INNEAPOLIS -- What's worse than being 12 years out of high school and on your way to having $40,000 in debt?
Being 30 years old, with no college degree, making $15 an hour.
That's why Jesse Mullan has taken a risk and gone back to college, sitting in classrooms with college juniors who were 8 years old when he graduated from high school in St. Paul, Minn., in 1994.
Mullan, who expects to graduate from college in 2008, figures that taking on debt to further his education will pay off. He expects to triple his hourly pay shortly after collecting a degree in computer science from the University of Minnesota, allowing him to pay off his school loans in no more than 10 years.
"It's better than car loans," he said.
Mullan is still making a good bet, many economists agree. While the cost of college has soared, the incomes of college graduates are still staying well ahead of those who don't have four-year degrees.
How far ahead? Lifetime incomes of college grads in today's dollars average nearly $300,000 more than high school graduates over a 40-year career. And that's the net benefit, after deducting an average cost of more than $100,000 in tuition, room and board and potential income lost while attending college.
The income gap between those with and without a college degree continues to grow, though at not as fast a pace since the mid-1990s as in the 1980s. Why? A rising tide of economic prosperity has lifted most of the boats, providing higher incomes for even the undereducated.
"Since the mid-1990s, the average (inflation-adjusted) wages of college graduates have skyrocketed, increasing by 18 percent" as of 2004, a recent study found. In contrast, wages of high school dropouts rose at about half that rate -- 10 percent -- over the same period.
Economists Lisa Barrow and Cecilia Elena Rouse said in the same paper that "there are no signs that the value of a college education has peaked or is on a downward trend."
While many people have heard stories of degree-holders with nothing more to show for their high-priced education than a job behind a coffee counter, sticker shock about the rapidly rising cost of tuition and fees is largely misplaced, said Rouse, a Princeton University economist.
Rouse cites two factors to back up that claim: Significant numbers of students get some form of aid, income tax credits at the very least -- meaning they pay less than the posted price for their degrees. What's more, by far the largest cost of going to college is foregone income, and wages of high school grads have not climbed nearly as fast as the double-digit gains in tuition at many colleges in recent years.
To be sure, paying for college is a bigger gamble for some than for others.
Sixty-three percent of all students with family incomes of $79,000 or less face a gap between the annual cost of college and the money they can raise through grants, scholarships, work-study programs and family contributions, according to a national study released last month by the Southern Regional Education Board.
That gap is filled by debt.
For example, in the spring of 2005, nearly two-thirds of the students graduating from the University of Minnesota's Twin Cities campus left with debt -- an average of more than $22,000. That was up 65 percent from the average for indebted students in the class of 2002.
But the average return to a college education is large enough to overshadow those liabilities, many studies have found.
The Census Bureau in 2004 calculated that the average college graduate earns $27,800 more per year, adjusted for inflation, than the average high school graduate. That adds up to more than $1 million over a lifetime.
Barrow and Rouse calculated that over 40 years, the average payback for a college diploma comes to $402,959 in today's dollars. Subtract $107,277 in their estimated average total cost for a four-year degree and the average expected benefit would come to about $296,000.
And what about the English majors or art students who end up behind a counter at Starbucks after graduation? Their degree still is likely to make them more attractive as a management candidate than someone who didn't go to college.
"There probably are more opportunities open to these people who maybe aren't doing as well as the average," Barrow said.
source:seattlepi.com
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