrounds. What a student majors in also has an impact on the rate of return.

“It’s important to look at not just college kids across the board compared to high school graduates, but also the variation upon majors,” Hossler said.

With so many variations and paths, college is not a guarantee, Olson said. But, that doesn’t mean it’s not worth it.

“For the average student, there’s still a positive return to getting a degree,” Olson said. “In other words, college still pays for most students. It’s still worth it for most. But most doesn’t mean all.”

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