Undergraduate Degrees Are Not Under-Priced

$60,000 seems like a reasonable investment for a valuable degree, but the value of an education depends largely on the student’s major, intellectual ability, and the job market. Certain fields are currently over saturated. This makes it more difficult for many graduates to find jobs without investing in even higher forms of education, such as certifications or a Master’s degree. Some majors are not as viable as others. A person with a bachelor’s degree in Liberal Arts, Fine Arts, Journalism, Mathematics, etc. may have a harder time finding secure employment because those degrees are not in high demand amongst the majority of employers. A person with a degree in Engineering, Business/Management, and Computer Science/Information Systems will be more likely to find secure employment because these degrees are in higher demand and offer employees higher salaries.

However, it has been argued that simply having the bachelor’s degree is not nearly as impressive as it was in the past. This is because higher education is a business and the product is in high demand. Generation Y contains the highest number of college graduates, but many of them are not employed in their field of study, are pursuing more higher education, or working for less than they anticipated. “Students aren't learning much, and employers know it. Universities want to keep their paying customers (colloquially known as students), so grade inflation has increased. Today, a high GPA doesn't mean what it once did”, writes David N. Bass in Bailout U (http://spectator.org/archives/2011/11/17/bailout-u). I can attest to this statement as a college graduate of 2009. While completing my degree it was not uncommon for me and my peers, attending various universities across the country, to be enrolled in classes that graded students based on misleading curves. For example, if a professor grades students on a curve and the highest score amongst students on a final exam is 87% than anyone who scored an 87% on that test received an A+. That means some students (on a ten point grading scale) scoring as low as 68% could qualify for a B-. That is ridiculous, but it happens in schools all across the country. Obviously, standards vary from class to class, college to college, and university to university, but this makes it difficult for employers to determine the value of a bachelor degree.

Still, a hardworking, highly motivated, undergraduate, with skills that are in demand amongst employers, will find a job. In this scenario, a $60,000 investment in an education is worthwhile. However, an undergraduate tuition that is $75,000 per year is not a sound investment. It is a dangerous one. That undergraduate degree would cost approximately $300,000, and although it is possible to pay that debt with a lifetime of income the road to recovery would be long and somewhat uncertain for the average undergraduate.

At this point, “the average salary for college graduate jobs is $46,000” (http://www.simplyhired.com/a/salary/search/q-college+graduate). The average undergraduate will earn anywhere from $60,000 - $80,000 annually at the pinnacle of a career based on statistics I read at: (http://en.wikipedia.org/wiki/Household_income_in_the_United_States) So, let’s assume the average college graduate is making approximately $50,000 a year at the beginning of their career and making $80,000 before retirement at age 65. It’s plausible that an average college graduate like this earned $3,500,000 (after taxes, before living expenses) throughout their entire career.

Let’s imagine this average undergraduate finished college with $300,000 worth of debt at 6.8% interest. The cumulative debt of $519,604.09 is to be paid on a monthly basis over a span of 20 years. This person has a starting salary of $50,000 and earns approximately $42,500 after taxes. Let’s imagine this person’s monthly budget looks something like this: Monthly Income: $3,540; Monthly Expenses: College Loan Payment - $2,290, Monthly Rent Plus Utilities - $600, Food - $400, Healthcare and Dental - $120, Cellphone Bill - $30, Car Insurance - $120, Car Payment - $100, Transportation - $200. In this scenario our successful college graduate is spending $320 more than they earn every month during their first year of employment. He/she will have to find a part-time job to compensate for the difference.

My point is, college already costs a considerable amount of money and most students/families have to take out loans to flip the bill. College degrees do not have any guaranteed value attached to them. The value of an education is dependent on the student, area of study, and job market. An undergraduate degree is not grossly under-priced, and it is not necessarily over-priced either. But, asking undergraduates to pay $75,000 a year for tuition in the near future would be unrealistic. It would be a risky investment for most people.