Is College Worth the Cost?

There has been much talk about the inflating costs of a college education. I’ve wondered, too, whether the enormous loans students take out for a degree in the liberal arts can be justified. For example, a creative writing major cannot expect to pay-off his debt by solely relying on the muse; he will see a more affordable application of his skills if he goes into a field like marketing – and then we might ask why he didn’t simply acquire an economics degree in the first place.

Notwithstanding the individual choices students make, the collective action behind the student loan industry constrains millions of peoples’ finances. More students apply to college, tuition rates go up, and so the government subsidizes loans, in turn leading more people to apply, raising rates. . . you get the picture. At some point in the cycle, a sizable proportion of individuals will no longer make good on their debt.

And so from these two observations – individual choice and collective action – some have asked whether the cost of college outweighs the benefits to individuals and to society. The answer to that question is an unequivocal yes. But at the same time, people should not respond by not attending college.

The reason for saying students should attend college despite rising costs involves the fact that the demand for college graduate is inelastic: the need for college graduates remains high (see a recent report) without regards to the cost of producing those graduates. From another perspective, more harm can be done by reducing college output than by incurring the costs.

The answer may disappoint some pundits (though not all): we must make our education system more efficient, which is to say, we must reduce the cost of educating our citizens without reducing the overall output of educated citizens. So far, we don’t know how to do that…

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