Debating the worth of college

Coddy Baken graduated from Portland State in 2010 with a bachelor’s in Liberal Studies.

He’s currently unemployed and faces over $30,000 in student-loan debt.

Coddy Baken graduated from Portland State in 2010 with a bachelor’s in Liberal Studies.

He’s currently unemployed and faces over $30,000 in student-loan debt.

“I’m using my inheritance to pay rent, and I’m on food stamps,” he said. “Not exactly how I pictured being a college graduate eight years ago when I finished high school.”

With tuition costs on the rise and a recession that seems never-ending, it’s no wonder that students and parents are questioning the value of higher education.

Author and venture capitalist James Altucher has made headlines leading the anti-college movement.

“We are graduating a generation of indentured servants who will spend 50 years or more paying down their student debt rather than starting companies and curing cancer,” Altucher recently blogged, “Most things that you can learn in college you can learn for free outside of college thanks to the Internet.”

But John Gallup, an assistant professor of economics at PSU, stands by the college degree as being a worthwhile investment.

“Despite big tuition increases, college is an unbeatable investment even at much higher tuition rates than students currently pay,” Gallup said. “College causes workers to earn so much more due to their higher productivity that the government would actually make money by paying the full tuition of students who wouldn’t otherwise attend.”

Gallup believes that degree-earners, not students who dabble in college and don’t graduate, are the ones reaping economic benefits.

Responding to Altucher’s idea that an entrepreneur can become more fiscally successful than your average college graduate, Gallup suggested that such a phenomenon is rare.

“Even for future dot-com tycoons, very, very few of them have such valuable and time-sensitive ideas that they’ll benefit financially by dropping out,” he said.

 Gallup’s bottom line: college tuition may be climbing to the ceiling and the job market swirling uncertainly, but a college degree is still an advantage in the long run.

 “Financially, graduating from college is a no-brainer. You do have to graduate to ensure the payoff, and the harder you study, the bigger your payoff.”

Altucher, himself a graduate of Cornell University, doesn’t stand alone on the anti-college soapbox.

Peter Thiel, technology entrepreneur and cofounder of PayPal, launched the 20 Under 20 fellowship late last year. The program extends grants to 20 youths under the age of 20 who agree to turn away from the college path and immediately pursue entrepreneurship. The grants awarded to the technology-inclined young people are as much as $100,000.

“You have to get rid of the future you wanted to pay off all the debt from the fancy school that was supposed to give you that future,” Thiel said in an interview with TechCrunch blog. “Maybe people at Harvard need to be doing something else. We have to reset what the bar is at the top.”

The anti-college sentiment is shared among well-to-do venture capitalists, hedge fund managers and some college graduates.

According to Baken, his degree doesn’t impress potential employers.

“The nicest response, if I get one at all, has been, ‘Great, you have a bachelor’s. What makes you actually stand out?'” Baken said. “If I walked out of school with a degree and viable job prospects, I would not be concerned about loans as much.”

And Baken isn’t alone. Time magazine reported this March that student-loan debt in the United States is passing the trillion-dollar mark, surpassing credit debt for the first time in national history. 

Current statistics generated by a Planet Money post on the NPR news site, however, show that college degrees are worth slightly more today than before.

The gap in 2001 between college graduates and non-graduates was a 2.5 percent difference. In 2010, the unemployment rate among college graduates ages 25 to 34 was 4.9 percent, while youth in the same age group who’d only earned a high school diploma showed a 13.7 percent unemployment rate.

Not only has the unemployment gap widened between youth with college degrees and those without, the difference in annual income between the two groups has grown largely as well.

In 1980, the average income of a college graduate between the ages of 24 and 35 was around $46,000, while the average income of non-graduates was $35,000.

Today, young people without college degrees earn an average yearly income of $30,000, while graduates earn $50,000 on average. ?