Is College Still Worth It?

Based on a study by Cecilia Elena Rouse and Lisa Barrow, Does College Still Pay, published in the Economists' Voice, vol 2, issue 4, 2005 <http://www.bepress.com/ev/vol2/iss4/art3/>

As the costs of college rise, and as more people face the monthly college loan payment, some might begin to wonder, is it worth it? Does college still pay?

For years, the answer to that question was a resounding yes. As the job market increasingly demanded higher-skilled workers and as the bottom dropped out on the wages of the lowest skilled workers, the returns to college were huge. The key reason for the increasing value of a college education was the cost of not having one. By 1989, wages for college grads were more than 70% higher than for high school graduates. That started to change in the 1990s as the wages of non-college grads began to increase, closing the gap somewhat. Couple that with the rising tuition costs and the fact that more youth must fund their tuition with loans instead of federal grants, many are wondering, can I afford to go to college, or is it the case that I can't afford not to go?

Rouse and Barrow recently calculated those costs. They find that the average full-time student who entered college in 2003 and finished in four years would pay $30,325 in tuition and fees. But on top of that are the wages forgone while attending school. If you could make $20,000 each year between age 18 and 22, the future wages from a college degree had better pay that and more if college is worth the time and money. Factoring in this "opportunity" cost of attending college, the cost of attending college rises to $107,277. Therefore, to be valuable, college has to boost lifetime earnings by at least $107,277.

In fact, it does, and more. College will boost a graduate's earnings by $402,959, leaving the net value of a college degree at about $295,682. In short, a student entering college today can expect to recoup her investment within 10 years of graduation. In other words, college still pays.

The big question, though, is will college continue to pay in the near future? For the foreseeable future, the likely answer is yes. Wages for high school graduates would have to increase by 95% with no increase in college-grad wages in order to make the value of college disappear. Even during the booming economy of the mid-1990s, real wage growth for high school graduates averaged only 4.6%. At the same time, we must recognize that while the real wages of college graduates have historically increased over time, globalization and technological progress could change all of that. With technological innovation, even our most skilled workers are starting to compete for jobs with workers overseas, and as supply and demand demands, wages for college grads would likely fall.

Thus, like all other investments, paying for college involves some risk. But, it's also likely to remain one of the best deals around.


Cecilia Elena Rouse is Professor of Economics and Public Affairs at Princeton University and is a member of the MacArthur Research Network on Transitions to Adulthood. Lisa Barrow is a Senior Economist at the Federal Reserve Bank of Chicago.

Upward Mobility and Class in America

Originally published in the St. Paul Pioneer Press, July 20, 2005, as an op-ed.

Teresa Toguchi Swartz, Douglas Hartmann

As Americans, we’d like to think that where or to whom you’re born is only a temporary status. With a little hard work, some gumption, and a bootstrap, we can be anyone we want to be. That certainly seems to be the case with a group of 20-somethings who grew up in St. Paul, whom our research group is interviewing in an effort to better understand how the transitions from adolescence to adulthood are unfolding today. These young adults believed for the most part that they were the authors of their lives and, if they were unhappy with the way things were going, that they could plan for and act to change things.

But is that really the case? Or does class matter in America? Consider this: Our findings show that in their early 20s, nearly two-thirds of young adults receive financial support from their parents, and 40% of those in their late 20s still receive assistance from parents in some form or another. However, and here is where class rears its head, young adults in the top one-fourth of family income categories receive three times more in material assistance than those in the bottom one-fourth. This occurs even though higher-income youth are only 10–15% more likely to attend college than low-income youth.

The importance of class was probably no more evident than in our interviews in St. Paul. While most, although not all, of the young Minnesotans we spoke with could count on their families for continued support as they established themselves, it was clear that those from more affluent families received significantly more financial help—for their education, rent, health and car insurance, and even down payments on homes—while their less well off peers spoke of struggling to pay for these or forgoing them altogether.

Consider Jake and Bo, two white 29 year olds who both attended St. Paul public schools. Following high school, Jake’s parents paid for his BA at William and Mary. After graduating, he attended a prestigious private law school on the East Coast, also financed by his parents. Bo, meanwhile, attended a local public university, which he felt was his only option because his mother could not afford to foot his education bills. Despite working substantial hours while attending college, he dropped out when he found himself having to go without food. Jake is now an attorney, while Bo has worked a series of manual and service jobs. Recently laid off, Bo has returned to community college, still hoping to someday earn his degree and land a well-paying job.

Yet despite these distinct trajectories, Bo remains optimistic that he can make a turnaround. Bo is not alone in this. Predictably, we found optimism over work and financial futures more prevalent for white, middle-class, and highly educated youth. But even those facing more challenges believed that hard work and determination would eventually pay off. As Bo said, “If I have to do something completely different tomorrow, as long as I’m willing and able to work at it, I think I’ll be fine.” The one concession for poor and working-class kids, it seemed, was to have reined in their aspirations; for example, hoping for a “clean” office job if they currently did manual labor or for increasing their commission from phone solicitations or bill collections.

On the whole, young people did not see their background and past experiences as determining their futures, and they viewed the world as offering them the chance to continually reshape their life through reflection, planning, goal-setting, and hard work. In short, the American Dream.

Indeed, the advantages of the private scaffolding that families provide their young adult children remain hidden, despite the very real inequities in material support that young adults from different classes receive from their parents. Relying on private families to deal with the many, larger structural changes (such as declining wages for males, higher housing costs, higher college tuition, more jobs that demand higher education) means that those with more resources will be better able to afford more—and a class divide will only widen. Without stronger safety nets, such as affordable health care, subsidized education (think GI Bill), school-to-work supports, and others, the optimism and can-do spirit of Bo and his peers may quickly disappear.


Teresa Toguchi Swartz, Ph.D., is Assistant Professor of Sociology, University of Minnesota. Swartz is the author of Parenting for the State (Routledge Press, 2005). Doug Hartmann is Associate Professor of Sociology, at the University of Minnesota, and is the author of Race, Culture, and the Revolt of the Black Athlete: 1968 Olympic Protests and their Aftermath (University of Chicago Press, 2003).

John Q. Public: Connecting the Dots

Connie Flanagan

Could it be that the fear of “big government” is receding? Could it be that voters are beginning to demand more from their elected officials? If a turning point is indeed upon us, we should make doubly sure that the youth of this country are swept up in the movement, because without them, the future is surely lost.

As we all know, young adults of today have slowly disengaged from the political process. Their confidence in the Supreme Court, the executive branch, the Congress, and the press has sunk precipitously. Their concept of a public has all but disappeared.

When I posed the question to students in my Civic and Community Engagement class, “Who is the public, what are public goods, and what can the public expect from its government?” without exception they thought “the public” meant poor people, those who could not afford the luxury of good (private) schools and thus had to attend (inferior) public schools; those who could not afford their own car and had to depend on unreliable and often unavailable “public” transportation.

After my initial shock, I realized that this generation had grown up during several decades when public goods and services were eroding. Before they were born, President Reagan deregulated the media, the airlines, and the health care industries. Financial support to public schools eroded as voucher programs encouraged families to instead buy private school services and as legislation such as No Child Left Behind forced school districts to pay for (typically private) tutoring when their test scores didn’t measure up.

Students are ripe for action. Although they rarely place their faith in government, they do respond to issues in their local (and global) communities and believe citizens can make a difference. National studies of college freshmen show that more than 80 percent have done community service, up significantly from the 1980s and 1990s. And not just bake sales. The level of their ambition and social contribution is impressive.

We can revitalize democracy by making the most of the more positive attitudes towards a role for government as well as youth’s idealism, energy, and commitment to a common good. To do so we must help younger generations see the links between their direct actions in community service (whether tutoring in low-income schools or testing water quality in local streams) to public policies and to hold public officials accountable. Citizen groups like Democracy Rising groups are calling for a truly representative democracy in which the voice of the public is restored. The younger generation must be reconnected to the political process through their community and public service. Some service learning and public scholarship courses in high schools and colleges are already connecting the dots between community service, public issues, and government accountability. More is needed.

Perhaps the voters in California, Colorado, New Jersey, and Washington State who rejected tax cuts do signal a shift in attitude toward “big government,” and perhaps Hurricane Katrina, like September 11 before it, further underscored the importance of a vital government and public sector. Perhaps the voters will show my students—and all those other committed youth—that the public is all of us, in it together.


Connie Flanagan a professor of youth civic development at Pennsylvania State University and a member of the MacArthur Research Network on Transitions to Adulthood, which is studying what it means to be a young adult in today’s society. She is co-editor of On Your Own Without A Net: The Transition to Adulthood for Vulnerable Populations (University of Chicago Press).

Are Young Adults Afraid to Leave the Nest?

Frank Furstenberg

There is a lot of talk these days in the popular press about the apparent unwillingness of young adults to cut the apron strings and leave home. The story line favored by many commentators is that the current generation has been so indulged by their parents that they are becoming dependent on a family welfare system where they feel entitled to remain at home and draw allowances from their parents indefinitely. And their parents, in turn, are incapable of giving them the gentle shove they so badly need to go out on their own.

Curiously enough, there is simply no evidence to substantiate the claim that young people in their late teens or twenties are more likely to remain at home today than they did in the past once we account for their marital status. Over the past several decades, the marriage rates of 18–34 year olds have been falling, mainly because youth are delaying marriage longer than they did a generation or two ago, not eschewing it. Because single people have always been far more likely to live with their parents than their married counterparts, more young adults are living at home today. Yet, even given that, young adults are still far less likely to live with their parents today than in the past. Using historical information from the decennial census, authors of a recent report in the American Sociological Review report that the proportion of young people aged 20–29 are about half as likely to live with their parents today than they were in the post-war period of the 1940s and 1950s. So the proportion of single youth who remain at home has been dropping at the same time that more young adults are single, creating the appearance that young adults have a greater taste for living with their parents.

Evidence is mounting that young adults are not remaining single so that they can mooch off their parents. They are deferring marriage because these days it takes much longer to acquire the requisite schooling and job experience to obtain a well paid job. And most say that they are unwilling to enter marriage without having a career and stable employment. That’s not such a bad thing.

In the meantime, many do look to their family for help during the transition to adulthood. Of course, they would be less likely to do so if government support for education were still at the level it was in the 1950s and 1960s, if housing costs had not risen to unparalleled highs, and if well paying jobs were more readily available to young people. As a result of these rising costs and demands, parents are increasingly called on to help out, offering room and board, help with tuition, or other supplements to help launch their offspring. Contrary to popular images, young adults are also doing their fair share. The overwhelming majority are working, often at low-paying jobs, or they are in school full-time. Many are juggling jobs and education to help pay for school.

Perhaps the public ought to lend more of a hand. But tell that to taxpayers who are reluctant to provide more money for educational grants, health insurance, or housing subsidies for young adults. Short of giving more tangible assistance to young adults and their families, it is time to stop berating young adults for not growing up faster or criticizing their parents for helping them through a more difficult transition to adulthood. Instead, we should take solace in the fact that the family is alive and well in America today.

Frank Furstenberg, Zellerbach Family Chair of Sociology at the University of Pennsylvania, heads the MacArthur Research Network on Transitions to Adulthood and is co-editor of On the Frontier of Adulthood (University of Chicago Press, 2005).