Re: College Pays Off, But It Is Inefficient

by Jason Fertig

Nathan hit the main critiques of the Leonhardt NY Times article, but I have to emphasize one additional point. Mr. Leonhardt categorizes college degrees as financial “investments” throughout his article. I’ve used that phrase figuratively to describe developing one’s mind, but never in the way that Mr. Leonhardt does:

The evidence is overwhelming that college is a better investment for most graduates than in the past. A new study even shows that a bachelor’s degree pays off for jobs that don’t require one: secretaries, plumbers and cashiers.

The Hamilton Project found that college tuition in recent decades has delivered an inflation-adjusted annual return of more than 15 percent. For stocks, the historical return is 7 percent. For real estate, it’s less than 1 percent.

Given how much the economy changes, why would a high-school diploma forever satisfy most citizens’ educational needs?

This is the type of flawed thinking that lead many people to overspend on their personal homes because they saw those houses as investments.  That practice really worked out well.