Episode 3: Is college still worth the Cost?

Lately there has been a lot of talk that the cost of a college education is just not worth it anymore. This episode delves into whether or not the return on investment truly is valuable.

Full Transcript

Steve Meredith: Hi everybody. I'm Steve Meredith, and you're listening to Solutions for Higher Education, a podcast featuring Scott Wyatt, the president of Southern Utah University. Scott joins me this morning.

Scott Wyatt: Good morning, Steve.

Meredith: Good to see you. Today we're going to talk about what kind of an investment a college education is. I know for most of—certainly recent—history, that's been kind of a "no-brainer." But there's been kind of a push lately, certainly in some corners, that the investment of a college education is just simply too steep now, and that the return on investment is not worth it. I know you have some data that shows that that's not necessarily true, is that right?

Wyatt: Yeah. So there's…that's right. There's a variety of ways to look at this. And let's walk through a few of these. So the first one is: what are the opportunities? How many jobs are out there? And if we…if we look at this from 2008 forward through the recession and the recovery to the most recent data that we have available, what we can see is, is that there has been a loss of jobs for high school graduates or high school dropouts, to the tune of five and a half million. There are five and a half million less jobs in America available for those who have a high school diploma or less.

Meredith: Wow.

Wyatt: But if you look at those that have a bachelor's degree or higher, there has been an increase of 8.6 million jobs. There are 8.6 million more jobs in America available for those with a bachelor's degree than there were in 2008. There actually wasn't a loss of jobs during the recession for college graduates. And there's been a boom of jobs in the recovery. So there's a lot more opportunities. The next question might be, "Yeah, but how much money can I make?" And the data there is really clear as well. The difference between the lifetime wages of a college and high school graduate is a million bucks. So, if you choose to just graduate from high school and go to work, you'll make a certain amount of money. And on average, if you choose to go to college, you're going to make a million dollars more. That's a lot of money over a lifetime. And interestingly enough, it's not just a college degree because the difference between the highest and lowest paying majors is about 3.4 million. So while the average earnings of a college graduate is a million more than high school, you can really bump that up even more if you choose to have a major that's going to lead you to one of these higher paying jobs.

Meredith: So there was never a time, even during the worst of the recession, that there were fewer jobs available for college graduates, and in the recovery it's been no contest in terms of the number of jobs available for college graduates versus non-college graduates?

Wyatt: That's right. If you look at the start of the recession to the point at which we say the recession basically ended, 2008 to 2010, the number of jobs stayed almost exactly the same. It went up and back a little bit, and then beginning in 2010 it started to explode again.

Meredith: Plus, you're going to make at least a million dollars more over your life time, which means that unless you have—well, I know people carry hundreds of thousands of dollars of student debt—but even still, you're going to be able to pay that off easier than have had you not made that investment.

Wyatt: Yeah.  So if you go to medical school and you borrow a couple hundred thousand dollars, you'll pay that off a lot more rapidly than if you go to a really expensive place and get a degree in a less remunerative career. But we took this data for Southern Utah University, and admittedly, Utah has a lower tuition than most states. We, in fact, have the fourth lowest tuition of all the states in the country. That's because the legislature has been generous and are still contributing at high rates for us to help us along and keep the tuition down. If you look at Southern Utah University, we charted this out. We said, "Ok, let's assume that one person graduates from high school and goes out and gets the best job he can. How much is he gonna make? And how much is he gonna make year after year after year with inflation?" And then we took the second person and said, "Ok the second person is going to graduate from high school, go to college, and so for four years, the second person will not be making any money—in fact, will be borrowing money—and then upon graduation goes out within a few months and starts a job…how many years does it take for that person to catch up?"

Meredith: How many?

Wyatt: Seven.

Meredith: Wow.

Wyatt: So seven years is all it takes for it to be a positive return on investment. Seven years. That's not very long. We're gonna work for a long, long time. Now, if you go to a very expensive private school and, depending on your major and depending on where you choose to go work it will take longer to get that return investment, but remember, the average is a million dollars more over a lifetime. And so even if you have to borrow $50,000 or $100,000, you're gonna make that back. The cost of tuition and fees and books for four years at Southern Utah University is less than a new pickup truck without any extras.

Meredith: Wow.

Wyatt: That's the investment people should be questioning. Not a college degree.

Meredith: Yeah. That's…I had never thought of putting it to a commodity or something like that. That's interesting.

Wyatt: Well and one of the questions that a lot of people have, I know I hear this from parents, "I want my child to major in this or that."

Meredith: Right.

Wyatt: Um…and certainly some majors are more likely to lead quickly to jobs than others, but graduates from all the different areas can expect to make a really good family sustaining income by mid-career. All the different majors.

Meredith: That's good news for liberal arts majors like me. *Laughter*

Wyatt: That's right.

Meredith: Well, is it just about money, though? Are there other life transforming things that happen as part of a higher education?

Wyatt: Yeah. So, you know a lot of people graduate and say, "I want the best paying job I can get." And other people graduate and say, "You know what? I actually value my lifestyle more." And so we all have different motivations. But this one is important, and that is the non-economic benefits. The non-economic return on investment. And what we find is that those who graduate from college live five years longer than those who didn't finish high school

Meredith: Wow.

Wyatt: That's five years.

Meredith: Shocking. Five year difference in mortality.

Wyatt: Four years to go to college and you get five years out of it.

Meredith: Yeah. Man, that…

Wyatt: Yeah. And it's not just living longer, it's living healthier. Those that have a college degree report better health. We also find that those that graduate from college are more likely to do service in their community, they're less likely to need state assistance, they're less likely to be unemployed…if there's a recession or downturn in the economy, there are more options to those with a college degree. We even have research that show that women, regardless of their income ability, regardless of whether they're working or not, report higher levels of happiness if they have a college degree than those that don't. And of course these are averages. But investing in you—there is no better investment than to go to college. None. Um…we've been talking, Steve, about a college degree—a bachelor's degree or higher—and I don't want to be guilty of forgetting to make a comment about the other kinds of jobs that are available that require education, but maybe not as much as a bachelor's degree. There's a lot of technical programs—a lot of technical schools—that lead people to really good paying jobs.

Meredith: Yeah, associate's degrees…

Wyatt: Associate's degrees…

Meredith: They represent usually a far less of a tuition investment and have in some cases, nearly as much payback as a bachelor's degree does.

Wyatt: Yeah. So we've got all this data. We know exactly how much money the average person gets with an associate's degree, some college, we know how many jobs are available for those people…um, it's not quite as good. So for example, an associate's degree or some college? Since the recession? The number of jobs that were available during the recession went down significantly. So those that didn't have a bachelor's degree but had some college suffered through the recession. And then during the recovery, those jobs came back. The growth in jobs from 2008 forward has been about 1.3 million. There's 1.3 million more jobs available for those with some college or a post-high school certificate or degree. That's contrasted with 8.6 for those that have a bachelors or better.

Meredith: Wow. That's still a pretty significant difference.

Wyatt: And our world is just changing. There are less and less and less jobs available for those with a high school diploma or less. So this is where we want to be. This is a great place, Steve. We get to spend our time doing the kind of business that leads people to higher happiness, longer lives, better health, less dependence on government assistance, less stress during recessions or economic downturns, and greater levels of prosperity. It's…we're really in a fortunate place to be able to do that.

Meredith: And we see that every day, the transformative effect that education has in the lives of people.

Wyatt: Yeah, and it's also fun, rewarding to just be around so many people every day, day in and day out—students, faculty, staff—who are all engaged in this business of learning and growing and that in and of itself is enough for my return on my investment in a college degree.

Meredith: You've been listening to Solutions for Higher Education, a podcast featuring Scott Wyatt, the president of Southern Utah University. We'll be back again soon. Thanks for listening, bye bye.