The Problem with College Isn’t That It’s Worth Less (or Worthless), but That It Costs More

I know that sounds like I’m channeling my inner Yogi Berra, but bear with me. A recent article by David Leonhart refuting claims that college is a waste of money has led to a further round of related posts (as you’ll see, I agree). But the reason the ‘college is a waste’ arguments have any traction is not due to what colleges are delivering, but what students (or their parents) pay to attend college. The price of college is becoming prohibitively expensive in light of an educational model–the real benefit–that really hasn’t changed much since the 1950s and 1960s. Before I get to the benefits, let’s consider the costs. Here’s what college, including all expenses, fees, and so on, cost in 1960:


The median household income in 1960 was $5620 (pdf). Housing was cheaper, thanks to suburban settlement policies. Scholarships, especially the GI Bill, could cover most or all of these costs. Importantly, the minimum wage was $1.00 and rose to $1.15 in 1961. That’s key: if we rescale the cost of college in terms of minimum wage hours, we notice something critical. Someone who worked after school and during the summer in high school, and, once in college, during the summer and maybe a few hours a week could pay for college–at least a state school–without incurring debt. With a median household income of $5620 (and half made more than this), many families could also help out too.

I don’t want to be overly pollyanish about this, but college was far more affordable than it is today (the only job for college students that could possibly pay the total cost of school by itself I can think of is ‘exotic dancer’). So the question then becomes what exactly is one affording? College has several key functions:

1) Credentialing. If you want to attend a professional school, you need a degree.
2) Signaling. Employers realize that if you can graduate from college, you probably (though not always) be brought up to speed relatively quickly.
3) Basic skills. The ability to write and know some other basic skills is worth something to employers.
4) Finishing school. Like it or not, the U.S. is a class-riven society. College performs a critical role in socializing students in professional-class mores (and, unfortunately, too often values)
5) Expanding one’s horizons. I mean this both academically (learning things, reading books one otherwise wouldn’t have read), as well as the gains of being exposed to different ideas, places, and people.

This really hasn’t changed since the post-WWII expansion of higher education. Functions 1 – 4 have definite economic benefits, as Leonhardt notes. But other than the credentialing function, most of these gains are fairly nebulous and diffuse. In the long run, all of these things are worthwhile. But college is so expensive–and out of reach for someone whose family can’t foot the bill–that the entry costs are prohibitive, or require incredibly daunting loans. In 1960, for many students, there was an economic path through college, so diffuse outcomes were acceptable. In 2011, beginning adult life with massive debt makes diffuse outcomes far less appealing.

That’s why I think the question of the value of college is being raised.

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6 Responses to The Problem with College Isn’t That It’s Worth Less (or Worthless), but That It Costs More

  1. Jim Thomerson says:

    I grew up working on the family ranch. From the ages of six through fourteen I raised goats for money to go to college. When I sold out, I got $5 per goat. When I entered the University of Texas in 1953, tuition was five goats per semester. In a couple of years tuition doubled, to 10 goats per semester, so the cost increase started a long time ago.
    Top end, pedigreed, registered goats go for about $500 today. I haven’t done the math, but I bet one could still pay for college by raising goats. 😉

  2. becca says:

    Very clear thinking on this post (even if the wording of the title disguised it), nice to see.
    @Jim Thomerson- even in goats, it’s more than twice as hard now.
    It took you 10 goats per semester, now it would take more like 25. Total cost at UT-Austin is now about 25k/year, or 50 goats at $500 each (so 25 goats/semester).
    Plus, the costs of feeding/watering/vet care for goats have probably also increased. Counting goats only in terms of sale price, and not net-profit after factoring in costs, is a bit questionable.
    Still, I did enjoy imagining college degrees from various places in terms of variable heights of stacks of goats.

  3. Jim Thomerson says:

    I suppose it is a family tradition. My mother went to college on proceeds of a herd of goats jointly owned with her brother. My expenses were absorbed into the ranch operations. There is good money in goats if one is totally subsidized.
    At my professional institution, Southern Illinois University at Edwardsville (one of those places with both direction and place in the title) Undergraduate tuition and fees (includes textbook rental) is $4,432.40 per semester. That’s not exactly one goat a semester more than I paid, because the 10 goat tuition did not include some fees.

  4. Misaki says:

    “Functions 1 – 4 have definite economic benefits, as Leonhardt notes.”

    While a signal that correlates to another function along all of that function’s range has value even if it’s noisy, many signals have a maximum value and their economic value cannot be assured. Variable costs to send a signal and the phenomenon of deliberately avoiding sending a signal but instead using alternate signals, mean that a given signal can have negative net economic value to society.
    This is dependent on the specifics of the situation, and it would obviously be better for a society to improve the quality of the signals that are in use. The way to do this might not be obvious to everyone:

  5. Joe Shelby says:

    There are other factors involved in a lot of these numbers, of course. For example, “Housing costs were cheaper then” – this wasn’t the GI bill so much as the single income family, which started to end in the 1970s as more women went into the work place.
    Mind you, they went into the work place not just for personal satisfaction, but also to improve their family’s standard of living including buying a better (re: bigger) house. Thus, the demand for houses (particularly larger houses) started to climb and with it, the price points all jumped to where a 2-person income became the ONLY way to afford a house in many areas.
    *Some* aspects of college prices can be attributed to the same – once the university degree became the only way to get a job that makes more than $20K out of the box, combined with the general rise in population (and NOT a rise in the number of schools), and then combine that with the over-effective marketing of some schools, even public schools (JMU, VaTech, UVA here in Virginia) and you get a huge demand that was going to increase the cost even before tax cuts and budget cuts from unconcerned conservatives (and litigious lawyers) got into the picture.

  6. nichole says:

    Also: inflation rate from 1960 to 2011 = ~651.6%
    Yale tuition: $2,300 (1960), $49,800 (2010)
    $49,800-$17,286.80=$32,513.20/17,286.80*100%=188.08% more than inflation. No wonder people go into debt to pay for it now when they didn’t have to 50 years ago.

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