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<March 2015>



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What Experts Are Saying About The Value Of A College Education

By: Stewart McClure, Regional President

The cost of higher education has skyrocketed and student debt is growing. It seems there are more reasons than ever to doubt the value of a college education. Is there still real value to a college degree? Here’s what the research reveals.

The Numbers Reveal Pros and Cons

A 2011 study by the Pew Research Center asked, "Is College Worth It?" The study revealed that the answer depends on who you ask. According to the majority of public respondents 18 years old and above, the answer was “no.” The study showed that 57 percent of Americans say the higher education system in the United States fails to provide students with good value for the money spent, and 75 percent of Americans say that college is too expensive for most people to afford.1 In addition, the study revealed that a record number of students are leaving college with substantial debt, which 48 percent say makes it harder to pay other bills. A quarter of respondents acknowledged that the debt has had an impact on their career choices.2 In contrast, six-in-ten college presidents say the system of higher education in this country is headed in the right direction, but a substantial minority—38%—say it is headed in the wrong direction.

On the flip side, College Board reports that college graduates tend to have higher earnings than people without degrees, on average about $20,000 more a year. They also are more likely to receive health and retirement benefits with their jobs, and are far less likely to be unemployed.3 College Board also revealed in their Education Pays report that college graduates were more satisfied with their jobs, and felt college helped them grow intellectually and socially.

A Dangerous Myth: College Costs Have Soared Beyond Value

According to David Autor, an MIT labor economist who has studied the relationship between higher education and earnings, college costs have not soared so high as to make the degree less valuable. “[That is] a dangerous myth that leads people to make bad choices,” said Autor. He noted that a college degree leads to a lifetime earnings increase of $250,000 to $300,000.4

Economist Tony Carnevale, director of the Georgetown University Center on Education and the Workforce, noted that a college degree delivers value through increased job opportunities following graduation. As lower skill jobs are shipped overseas, and with computers taking up more of the mundane tasks, jobs increasingly require advanced education. Today, nearly 60 percent of all jobs in the U.S. economy require higher education.5 “Skills that used to be reserved for senior technical people or managers are more and more required [of everyone],” said Carnevale.

Jeffrey Selingo, editor of The Chronicle of Higher Education, noted that the emphasis often is on four-year B.A. programs, when there are other options. Students should also consider certificate programs and two-year colleges. Community colleges also are good options for families who may not have the funds to support a four-year degree.

Tell us what you think on our Facebook page.

How to Finance College So You Don’t Break the Bank

The bottom line is that a college degree is valuable if it can be properly financed. One option is to refinance your primary mortgage as an alternative to student loans. Refinancing uses the equity you’ve built in your house, and often offers a lower interest rate than private student loans.

Here’s how it works. If a home worth $600,000 carries a mortgage of $150,000 and an additional $50,000 is needed to pay for college, the owners could refinance for $200,000. Not only would they have the extra $50,000 to go toward college, but they also might get a lower interest rate on their new mortgage loan.

Read our Tips on Saving for College blog for other ways to prepare for financing a college education. For more information about refinancing, visit Lakeland Bank’s residential mortgage page or stop by your local Lakeland Bank branch office. We’re ready to help you meet your financial goals for all of the important milestones in your life.

1 http://www.pewsocialtrends.org/2011/05/15/is-college-worth-it/
2 ibid
3 http://trends.collegeboard.org/education-pays
4 http://web.mit.edu/newsoffice/2013/forum-on-higher-education-costs-0208.html
5 http://americanradioworks.publicradio.org/features/tomorrows-college/dropouts/value-of-college-degree.html

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