College Worth the Cost? Not for Investors... and Not for Self-Motivated Learners?

I've told students that college is a great place to be during a recession. You go to class, think big thoughts, and when the recession is done, you ride out into the revitalized workforce with more skills and earning power.

An eager reader sends this article from SmartMoney.com's Jack Hough, who questions whether the investment in college is worthwhile, in a recession or otherwise. Hough runs the numbers on two hypothetical high school grads, Ernie and Bill. Both save up cash for college, but after high school, Ernie invests that money and goes straight to work. Bill goes to college, covers about half of his tuition with his savings, and takes on students loans for the rest. Saving money at the same rate as Ernie, Bill pays off his student loans by age 34 and begins investing. Thanks to his college degree, Bill earns higher pay each year than Ernie. However, with a 16-year jump on investing, by age 65, Ernie has over three times as much money—$1.3 million, not adjusting for inflation—than late-saver Bill.

I like to argue that money isn't everything, but even I have a hard time arguing to value of a university education against a tripling of lifetime savings. Maybe we can argue that Ernie will be stuck with a much narrower range of employment, fewer jobs that really engage his talents and fulfill his spirit. Is a big retirement fund worth 47 years of toiling away at unsatisfying work? But who's to say Ernie or any ambitious high school graduates can't find such work, or create it for themselves?

And who's to say Ernie and others who would skip college can't expand their minds and obtain a liberal education outside of traditional degree programs? Hough contends that our universities are lowering their standards and inflating their grades at the same time that the Internet is making it ever easier for individual learners to pursue the knowledge that interests them. Individual learners ought to be able to prove their brains and skill on the job without having to pay the costly premium of branding (that's what Hough calls it) via a university diploma.

But how do we know folks know what they know without a B.A., B.S., or other letters after their names?

Here Hough makes me antsy: he embraces the recommendation the Bush-era Spellings Commission to create standardized tests for university-level learning. I place the burden of proof on testing advocates to demonstrate that their tests can effectively gauge learning as rich as what our universities are supposed to offer. But would scores on a mega-SAT be any less arbitrary than the piece of paper the dean or president hands out in May? A set of standardized tests for advanced learning might even be more fair than a diploma, since it would be open to anyone, not just those students who can afford to sit for four years (or five, or six...) in university classrooms.

It will be hard to reverse the enormous social pressure to go to college. A lack of a degree shuts a lot of employment doors. But Hough's argument suggests that the labor market's expectation that more employees have a university degree (and, increasingly, degrees) may be closing as many doors as it opens and degrades the quality of university education.