With graduates forced to pay off student loans that reach up into the $50,000 range, it's time that we took a second look at the financial benefits of going to a four-year college. The old, outdated cost-benefit analysis was that a college education meant a $1 million increase in lifetime earnings. But that was calculated before the skyrocketing cost of tuition was figured in, plus all the lost income from spending six years in college. Every year it takes a little longer for college graduates to catch up to their friends who ended their educations at high school.
Now there are increasing numbers of graduates who can't find jobs at all in our economy and are either unemployed or so underemployed in crap jobs that they can't make their payments. So they move back in with their parents and get them to make the loan payments. You can read all about this in this story from the New York Times.
When stories like this start to get around, you can bet parents and students are going to think twice about going deeply into debt, cleaning out their retirement accounts or taking out a second mortgage to pay for junior to attend the five-year party that subprime four-year colleges have become.
The best investment in these times are inexpensive two-year programs with direct connections to jobs, such as the ones offered at community colleges. Or, even better yet, the new "no frills" colleges that offer an education without all those high priced buildings, expensive administration salaries, sports teams and student centers that drive college costs up out of sight.
There are plenty of people who have seen the beginnings of a new age of thrift, when value is more important that frills. Colleges are still building monumental palaces along college row and inflating administrative costs as if they were Wall Street bankers. A day of reckoning cannot be far off and like other inflating bubbles, it's likely to explode any time without warning.