Paying For College For Dummies. Eric Tyson

U. of Michigan at Ann Arbor 91.6% 4. U. of California at Berkeley 91.1% 5. U. of North Carolina at Chapel Hill 90.9% 6. U. of California at Los Angeles 90.9% 7. U. of Florida 88.0% 8. U. of Wisconsin at Madison 87.2% 9. College of New Jersey 86.6% 10. U. of Maryland at College Park 85.4% Four-year for-profit colleges 1. Los Angeles Film School 78.6% 2. Monroe College (N.Y.) 73.6% 3. Pima Medical Institute at Tucson 73.0% 4. Santa Fe U. of Art and Design 69.6% 5. New York Film Academy at Los Angeles 69.4% 6. SAE Expression College 68.9% 7. Bob Jones U. 65.6% 8. School of Visual Arts 64.1% 9. International Business College at Fort Wayne (Ind.) 59.3% 10. Neumont College of Computer Science 58.8%

Now, I must point out here something that may seem obvious. These high graduation rates, especially at the traditional non-profit colleges, shouldn’t be viewed in isolation and don’t, in and of themselves, necessarily tell you much about the educational quality of the school. Or stated another way, the schools on these lists don’t deserve all the credit for these high graduation rates! After all, these schools (at least the non-profit ones) are some of the most selective in the country so there’s a so-called selection bias going on here. These colleges only take well-prepared, high achieving students and the vast majority of these students come from families that highly value this type of educational experience. And, because these more selective colleges have so many applicants, they generally have plenty of more affluent families that can afford the high-ticket price and can afford to keep their kids in college for the duration of the four years. So, of course these students are more likely to succeed at completing college and graduating in a timely fashion.

      By contrast, colleges that have more open enrollment, that take more risks on less prepared students are naturally going to have a lower graduation rate. But that doesn’t mean that some of those schools with less impressive graduation rates necessarily provide an inferior quality of education or an inability to graduate your child on time.

      Don’t college grads make more money?

There are plenty of studies and analyses that show that those who have more education generally enjoy lower rates of unemployment and higher employment income. The graphic in Figure 1-1 clearly shows that those with higher levels of education reap considerably higher wages from work and lower unemployment rates.

      Source: U.S. Bureau of Labor Statistics

      FIGURE 1-1: What higher education means for earning higher wages and having lower unemployment.

There’s no question that education is a good thing and can develop your brain, critical thinking skills, interpersonal skills, etc. What jumps out at me from the graphic is that it looks like there’s value in completing high school, completing college if you’re going to attend and possibly considering an advanced degree. But that doesn’t mean that all education, or formal education, is worthwhile regardless of the cost. You should always consider the expected cost versus benefit or the return on the investment since attaining a college degree takes a good deal of time and money.

      Another important point about Figure 1-1 — the “income premium” associated with college (compared with a high school degree) peaked in the year 2000 and declined about 10 percent over the next 15 years. College costs of course continued rising rapidly over this period further undermining the potential value of a college degree.

      Parents and families should also be aware of the research report entitled, “Is College Still Worth It? The New Calculus of Falling Returns” by William R. Emmons, Ana H. Kent, and Lowell R. Ricketts, published by the Federal Reserve Bank of St. Louis Review, Fourth Quarter 2019. That report found:

       “The college income premium is the extra income earned by a family whose head has a college degree over the income earned by an otherwise similar family whose head does not have a college degree. This premium remains positive but has declined for recent graduates. The college wealth premium (extra net worth) has declined more noticeably among all cohorts born after 1940. Among families whose head is White and born in the 1980s, the college wealth premium of a terminal four-year bachelor’s degree is at a historic low; among families whose head is any other race and ethnicity born in that decade, the premium is statistically indistinguishable from zero. Among families whose head is of any race or ethnicity born in the 1980s and holding a postgraduate degree, the wealth premium is also indistinguishable from zero. Our results suggest that college and postgraduate education may be failing some recent graduates as a financial investment.”

      You can read this study at: https://files.stlouisfed.org/files/htdocs/publications/review/2019/10/15/is-college-still-worth-it-the-new-calculus-of-falling-returns.pdf.

      SUCCESSFUL PEOPLE WHO NEVER GOT A COLLEGE DEGREE

      You’ve surely heard of a number of “successful” people who accomplished significantly without a college degree. This would include folks like Michael Dell founder of Dell Computers, Steve Jobs founder of Apple, Bill Gates founder of Microsoft, John Mackey founder of Whole Foods Markets, Travis Kalanick founder of Uber, Larry Ellison founder of Oracle, performers Russell Simmons and Ellen DeGeneres, fashion designer Anna Wintour, and food guru Rachel Ray to name a few. These folks obviously are outliers in terms of their high level of professional success and associated financial earnings.

      And there are plenty of lower profile people who have done quite