This question might seem odd to someone who comes from a family of degree-holders. And somehow, despite these mounting costs, the number of college-goers keeps increasing. For the first time ever, a Pew Research Center analysis of census data shows fully one-third of the nation's 25- to 29-year-olds completed at least a bachelor's and more than half attended at least some college. It's also a question Jonathan Robe of CCAP recommends starting with when sitting down with your teenager to discuss future options. He says parents and their high-schoolers should of course closely examine the costs of various institutions and the likelihood of receiving financial aid. "But it is also important for them to look at the probability of graduation and of employment after graduation," Robe said. In other words, don't just look at the general data that shows people with degrees earn more than those without; you have to go deeper. For in spite of the lovely graphic on StudentAid that shows escalating payoffs for higher degrees, it's no guarantee (i.e., I live in New York City, a town filled with the most highly-educated waiters in the world). But if your teen is savvy enough to know what career path he wants to follow, Robe recommends researching the salary potential by major and estimating how much they are likely to make in their first job. Payscale.com ranks all the majors by starting salary potential, with "petroleum engineering" topping the list at $98,000 per year. Sadly my favorite field, the arts, sits near the bottom in the $30,000 range, and they've completely left off my dream job: Rock Star.
And this is where the math gets fun. "The general rule of thumb is that their starting salary should be equal to the total amount of debt they have accumulated by the time they graduate," Robe said. "If they don't keep their debt load below that level, they will likely have trouble financially." So, ignoring all other possible reasons for college--such as personal growth, expanding your mind, and dreaming of winning a Grammy--college-bound students can do the math to find out if it's worth the financial investment. And if you're really into numbers, you can even use the following formula (which my son, Zachary, created) to calculate how many years it will take until you catch up economically to where you'd be without going at all: N = Y x Sw + C Sc - Sw That's the Number of years to catch up (N) equals Years of college (Y) times Salary potential Without college (Sw) plus the Cost of College (C) over your Salary potential after College (Sc) minus your Salary potential Without college. Got that? That means if my son spends $250,00 on four years of college to trade up from his above-minimum-wage surf shack job at 20,000 for a 60,000 job in math or physics, it will take 8.25 years after college before it's worth it. But if his new job only pays 40,000, it will take 16.5 years. This formula comes with a number of caveats, including the assumption that the salaries would remain constant and that college has no additional benefits. I ran it by the Director of the Cornell Higher Education Research Institute, Ronald G. Ehrenberg, for his thoughts.
"This type of calculation makes sense but it is subject to lots of qualifications," he said. "Earnings profiles vary with age, and they are steeper for more highly educated people. Earnings depend upon where you go to college on average for some occupations but not for others." And besides, no one knows with certainty what occupation he or she will wind up in, because Ehrenberg himself changed majors twice--going from math to physics to economics--and I personally am on about career #12.