Home > A1, Learning > Does your College Return your Investment?

Does your College Return your Investment?

The increasing cost of college tuition raises significant questions on what they are exactly spending the tuition money on. The colleges first seem to be thinking of trade-offs, meaning that there are alternatives the colleges must face when making a decision on how to use money that they have gained. Colleges are now facing rising costs for health insurance, technology, and infrastructure. The nicer dorm rooms, and beautiful buildings create an incentive that encourages a student to want to attend that particular university. Attending any college today is pricey, but what is the fifty-thousand dollar price tag really paying for?

On average most college tuitions have been rising 5% per year for the past ten years. In economics terms, the increasing rate of the cost of college is double the rate of inflation. Inflation is the “percentage rate of the change in price over time”  (Sullivan 340). Inflation is simply the increase in prices. According to the Daily Ticker, the average annual cost for a four-year public college is nine thousand for in-state tuition, and out of state is around twenty two thousand. The staggering price of a private college is about twice as much as a public college. Most parents would suggest that every expensive college is worth the money if the education is appreciable.Image

The increasing unemployment rate for recent graduates could make you think twice of the costs   going to an expensive university. According to the Daily Ticker’s Aaron Task, “A lot of people would say the return on your investment is well worth it.” However, the unemployment rate for college grads is about 4% and those over 25 the employment rate is 3.9%. According to the Bureau of Labor Statistics Data, the unemployment rate for all workers for the first fourth months of 2013 is an average of 7.7%. Even though some colleges are more prestigious than other schools, every individual from all schools compete for that one job application. Even though one student might spend more for a college it does not guarantee that individual will be given a job straight out o

The unemployment rate for 20-29 year olds who graduated in college in 2011
Credit to bls.gov
Image

This diagram illustrates the costs that we give up, and the benefits that we receive in return for spending this money. The entire diagram is ROI which is the worth of your investment.
Credit to: rms.net

Although most parents seem to believe the more expensive the college the more likely their child will be employed, however, according to the latest data from BLS, recent college graduates with a bachelor’s degree had a 13.5% jobless rate. “The median weekly earnings of college-educated, full-time workers have dipped, to $1,141 after adjusting for inflation in 2012, from $1,163 in 2007” Although people are spending lots of money for college, there are only 150 institutions that return the investment according to Bennett. “Returning the Investment” means that the college is not only affordable with a higher education, but it reflects the salaries received college graduates.

Despite all of these previous claims, Michael Santoli , the senior columnist for Yahoo! Finance writes that, “No one is turning down the top universities because they can’t quite afford it.” Even though colleges are very expensive people have the ability to pay for the college through loans, and if the student has the desire to attend that college they will understand that there are tradeoffs to going to an expensive college. Students need to understand that the trade offs to going to an expensive college is financial debt for years, and the college might not have a good return of your investment.  On the supply-side of this issue the colleges cannot increase the number of students because they enroll the same number every year because there is only a certain amount of spots for that institution available. When people are looking at different colleges they need to look if that college will provide a good return on their investment, and if that college is worth the increasingly expensive tuition.

Abby Jennings

Advertisements
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: