College Daze

In this stressful time of high-school students pouring over college applications (and for me, writing college recommendations), it’s worth a look at some of the financial aspects of the college (that’s “university” for you Canucks) experience. Incidentally, I should point out one thing in the differences in costs of attending Canadian vs. US schools that I realized recently (and really should have picked up on long ago): while Canadian schools are much “cheaper” on the surface, it must be kept in mind that pretty much all US universities include room and board costs in tuition, unlike in Canada where many students don’t live in university housing, and if you do it’s a cost over and above tuition. Factoring this in makes the cost differences much smaller (especially for state schools). This also means that the campus-oriented lifestyle seems to be a much bigger deal in the States. And while the whole dorm life thing sounds kinda fun, I guess, I wouldn’t give up my experiences at #1 1024 College Drive for anything. These included cooking for myself (while ignoring the dishes), hosting Halloween house crawls, collecting beer bottles for recycling, and having the most poorly decorated Christmas tree in modern history.

Back to the matter at hand: Neal McClusky has a piece over at Reason that describes the financial windfall of attending college. While we hear a great deal about the rising costs of tuition, it is rarely mentioned that student aid has skyrocketed even faster, thereby (on average) decreasing the out-of-pocket costs of attending college in America. McClusky also points out that the debt students face after college is peanuts compared to the estimated $1-million financial bonus a college graduate has over their working life compared to someone with only a high school diploma. And while I completely agree with McCluskly’s main point (students whine too much about the high cost of education, especially given that most of them are living pretty high on the hog while they’re at college, anyway), I do have a quibble with the comparison of the average $17,600 student debt to the $1-million in additional earning power. McClusky claims that this is equivalent to a $982,400 profit on their education. However, that is not only financially incorrect, it’s also conceptually misleading. First off, the $1-million in extra wages are accrued over an entire lifetime, and therefore future benefits are discounted, while the debt on student loans are costs right now, and therefore not discounted. It also seems to me to be somewhat disingenuous to compare benefits you get when you’re a 50-year old professional (and presumably, much wealthier) to costs you face as a 22-year old with little to no work experience, savings, or capital. If you were given that extra million bucks fresh out of college, than sure, compare the two directly. But in reality you have to overcome the debt at the time when you are least able financially to do so, and you get the extra wages at a time when you may already have been more financially secure. So yeah, break out the violins for the whining college kids, but don’t ignore the fact that ten or twenty grand in debt is a tough way to start out in the so-called real world. But even if the monetary benefits weren’t there, isn’t the experience of going to college surely worth the financial penalty? In my mind, it’s a no-brainer.