By Miles K. Davis, Ph.D.
If we accept the media headlines, more than 416,000 Google references and hundreds of reports from the federal government, we would conclude that not only is a college education expensive, it is a waste of time and will saddle you with a lifetime of debt — especially if you attend an independent college or university. However, the reality is more nuanced than what is commonly portrayed, and there is more good news than normally reported. Let’s explore each of these issues in more detail.
Is college education expensive? Yes it is. However, not in the way or to the extent that government statistics report it. The 107% increase in tuition since 1992 that is commonly reported by the government is based on list prices colleges and universities publish in their brochures. Until 2003, statistics did not factor in financial aid grants or scholarships awarded (both need and merit-based). In essence, it is like reporting the sticker price for a car. Very few people actually pay sticker price (the MSRP), or in the case of higher education, the list price.
Therefore, the long-term increase of tuition increases in higher education will forever be distorted by the historical way it was tracked. The discrepancy matters because the United States is in the midst of debate over whether higher education is worth the cost.
This debate largely focuses on the amount of student debt. According to a Brookings Institution report, student debt did increase in 2013. However, that is not because of the amount of debt students carry. It is tied to the increase of students overall who are pursuing higher education.
The reality is that students are no worse off than they were 20 years ago. One of the main reasons for this is that income increases over the lifetimes of college graduates kept pace with their increased debt, and student loan payments stayed the same or decreased since 1992. Whether something is worth the investment of time and money must factor in, not only the present value, but also the future value of the investment. Higher education still produces some of the best return on investment (ROI) for dollars spent.
What is even more misunderstood is the cost of an independent school education, more commonly referred to as private schools. It is assumed the cost to attend a private school is significantly higher than the cost to attend a state-funded university. However, government funding cuts to public colleges and universities has forced them to raise the price of tuition to meet the unsubsidized costs. This brings public institutions closer to the cost of attendance at private schools.
The real issue of this debate is the amount of debt carried by undergraduates from independent colleges and universities. According to the National Center for Education Statistics report released in 2013, one quarter of students who graduated with a bachelor’s degree from an independent four-year college or university did not have any educational debt and nearly half had less than $20,000 in debt. Also, it is interesting to note that the median debt spread for all bachelor degree recipients who borrowed at public versus independent institutions during the 2011 – 2012 school year was only $4,375.
Education still represents the best chance for social and educational advancement. A high-quality education can be achieved at a reasonable cost from independent universities like Shenandoah University.