There may be bad news for students who just dropped a few grand on a tuition payment: It may not be worth the money to pay for a college education, according to a Boston University economics professor.
College of Arts and Sciences professor Laurence Kotlikoff is opposing a report conducted by the College Board last month, which states that while a college education comes with a large bill, the high price is paid off by the advantages that come with a degree.
Kotlikoff disagrees, saying that students with a college degree only have an average 10 percent advantage over their peers in the job and financial markets. He calculated this figure using the Economic Security Planner – financial-planning software he developed to organize costs.
“I was surprised, thinking the number would be bigger,” he said. “[Investing in a college education] is a pretty risky proposition, like borrowing to buy stock.
Kotlikoff said his ESPlanner accounts for factors a graduate encounters, most notably lifelong debt, dubbing students “Generation Debt.”
The College Board report, which is based on government and academic research data, provides detailed verification that higher levels of education are directly associated with higher earnings and benefits, higher employment rates and increased participation in society, said College Board Senior Policy Analyst Sandy Baum in an email.
Kotlikoff said he entered the report’s figures into ESPlanner, adding costs of tuition, room and board and four years of absence from employment and loans and found different results.
“College Board only looked at the benefits and disregarded the costs,” Kotlikoff said. “One must look at the whole picture.”
The debt amassed results from several factors, such as when there is a high demand for private school education — which raises tuition, Kotlikoff said — adding the availability of student loans may lead parents to believe their children will be able to pay the bills themselves.
Despite these expenses, Kotlikoff said he agrees with the Board’s findings that there are benefits of attending college unrelated to expenses. From a non-economist perspective, the money is well spent, he said.
“I’m not advocating anyone leaves college,” he said. “There are a lot of advantages of going to college that aren’t monetary, like making friends, finding a life partner and discovering what career to pursue. You can’t just decide based on economic factors.”
BU economics department chairman Kevin Lang said he agrees with the professor, but noted the benefits and costs of attending college vary from student to student.
“Going to college is fun, for most people a lot more fun than working at the sort of job you are likely to get fresh out of high school,” Lang said in an email. “On the other hand, that would be less true for the student who is working a lot on top of studying in order to avoid carrying a big debt.”
Kotlikoff encourages students and adults to consider every cost and benefit of their financial decisions, using programs such as his ESPlanner.
“We haven’t had the technology until now to help make these decisions,” he said. “It’s the first financial-planning program available to the public.”
This is an account occasionally used by the Daily Free Press editors to post archived posts from previous iterations of the site or otherwise for special circumstance publications. See authorship info on the byline at the top of the page.
