“Your Investment In Higher Education”-Is The Investment In College Education Worth?
A major challenge faced by jurisdictions worldwide is reforming higher education policies to meet the pressures of increasing private demands for higher education and the heavily overstretched public budgets. Over the last several decades, the knowledge-based workforce of United States has transformed the American economy, though few people have questioned the value of higher education (Maureen par. 4-5). It is evident that enrolments in colleges have increased significantly up to more than a third in the last decade and the college credential has become a means of achieving a better life (Sandy, Charles and Jennifer 25). From pure economic perspective, many people have subscribed to the prevailing wisdom that college education is worth the future returns that accrue to the graduates: College graduates earn more money and are less likely to miss employment in future than their counterparts who are only in possession of high school diplomas (Maureen par. 12-15). Nevertheless, the onset of the 2008 Great Depression has shifted the viewpoints regarding the debate about the value of higher education. However, while it might seem that the value of a college degree has declined citing fall of wages and rising tuition costs, that is not the case.
The debate on whether higher education investment has significant returns to warrant the cost of education at colleges is a two-faceted discussion with the government initiating it while the parents and the students criticizing the move (Philip and Uros par. 1-2). The organizations mediate the playing ground by doing the necessary to ensure quality education at ‘affordable rates’, a situation that has seen many students from low-income families drop out of colleges (Bennett, William and David 31). The logic behind the debate is that the high cost of education has become a burden to the parents and the students since the government cuts on education funds following the Great Depression of 2008. Most American states have since implemented the plan of cutting higher education funding to channel such funds to the pressing matters of economic growth such as health care (Whitehouse par. 2-4). States have been reducing their contributions to public higher education, leaving the parents and the students to bear the larger part of the costs. The trend coupled with the slow growth of middle-class incomes has ever led to the decline in the affordability of public higher education (Whitehouse par. 5-7). Even as the students have borne the responsibility of settling their college tuition fees, the cost of education has outweighed the financial resources within the reach of their families.
The statistic reveals that between 1991 and 2011, the median household incomes only increased by 3 percent, with the inflation component inclusive (Bennett, William and David 37). Even though grants and tax benefits also realized significant growth, the cost of higher education realized a growth of 58 percent, much above the rate of growth in household income. Again, there is a looming threat of increasing tuition fees to the rate of enrolment in colleges. Research indicates that as the cost of college education increases, the number of students seeking enrolment in the colleges decline significantly (Sandy, Charles and Jennifer 31). More often than not, the federal and state governments provide financial aid to the students in public colleges to lower the burden, but research has revealed that the advertised tuition cost and the net actual cost of higher education, still affect the enrolment rates especially when the net price is high than most students can afford (Jaison and Richard 34). The increasing cost of higher education has greatest impact on the students from low-income families. For example, a study conducted by Harvard University researcher- Thomas Kane, in 1995 concluded that largest tuition fees increments happened during 1980s and during early 1990s and the result was the greatest ever widening of the enrolment gaps between students from high-income and low-income backgrounds (Bennett, William and David 48). It therefore follows that the tuition fees increment fuelled by the 2008 economic crisis is more likely to widen the gap between the high-income and low-income families further. Hence, as a matter of general principle, the increasing costs of higher education has a potential threat to college access and instead burdens the students with the increasing student loan levels (Sandy, Charles and Jennifer 33). The students from low-income families who attend colleges are having difficult moments as they work for several hours of the week in their bid to finance their education, a factor that places them at risks of dropping out of school. A study conducted by the U.S Government Accountability Office (GAO) in the year, 2003 revealed that college students who work for more than twenty hours in a week are likely to drop out of college (Bennett, William and David 61). In essence, the current trends in the American higher education sector implies that only the ‘financially muscular’ families can afford to send their children to better colleges with adequate academic facilities.
The cost of college education is increasingly increasing as the proportion of house wealth declines. For instance, the current tuition fees consumes close to 40 percent of the American median earnings, yet in the last decade, it used to consume less than a quarter of the American median earnings (Philip and Uros 2). Consequently, the total student loan beat the one trillion spot in 2012. In addition, since the year, 2000, the average federal PLUS loans for parents has gone up by about one-third to around 12, 000 U.S Dollars (Philip and Uros 3). The cost of higher education has skyrocketed and such move along with huge student debts are among the bases that form the inquisitive minds of families and the students themselves if at all they will get their returns from their investment in college education when the debt level is significant (Sandy, Charles and Jennifer 45). The inquisitive minds surrounding the worthiness of higher education in relation to the comprehensive cost-benefit analysis is a step forward (Philip and Uros 5). Returns of higher education is an issue that concerns both calibers of parents, whether high or low income earners since the economic returns form part of the ultimate price of any education system in the world (Bennett, William and David 77). More often, students and parents are not questioning the value of the college per se, but rather the value of attending particular colleges.
The returns of Americas investment in college education is under threat from affordability point of view. Nevertheless, the returns of investments in college education are not purely economic (Maureen par. 3-4). The returns from investment in college education has both economic and social impacts on the graduates and the society in general. Valuation of returns from an educational system is complex since there are certain aspects of educational returns that cannot be subject to monetary terms (Bennett, William and David 57). There is a college disconnect regarding awareness of the benefits of college that is to partly blame for the low enrolment rates in the colleges (Sandy, Charles and Jennifer 57). When students are aware of the benefits of college education, tend to pursue more education despite the costs while those who have academic qualifications tend to be reluctant to join colleges, as they are ignorant of the benefits of college education (Maureen par. 9-10). The returns also depend on such factors such as the faculty in which a student majors in, academic performance, and the college that one attends. Top students always have more opportunities as compared to low performers (Bennett, William and David 65). These factors are vital and explains the disparities that exist their future earnings after graduation. Therefore, we should blame the whole issue of low enrolments on high costs of education but rather focus on other aspects (Sandy, Charles and Jennifer 97). Economists often regard the college degree as ‘an experience good’ that is multipurpose and therefore, valuing its monetary net worth with certain degree of accuracy is almost impossible.
Parents and students must understand the concept of education as private and public investment and stop evaluating the returns from the perspective of the students instead of both the students their and families and the government (Bennett, William and David 73). With the cut of higher education funding by the federal government and states, the higher learning institutions have to acquire the necessary learning equipment to ensure high quality education (Barr par. 3-4). The educational resources are subject to diminishing returns and therefore requires regular updating, maintenance and acquisition if necessary. Inadequate funding of the higher learning institutions may fail to counteract the effects of diminishing returns thus, compromising quality of higher education (Maureen par. 7-12). The US federal and state governments are supposed to take adequate measures to increase the funding of higher education while balancing their budgets to avoid ignoring other critical economic aspects such as investing in child education (Bennett, William and David 99). The government should not over-emphasize activities of other sectors of the economy to the extent of neglecting a very crucial component of economic prosperity of any nation-an educated population. If the government does that, the enrolment rate will increase and the disparities in education seeking based on economic classes will narrow (Jaison and Richard 34). High quality education system yield the best returns, as the students are able to acquire necessary professional and life skills (Bennett, William and David 109). The realization of returns from such an education system demands for high costs of learning facilities and equipment. To achieve this, the organizations offering higher education have no option but to demand for more money from the students or parents through their children to operationalize good returns in future both for the students and for prosperity of the nation.
The US government ought to have increased the funding for higher education, also, the parents, and the students should understand the economic dynamics and work together in collaboration to make college education a success (Barr par. 4-5). The success of an education system is relates to the concept of ‘value addition’ that incorporates the achievements such as growth of knowledge, skills, abilities such as innovation and other attributes that student gain from their experiences while within the education system (Philip and Uros par. 4). Until we realize that child education is also a public investment, we will keep on complaining of the costs and neglecting other factors of importance (Barr par. 3-6). As the students struggle to obtain college regardless of the constraints, the government should draft and adopt policies to ensure that the funding of higher education is reasonably adequate.
In summary, the worthiness of the returns from higher education as a private investment should never be solely evaluated based on economic terms but also as a public investment. Both the government and the families share the benefits their investment in higher education. Based on research by the economists, the rates of returns for an average student with a college degree is a good investment.
Works Cited
Barr, Nicholas. “Funding higher education: policies for access and quality.” House of Commons Education and Skills Committee, Post-16 student support, Session 2 (2001): 24.
Bennett, William J, and David Wilezol. Is College Worth It?: A Former United States Secretary of Education and a Liberal Arts Graduate Expose the Broken Promise of Higher Education. Nashville, TN: Thomas Nelson, Inc, 2013. Internet resource
House, White. “The President’s Plan for a Strong Middle Class & A Strong America.” wvv» v. whilehouse. govfsitesrdefagrltffileslugloadslsottr (2013): 5.
Jaison R. Abel and Richard Deitz. In Economics And Finance: Do the Benefits of College Still Outweigh the Costs? Volume 20, Number 3. Federal Reserve Bank of New York, 2014. Web. 30 July 2014.
Maureen Woodhall. Funding Higher Education: The Contribution of conomic Thinking to Debate and Policy Development. No. 8. The World Bank, December 2007. Web. 30 July 2014.
Philip and Uros . Making College Worth It: A Review of the Returns to Higher Education. VOL. 23 / NO. 1. Future of Children, Spring 2013. Web. 30 July 2014.
Sandy Baum, Charles Kurose and Jennifer Ma. How College Shapes Lives: Understanding the Issues. College Board, October 2013. Web. 30 July 2014.