Saving for a Brainy Day
College kids learn it takes money to make money
September 12, 1991
Who should pay to send kids to college in Illinois—families? taxpayers? students themselves?—is as pressing a question of how much, and has been for some three decades now.
The state's Student Assistance Commission has just announced yet another new program to help Illinois parents accumulate the money they will need to send the Future of America to college. Up to $6,000 of the interest earned on special savings accounts at participating banks will be exempt from state taxes (although federal income taxes would still apply). Cheaper to buy into than the state's existing zero coupon college savings bond program, the new plan should enable the little guy to sock away what he skims from the office coffee fund so that twenty years from now his kid can get an MBA and steal legally.
Measured in constant dollars, it was no more expensive to send a kid to an Illinois university in 1986 than it was in 1960; since 1986, however, the rise in real costs has begun to bite the middle class, especially that part of the middle class that decides what issues are Issues. (Jim Nowlan, the new president of the Illinois Taxpayers Federation, has suggested that college costs were labeled a crisis around 1987 when "leading editorial writers [were] struck by the 'sticker shock' of the tuition charges they face for their children who want to go to expensive East Coast schools.")
Demand for spots at the state's most expensive private four-year universities has not dropped markedly, however, in spite of their daunting tuition. Applications at Northwestern this year were up 25 percent since 1985, having set a record in 1987. Thus do we see illustrated the perverse economics of higher education: The value of a prestige degree increases as the costs of getting it goes up, since a posh degree is the best guarantee of earning a post-college income high enough to pay off those costs.
[Gov.] Jim Edgar went to Eastern [Illinois University], and look what he's having to do for a living.
I know. You don't buy only knowledge when you buy a degree. The top schools sell prestige, contacts, class. As Rebecca Dixon, Northwestern's director of enrollment, puts it, "Harvard costs more than Northwestern, in net costs. But you have to balance that higher cost against the prospects of a Harvard degree compared to a Northwestern degree." However, adds Ernest Pascarella, such advantages are much more modest than most people assume. Pascarella, who teaches educational psychology at the University of Illinois at Chicago, recently coauthored a survey of 2,600 studies of what students at different colleges and universities earn and learn. He concedes that an earnings advantage as small as 1 percent means significant bucks over a lifetime, but adds, "I'm not sure that's crucial." Were I a parent I would demand a refund from any university that taught my kid that cumulative earnings was the measure of a life.
College has become for the children of the middle class what the Army is for working class kids—something to fill those awkward years between high school and the first divorce, less a place to prepare for a productive life than to escape from one. Ronald Leglon is associate vice-chancellor for academic affairs at the University of Illinois at Chicago, and thus a man who is obliged to think deeply about such things. Says Leglon, "One could theorize that in poor economic times education itself becomes an attractive alternative to the job market."
In a recession, community college students who might have gone straight into a job often opt to stay in school. At the other end of the enrollment spectrum, graduate school applications have risen nationwide as jobless BAs and BSs seek a safe haven where loan repayments will be deferred while they wait for the job climate to improve. Thus we have the phenomenon of the double major, sought by students eager to protect themselves in a job market in flux; some private colleges in the East are offering premed programs for liberal arts majors in their 30s who are bored with their first careers or unable to find jobs that meet their income expectations.
Colleges are doing booming business training people for jobs that don't exist. Says Leglon, "We've seen a significant increase in the number of applicants, particularly from transfer students and graduate students. An amazing surge in fact. It's totally unexplained. We face a problem even processing them all."
These are dubious trends from the point of view of everyone who isn't a college admissions officer. More and more jobs these days require a college degree even though few of them require a college education. Academic lily-gilding keeps talented people out of productive work and adds to their personal debt (not to mention encumbering taxpayers with subsidies) for training that may be redundant or tangential to their ultimate career.
The old warning, “caveat emptor,” might protect more of our families from overspending—if we still taught Latin in high school and they understood what it says. In 1989, a skeptical Arnold Weber, Northwestern University's president, asked a Washington audience whether college consumers "are so ignorant that they cannot approximate the difference between tuition and the quality of education at different institutions." The answer, according to Pascarella, is, "You bet." His study concluded that like students do not learn significantly less at public colleges than they learn at equivalent private schools, other factors being equal.
Referring to the fact that undergrad tuition at top private schools runs twice the tab at the equivalent state schools, Pascarella says, "I remain skeptical that a kid who goes to U of I or Indiana gets an education that's only half as good as one he would get at Northwestern or Chicago." Family background and intelligence seem to matter much more in determining future success than even the most expensive college education. "If you took the incoming class of Harvard and distributed them randomly nationwide among all kinds of colleges and checked 20 years later," says Pascarella, "you'd still find a pretty successful bunch of people."
The moral: Spend on your kid's education at two-tenths of what an Ivy League degree costs when he's twenty and everybody looks like a genius. □