Why "College for Everyone" Could Become a Dangerous Slogan

"You dropped one-hundred-and-fifty grand on an education you coulda got for a dollar fifty in late charges at the public library."
-- Will Hunting, from Good Will Hunting

There are lots of reasons to go to college. It broadens students' cultural horizons, opens them up to new fields of study, and for some, gives them a chance to exist outside of Mom and Dad's influence.

While we'd like to believe those are the most salient considerations, there's another important factor at play: College graduates are more likely to achieve greater financial success in the future.

Though improved accessibility to college has historically been a boon for Americans of all stripes, a recent report by the St. Louis Fed shows that we may be running up against the limits of what college can and can't do for our populace.

First, the good news
Between 1980 and 2000, the rate of high school graduates enrolling in college increased from 41% to 68%. A huge part of this can be explained by the growing gap between the lifelong earnings of those with a bachelor's degree and those without. Simply put, students don't want to be left behind.

Source: St. Louis Fed.

Increases in both merit-based and need-based scholarships also played a role.

It's especially heartening to note that those who needed financial assistance the most saw their ability to afford college increase significantly: "Students in low- and middle-income families have greater access to need-based grants and scholarships [than in 1980], which reduce the cost of education," stated the report.

And now, the not-so-good news
With the gap in earnings between college graduates and everyone else widening, it would seem (financially, at least) odd that anyone would choose not to pursue higher education. But digging beneath the numbers, it becomes clear why college isn't a one-size-fits-all proposition.

For starters, there's the distinct possibility of failure. As the Fed report makes clear, "even though a greater percentage of high school graduates enter college today than 30 years ago, this rise has not been met by a proportional increase in completion rates." A 2009 study found that about 50% of students who enroll in four-year public schools eventually withdraw.

If a hypothetical student were to drop out after two years, he would have a load of debt to contend with. Meanwhile, his buddy who decided to skip college has two wage-earning years under his belt and no college debt. By age 62, the student who decides to forgo college entirely still fares slightly better, financially, than the college dropout.

Source: St. Louis Fed.

What does this equate to?
Though we could discuss how our K-12 education system needs to do a better job in preparing students for college, that's beyond the purview of this article.

Instead, when up to 50% of students are dropping out of college while the costs of tuition increase, we have to collectively ask ourselves when enough is enough. For-profit schools have already preyed on both the government and low-income students who are now under a mountain of debt.

There is still strong evidence that graduating from college is a good indicator of future financial success. But even now, some are beginning to wonder if that will always be true.

If everyone has a bachelor's degree, escalation toward a master's is right around the corner. With our nation's student-loan debt reaching the $1 trillion mark this year, one has to wonder how much more strain the system can inflict on our pocketbooks.

Educational institutions used to be the gatekeepers for knowledge. If you wanted to follow the well-worn paths to success, college was an easy decision. But with the advent of the Internet, there really aren't any gatekeepers left. This isn't to say that going to college is silly; but one has to wonder if the push toward "college for all" will really lead us to a better society, or -- in the end -- just a more indebted one.

Fool contributor Brian Stoffel isn't against the idea of college, just against the idea that it's the "only" way to find your way in life. You can follow him on Twitter, where he goes by TMFStoffel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On June 18, 2012, at 5:32 PM, TMFBiggles wrote:

    Good article, Brian.

    It's striking that the earnings gap between a college education and lower attainment isn't because the college degree becomes more valuable, but because people who don't have a degree are losing earning power over time.

    - Alex

  • Report this Comment On June 18, 2012, at 6:49 PM, Zombie111 wrote:

    Repeating a comment I have made before, in the early 80s (last century) one of my lecturers in sociology talked about The Great Training Robbery, which was about the inflation in qualifications needed to do various types of jobs. Nursing was a good example: my mother did it straight out of school with no qualifications, now it is a degree course. It would not be so bad except the costs have increased exponentially since I was a student, but the wages and salaries haven't.

  • Report this Comment On June 18, 2012, at 7:17 PM, TMFCheesehead wrote:

    @Alex-

    Many thanks.

    @ir0b0t-

    I couldn't agree more. On paper, it makes sense that requiring certain programs would improve performance and make for a healthier society. But in practice, it leads to entrenched interests that will defend their turf no matter if it helps society or not.

    Brian Stoffel

  • Report this Comment On June 18, 2012, at 7:31 PM, FutureMonkey wrote:

    College can provide benefits not measured by dollars. Brian does a good job of avoiding the trap, but I've been disheartened by other commentators contention that college isnt a good deal because the cost is not returned in higher career earnings, as if money was the highest aspiration a person can have in their life. Shameful. Although to Brian's point, you might get as good a life experience with a library card, travel, and reasonable conversation skills.

    To be clear, my point is that earning more money is not the highest acheivement a person can or should pursue (but it is nice to avoid poverty/destitution if you can).

    FM

  • Report this Comment On June 18, 2012, at 7:38 PM, TMFCheesehead wrote:

    @FM-

    Great point, there's a lot to value from college that isn't covered in potential future earnings. They are "soft" benefits in that they can't be measured as easily. The key question to ask is: Is college the ONLY way to get these experiences?

    Brian Stoffel

  • Report this Comment On June 18, 2012, at 8:32 PM, enginear wrote:

    interesting take... also:

    College is not the liberal education it once was - much more focus on technical training than 'learning to learn' these days. It does take more than a library card, but its possible without higher education.

    I worked as a blue collar for 35 years and had 150+ units (but no degree). Life has been quite enjoyable, and reasonably (no bonuses in multiples of $100K, dangit) remunerative.

    The social aspects of college (the network, if you will) is an important part of it, of which I, with no degree got some benefit, but it is coming at a very high price these days.

    In the last 7 or 8 years, since my daughter began school in California (Cal State system) tuition went from reasonable to exorbitant (never mind the UC system - much worse!)

  • Report this Comment On June 18, 2012, at 10:30 PM, Borbality wrote:

    ha, try to get a job telling your employer you'e qualified because you learned it all on the Internet! When jobs don't require any truly specialized skills, they just make you get a B.A. or master's to whittle the application process down.

  • Report this Comment On June 18, 2012, at 11:59 PM, bamasaba wrote:

    Is there a chart that shows the real earnings by women by educational level? I'm just curious to see what the differences in the trends are.

  • Report this Comment On June 19, 2012, at 12:07 AM, bamasaba wrote:

    Of course, I just Google it and find charts of everything.

    http://trends.collegeboard.org/education_pays/indicator/inde...

  • Report this Comment On June 19, 2012, at 12:53 AM, gdett2 wrote:

    Brian,

    Good article.

    I view college education as a test of a person. Certainly, specialties learned there are valuable but I believe the difference between someone that completes the process as opposed to quitting says more about the person. The fact that someone drops out and on average earns less over time does not surprise me.

    When I was in college, I saw people there that had no business being there. Some were there to party. Others just dragged along in class. They eventually dropped out, not because of money, they just didn't want to do it. Was the money paid well-spent or wasted?

    The notion that everyone should go to college is laughable on its face. We have shortages of many skill sets from carpentry, masonry and other building trades, welders, machinists and many others. They earn good wages and are necessary in our world.

    People need the option to go but they need the good sense to not go if they don't have the aptitude or inclination. Maybe the K-12 system needs to prepare students for the decision to go to college or not. While they are at it, K-12 needs to prepare students with better financial basics from managing expenses to home mortgages. Most HS graduates seem to be clueless in those areas.

    Gene

  • Report this Comment On June 19, 2012, at 7:42 AM, HighVoltage627 wrote:

    You know what I would love to see? A breakdown of the profitability of degrees by field.

    I bet there are wildly disperate outcomes based on degree field, and that the adage that if you get a college degree you can expect to earn X amout of dollars more than someone who doesnt isnt true for everyone.

    I'm betting that degrees in the STEM fields pay well, and put you well above that projected number. Conversly, I bet degrees in things like english, history, or liberal arts dont get that long term payoff.

  • Report this Comment On June 19, 2012, at 9:21 AM, TMFCheesehead wrote:

    @Borbality-

    While that may be true at large firms, I would be willing to wager that smaller local businesses would be more than willing to take someone on who is able to do an unpaid internship and train them. While you might scoff at the internship being unpaid, it's nothing compared to the money being spent on college.

    Brian Stoffel

  • Report this Comment On June 19, 2012, at 10:14 AM, KwizatzHaderach wrote:

    @FM- Having met my wife at college I certainly experienced those non-financial benefits of college that you mention.

    However, it is grossly irresponsible to shackle oneself with a mountain of debt to achieve those benefits. If you have the money to pursue college for the more enlightened life it can give, then by all means do so.

    But don't go six figures into debt for it. And don't blame other people when you find yourself six figures in debt.

  • Report this Comment On June 19, 2012, at 11:02 AM, actuary99 wrote:

    "If everyone has a bachelor's degree, escalation toward a master's is right around the corner. "

    If everyone has a bachelor's degree, our productivity/efficiency/real GDP will rise accordingly (unless the portion of people pursuing useless degrees increases dramatically). I think the average wage will rise more than the wage of a graduate falls due to increased competition.

    Jobs not requiring higher education or specialized training are gradually being replaced by robots and/or increased productivity per worker. College education, specialized training, apprenticeships, whatever. The higher portion of people receiving education in any of these formats, the better.

    And yes Will Hunting, you can learn a lot on your own in the library, but I'm guessing very few (including me) people have the discipline and planning skills to set their own curriculum & learning goals and push themselves as hard as college courses might.

  • Report this Comment On June 19, 2012, at 11:20 AM, hbofbyu wrote:

    The prupose of a university is to teach you HOW to think not WHAT to think - also it should not be to fill your mind with information that you can get from a trade school or the internet.

    The more universities move toward maximizing salaries of their graduates by becoming, in essence a narrow technical college, the more damage they ultimately do to themselves, their graduates and our society.

  • Report this Comment On June 19, 2012, at 2:44 PM, kkensington wrote:

    Hey you all want to Throw - up ?? you missed a very important number to chart along side the

    " Real Media Earnings for Men by Educational Level " be sure the chart has the wages with benefit package costs for the colleges teachers / professors and the same for the colleges presidents and CEO, when you see the comparisom rise over the last 30 years you all will see why all the higher education instutions keep promoting " COLLEGE FOR ALL " , than you can puke !!!!!

  • Report this Comment On June 20, 2012, at 2:47 PM, 48ozhalfgallons wrote:

    "It's especially heartening to note that those who needed financial assistance the most saw their ability to afford college increase significantly: "Students in low- and middle-income families have greater access to need-based grants and scholarships [than in 1980], which reduce the cost of education," stated the report."

    That's an outright lie! I put myself through working several $1.25-$2 an hour jobs. No loans. No financial assistance. Tuition and books were about $210 a semester. I hit the ground running when I graduated, and I was a poor boy.

  • Report this Comment On June 20, 2012, at 4:20 PM, TMFCane wrote:

    Excellent article, Brian.

    I guess I shouldn't be surprised that the HS grad alone makes more than the college dropout with the huge monetary investment college is these days, but that's still a telling statistic. It seems many people are going to college for all the wrong reasons - simply to grasp straws at the statistics of a higher average income for grads, rather than creating a personalized plan.

    Looks like K-12 needs to beef up on preparing kids with more practical awareness of the future, rather than simply trying to expose them to a broad - and shallow - base of academics. Without that, I'm not sure the nation won't keep seeing a rising group of people hurt, rather than benefited, by going to college.

    -Dan

  • Report this Comment On June 20, 2012, at 4:36 PM, polenium wrote:

    Information isn't the same as education. Even that is being controlled on the internet.

    This country can afford to pay for everyone to go to legitimate universities...at least four years of college.

    The for profit universitities owned by corporate bad actors like Goldman Sachs that charge the earth and provide little that's useful (Phoenix for example) excepted.

    What this country can't afford is to foot the bill for building an empire for the rich and well connnected, subsidizing the already wealthy through taxes and subsidies and paying Wall Street's gambling debts.

    We can't afford to make it profitable for corporations to export US jobs and to use our air, water and soil for a garbage dump and handing working Americans the tab for clean up and medical care.

    We can't afford to pay two times as much for less health care than the rest of the world and prop up insurance companies who let people die to beef up their bottom line.

  • Report this Comment On June 20, 2012, at 4:57 PM, outoffocus wrote:

    Interesting commentary. But isnt the more important question "why are so many students not finishing"? Could it be the cost of education prices students out of finishing? With only 50% of students finishing college it sounds to me like thats the problem we should be focused on.

  • Report this Comment On June 20, 2012, at 5:00 PM, TMFRosetint wrote:

    @Borbality-

    I don't know, Borbality. That's pretty close to how I got hired where work, granted I had internal references to help.

  • Report this Comment On June 20, 2012, at 5:06 PM, devoish wrote:

    Suppose a person is not very smart, works cleaning 24 bathrooms each night for a hotel as they are expected to.

    How bad should their pay be? As low as the "market" can squeeze them?

    Or should they get enough to afford decent health care and a place to live?

    Best wishes,

    Steven

  • Report this Comment On June 20, 2012, at 5:07 PM, mtf00l wrote:

    As colleges go, they have become commoditized. They are about maintaning the revenue stream. No, you wont find that in the marketing materials.

    Higher education used to be about learning how to think, communicating thoughts and critical reasoning. It was a differentiator for those who could get an education.

    Today, college is available for everyone. The more expensive the institution the more assistance is available. Also, as stated previously, Masters Degrees will be the next step in the evolution of higher education.

  • Report this Comment On June 20, 2012, at 5:29 PM, mtf00l wrote:

    Added a comment however, not recorded... ;D

  • Report this Comment On June 20, 2012, at 5:29 PM, mtf00l wrote:

    Until now...

    Interesting

  • Report this Comment On June 20, 2012, at 7:08 PM, stric7 wrote:

    @devoish

    Who do you propose pay this person "enough" that they can get decent health care, a decent car, a decent place to live, decent clothes, etc and what government agency should define "enough"?

    Should the hotel owner have to pay all these costs for all his employees? Is someone guaranteeing his salary and success? Maybe we can force all hotel customers to pay more so that these costs can be covered? If hotel occupancy drops off we can then make tax payers pay more money to ensure this hard working hotel employee has all of these things. Or...... maybe we should just let hotel owners offer a job and fill it if someone is willing to work for that salary.

  • Report this Comment On June 20, 2012, at 9:01 PM, devoish wrote:

    stric7,

    So how low in pay are you willing to ask someone to go? Less than enough to eat? More than enough to eat but to little to have an apartment?

    Best wishes,

    Steven

  • Report this Comment On June 20, 2012, at 9:23 PM, vidar712 wrote:

    Why are the costs of a higher education increasing so rapidly? It is not as if the professors are getting double digit raises every year. Other than wages, what other expenses does a university have?

    My guess is the hubris of the university president. He became president because he wants to leave his mark on the university, the best way to do that is to build a building and name it after yourself. Who cares if it increases tuition immediately so the graduating class will pay for it without ever using the new facility? Who cares if the new building doesn't add any value to the university. The important this is that the president left his mark before moving on to another university to repeat the process.

    But that is just my guess. But seriously, the money has to be going somewhere. If not salary or buildings then where?

    Will no child left behind at the college level be better than at the K-12 level? At the college level the expense will be tied to an individual rather than shared through the tax payers.

  • Report this Comment On June 21, 2012, at 12:00 AM, orangefloyd wrote:

    @stric7: we don't educate people well enough to be able to determine whether the job will adequately cover their needs. Point of fact, many people probably aren't interested to learn to do the math on their own.

    I'm not saying that minimum wage and government healthcare are the answer to all our problems, but when C-level pay has consistently risen while all non-C-level employee pay has stagnated over decades, perhaps a nudge in the right direction might be in order?

  • Report this Comment On June 21, 2012, at 12:04 AM, TMFCheesehead wrote:

    @vidar712-

    Morgan Housel had an excellent piece on this, you can read it at the link below, but it basically boiled down to states not being able to cover as much of the bill as they once did.

    http://www.fool.com/investing/general/2012/01/06/surging-tui...

    @outoffocus-

    I would tend not to agree, as the prices are pretty well known before the four years begin.

    Brian Stoffel

  • Report this Comment On June 21, 2012, at 6:44 AM, devoish wrote:

    <<There are two MAJOR problems with the concept of a college degree for everyone: 1. A four-year degree BA or BS or BBA degree is NOT required for every or even most jobs today and 2. A four-year degree is the NEW High School deploma in the work place.>> - Kahuna

    And in Kahuna's commentary we find the core of the misunderstanding and the core of the understanding.

    1) If college is just about "job training" then IBM should pay, or Apple should pay, or GS should pay and let them fund the risk of paying for the dropouts or those who cannot perform after they come to work.

    2) Higher education is not about "job training" at all. Increasing the numbers who receive higher education is one measure of the increasing productivity gains of society and a far better measure of the economic growth of our Country than GDP will ever be. As is lowering the retirement age, more vacation time and better healthcare.

    The biggest problem with our education system was the choice to fund it with individual debt or inherited income. Otherwise its pretty good, possibly the best the world has ever seen.

    Best wishes,

    Steven

  • Report this Comment On June 21, 2012, at 7:17 AM, BMFPitt wrote:

    Even if we assumed that everyone would be capable of completing and benefiting from college, that still wouldn't change the fact that a big chunk of our jobs are low-skill or unskilled. If we already have tons of college grads working at Starbucks, how does churning out a bunch more of them (and presumably the ones who are even less willing/able to make it through) help anything?

  • Report this Comment On June 21, 2012, at 8:25 AM, JeanDavid wrote:

    Why are students not finishing? I went to a very expensive engineering school. Officially, I was kicked out at the end of my second year for getting four Fs and one D in my last semester there. And I was on probation and required to get all Bs or above.

    Why was that. I was really interested in the subject matter. But at that school, all the good professors were working at research institutes as well as teaching. Many never showed up at all. Even the lower-level instructors missed a large proportion of their classes when they went to Brookhaven, Mitre corporation, etc., for their personal contracts. So most of the teaching was done by graduate students who did not have the smarts to get research assistantships of their own. It was so boring as to paralyze the mind. The school had a great reputation, but it did not really deserve it. All it did was accept very bright students and test them, flunking out about 1/8 of the class every semester.

    On flunking out there, I immediately transferred to another university, where I did not learn much either, but I did get a bachelor's degree from there.

    What kept me in college was the draft board. After stifling my interest in formal education, it got so bad I was wondering if the army could really be that much worse. (I suspect it could be, but that is how demoralized I got with the whole business.)

    I did pretty well with work. But that was because I taught myself a lot of electrical engineering and computer system design and programming. Back when employers were more interested in whether you could do the work than in the degrees you had. But that is now long gone.

  • Report this Comment On June 21, 2012, at 9:15 AM, TMFCheesehead wrote:

    @JeanDavid-

    The good news is that the companies that care more about what you can do than the degree you have are still the better performing ones. By definition, they have to be.

    Brian Stoffel

  • Report this Comment On June 21, 2012, at 10:10 AM, Risky88 wrote:

    yes college is not for everyone

    BUT higher education is!

    Look at all of the most successful people in the world, they have a what?

    Those that don't are the very exception.

    On a graph they are the ones that don't follow the trend line and are very few.

    This is not 1969 any more.

    Walk down Lake street and get offered 50 jobs a day.

    Number one reason I got 3 offers within 3 weeks of graduating?

    Bachelors!

  • Report this Comment On June 21, 2012, at 10:33 AM, tredadda wrote:

    I see college as a necessary evil for too many. The way things are going, Bachelors Degrees are becoming the new HS Diplomas. Now you do not need a degree to get a trade and those fields will always be there so getting a degree is not vital for all, but for those who do not choose the skilled trade route it is becoming that way. But knowing this and knowing how easy it is to get money for college, tuition rates have risen exorbitantly. When will the financial benefits of a degree no longer matter because of school debt? It is not unusual to go to school for four years and rack up $50,000+ in student loans. That money has to be paid back and can't be written off in bankruptcy proceedings. The fact that students pay interest on this debt means that while their earning power might be higher, their purchasing power is lower as they have to divert money they could have used to invest or on consumer goods (which benefits the economy as a whole) into repaying debt. Also with Bachelors degrees becoming more and more common, at what point do you lose your competitive advantage over your peers and wages start to suffer as a result. It is not unusual for someone now to get a degree, and get a job that pays in the range of $35,000 a year. Considering what you paid for your education, that is not a very good return on your investment. Granted you will make more money as you gain in age and experience, but to me it has more to do with the previous factors than the degree you earned many years earlier. I know it seems like I am rambling (and maybe I am), but my end point is that if we are going to have a society in which education is pushed so much from all walks of society, something needs to be done about out of control tuition rates. I am glad they can't write off school debt though as this would just exacerbate the tuition rate issues, or greatly add to an already out of control federal deficit, or worse do both.

  • Report this Comment On June 21, 2012, at 1:04 PM, outoffocus wrote:

    Cheesehead.

    I was necessarily saying that was the exact cause. I'm just saying that its something that needs to be looked into. 50% is a high number.

  • Report this Comment On June 22, 2012, at 3:25 PM, 65bk wrote:

    A nice article that repeats data from many prior "studies" it seems. Is the relationship between the degree and financial success cause/effect or coincidental? It is unfortunate that the two are used so frequently as equivalent. Mr Gates clearly has demonstrated that not all successful people require college degrees to be successful. It is also most unfortunate that so little is thought of "success" that is measured in non-$$ terms.

  • Report this Comment On June 22, 2012, at 4:22 PM, TMFCheesehead wrote:

    @65bk-

    I especially echo your last point.

    Brian Stoffel

  • Report this Comment On June 23, 2012, at 4:10 AM, Zombie111 wrote:

    College for everyone is a bit like saying "Team sports for everyone". Some people do not have the intellectual ability to cope with higher study. (Unless you live in Lake Woebeggon, where all the children are above average).

    As far as the intangibles of attending college go, my country has a tradition called the OE (Overseas Experience), which usually involves spending a year or more in Europe or Asia etc, working and getting a lot of useful life experience.

    I don't want to downplay the usefulness of certain qualifications but for some, it is a con game they will not win.

  • Report this Comment On July 09, 2012, at 1:40 PM, C0ncernedCit wrote:

    Given the title of this article I think it entirely misses the mark. "College for everyone" is a dangerous slogan because not everyone should attend college. Over 2/3 of current fulltime positions require a technical degree or certificate or lower. You mention in the article that 50% of college entrants drop out. Much of this is because high school has become too much of a college prep environment, though you briefly argue the contrary. High school students don't reach graduation with much of an understanding of paths available to them. Someone could get a 2-year tech degree to pursue a position such as a welder, skilled machinist, or diesel technician and make a healthy $50k+ starting salary. They might even start at a employer at a lower level and have this education paid for. Are they not in a much better position after another student's $50k of debt and difficulty finding a position their liberal arts degree is in demand for? Looked at another way, if a student reaches high school without rock solid reading and math skills, they maybe very out of place being forced through college prep. We do it anyway often leading to high school drop outs.

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