Monday, February 18, 2013

Failing ROI of Higher Education

We all know that not all college degrees are created equal. The idea that someone who graduates with a degree in 17th century French literature is surprised that they can't get a high paying job (or any job at all) has been a running gag for a while. has the list of the eight degrees with the worst return on investment. The list is both amusing and kind of scary. To make things even more fun nearly a third of all undergrad degrees at CU are on this list.

Most of the degrees are pretty laughable. Certainly, no one goes into theology for the money. The one that stuck out to me was "Education". It was the only degree on the list that trains people to fill a vital role in society. We need teachers but more than that we need good teachers. Given the horrendous proficiency scores and high remediation rates for high school graduates, one can certainly question the quality of teachers being churned out.

There's another point I'd like to make. Every economist worthy of the title knows that ROI depends, not just on the returns, but on the investment. A student going to CU and living in the dorms could spend nearly $100,000 getting a degree. That number drops to a shade over $60,000 if that student goes to Adams State University instead. Because of the lower investment, the ROI is greater. It's even greater if the student's four year degree takes five or six years.

One could argue that the education provided by CU is worth that extra $10,000 per year but that's debatable. When I chose to go to Adams State, it was one of the best teaching schools in the state. (I was an ed major at the time.) Just because a university is a large, land grant institution doesn't mean that it will provide a student with the best education in every field.

The post a suggests that we "ought to be taking a closer look at what we’re funding." I agree. Perhaps we should be looking at funding universities that offer better value for students with professors who actually teach the courses they're paid to teach rather than pawning them off on some grad student.

There seems to be a prevailing view in Denver that "higher ed" means "The University of Colorado". When looked at through that lens, why should Colorado fund a institution that's sitting on a couple hundred million bucks and gets only a small fraction of their budget from the state? Instead, Colorado would be better served taking money from CU, which could stand on its own with a little effort, and funding institutions that are providing a better ROI by lowering the amount that needs to be invested.

More than that, though, we need to be drilling into students that they need to be taking responsibility for their own education and the costs associated with it. Yes, that psych degree looks easy but it's not going to make students a huge amount of money. If that students piddles around and doesn't graduate on time, that very expensive degree just got more expensive, both for the student and the taxpayers that are helping to subsidize him.

In fact, I think that's the bigger problem. Yes, some degrees have a low ROI but that, in and of itself, isn't a problem as long as the student doesn't spend the rest of his life drowning in debt. The problem is that students think that can hang around in college for an extra year or two, jacking up their costs, and not expect there to be financial consequences.

The idea that a student can waste their first year or two "finding themselves" is foolish. Students should be coming out of high school with some idea of what they want to do. It's quite possible that their career path would be better served by not going to college but rather to a trade school or other form of specialized training. The time to make that decision is in high school not a year or two into college.