Higher education can be a bad financial investment – Study

For years, a college education has been viewed in the United States as integral to securing a stable, well-paid job. President Barack Obama has emphasised this point time and again, most recently during a speech on 31 May, when he urged Congress to prevent student loan interest rates from doubling this summer.

“The surest path to the middle-class is some form of higher education," Obama said in the Rose Garden of the White House, surrounded by college students. “Higher education cannot be a luxury for a privileged few."

But college is not for everyone, and can in some cases be a bad financial investment, according to a new study by the Brookings Center on Children and Families.

The analysis, called “Should Everyone Go To College?”, found that a university degree was a smart move for most people, but not for all. Factors such as field of study, whether a student graduates and the type of institution all have a bearing on a student’s financial return from college education.

“While the average return to obtaining a college degree is clearly positive, we emphasise that it is not universally so,” wrote authors Stephanie Owen and Isabel V Sawhill, who is co-director of the centre and a respected labour economist.

“By telling all young people that they should go to college no matter what, we are actually doing some of them a disservice.”

According to the study, college was a good financial investment for students who attended "selective" colleges – especially a public university – and majored in financially secure fields such as science and technology.

But a university degree may not be a savvy choice for students who attend less rigorous institutions, take out large student loans, or get degrees in lower-paying fields, such as the arts.

Students who attend the “most selective” colleges will make more than $620,000 in lifetime earnings, while those at “minimally selective” schools will earn only a third as much, the study found.

Of the 853 institutions analysed, 170 of them – or one in five universities – had a negative return on investment, and the authors cautioned students to “think twice” before choosing these colleges.

“There is a cultural mindset that everyone should go to college,” Sawhill told University World News. “But many people would be better off getting specific training in a trade or a craft, like computer programming or welding.”

Some criticism

But the report has been criticised for ignoring the role that race and low economic status play regarding access to and success in college, suggesting that only those who can afford it should go.

“Underneath a lot of these numbers there is a stark difference in resources available by race and class,” said Anthony P Carnevale, a research professor and director of the Georgetown University Center on Education and the Workforce.

He also said the report did not offer much evidence to support its statement that obtaining a college degree might not benefit everyone.

“In essence, the report does find supporting evidence that there is wide variation in returns, but not much evidence to support that BAs are not worth it,” he said.

Sawhill said this particular study looked purely at the return on investment of obtaining a degree, and not at the issue of equality in higher education. But she does support making college affordable.

“College in the US is becoming much more a privilege of the elite, and I deplore that kind of inequality,” she said.

Terry Hartle, senior vice president at the American Council on Education, said the study results weren’t particularly surprising or groundbreaking.

“Higher education, like any other investment, is not a sure thing,” he said. “No investment is absolutely positively guaranteed.”

But he stressed that a person who obtains a college degree will be more financially secure, civically engaged and less likely to divorce than those who do not attend college.

“Anyone who is qualified ought to have the opportunity,” he said. “The evidence is overwhelming that you'll be better off in the long run.”