Income is Down, Tuition is Up

Over at Freedom Is Groovy, Mr. Groovy starts his latest blog post with this eye-catching first sentence, “A bachelor’s degree is one of the biggest scams ever perpetrated against the American public.” I had a few thoughts on the topic and left some comments.

Interestingly, soon after reading his post, I came across an article at ProPublica, posted a few days ago, which opined that public colleges play a special role in making higher education affordable. However, in recent years soaring tuition is pushing that dream out of reach. Of particular note, from 2000 to 2014 the average cost of in-state tuition and fees for public colleges in the U.S. rose 80%. During that same time period, the median American household income dropped by 7%. Disconcerting indeed.

Among my replies was this thought …

I can think of two good reasons to go to college: higher salaries and lower unemployment. Some stats from the Bureau of Labor Statistics

Median Weekly Earnings:
High school diploma – $678
Bachelor’s degree – $1,137
Master’s degree – $1,341

Unemployment Rates:
High school diploma – 5.4%
Bachelor’s degree – 2.8%
Master’s degree – 2.4%

Diploma_Prisma Udnie Filter

If you have a chance to check out both pieces, I would love to get your thoughts on the value of a college degree, the increasing cost of attaining one, and the relationship of both to income (i.e. paying for college when incomes are down and the relationship between education level and income).

Blogger-in-Chief here at RetirementSavvy and author of Sin City Greed, Cream City Hustle and RENDEZVOUS WITH RETIREMENT: A Guide to Getting Fiscally Fit.


  1. A college degree is pretty much a requirement in most industries nowadays. I think Mr. Groovy seemed more upset that colleges charge an arm and a leg, but often don’t prepare college kids for skills in the real world. That may be true, but, employers still want to see that certificate. One thing is for sure though…while a college degree may be necessary in the working world, it doesn’t mean you should go to college no matter the cost. Both my wife and I went to State University which is still relatively affordable.

  2. Hey, James. I can’t thank you enough for further exploring this topic on your blog. What a great back and forth. The comments have been very insightful. The pro-degree side makes some great arguments–and for many of those arguments, I don’t have a comeback. Consider me humbled! All I can say in my defense is this: Up until the last generation or so, the standard definition of a degree worked. Investing 4 years to take 120 credit hours of higher education made a lot of sense. The ROI was superb. But today, for many people, that’s no longer the case. Tuition, fees, room, and board are all up dramatically, and rigor is down. As Richard Arum and Josipa Roksa explore in their book, Academically Adrift, it’s not uncommon for someone to spend four years at college and show little cognitive improvement.

    So what to do? The college-industrial-complex isn’t going to come up with a better credential. It loves the current business model and the current definition of a degree. So I say, fine. We got to force its hand. My advice to young people is this: If at all possible, go to college and just take the classes that pertain to your major. Nothing else. Computer majors are tailor made for this approach. You take 10-12 computer classes, get a certification in PHP or Ruby on Rails, and you’re set. You’re college educated (not degreed) and you have a great credential to show potential employers. And if enough college students take this guerrilla approach to higher education, the college-industrial-complex will eventually cave.

    Okay, James, those are my warped views. I think education is very important. But I don’t think the current definition of a degree is completely synonymous with education.

    • Indeed. A great conversation with thoughtful points made by a lot of people. I concede there are serious problems with our higher education system, both with the cost and rigor. I have often lamented the soaring cost of going to college and I’ve often stated to friends and family, when the conversation turns to higher education, that soon a bachelor’s degree will become the new high school diploma as the value – and rigor – continues to be watered down.

      Where do we turn when everyone has a bachelor’s degree? But of course there are those who profit from matriculating as many students as possible and aren’t necessarily interested in the quality of the education. That is why I have stated on multiple occasions it is up to the parents and student to take the time to plot out and manage an education course that works (e.g. minimized costs and an education program that will produce the best potential for a good ROI) the best for them. That may mean just a high school diploma, perhaps a trade school, or maybe a two-year degree.

      At the end of the day – when I’m typically enjoying a glass of red wine – I still believe that for most people, in most situations, a four-year degree offers the best opportunities for career advancement and lifetime earnings. When push comes to shove, knowing everything I know about the education system, warts and all, I would still advise a young person to pursue a bachelor’s degree vice recommending that they skip college.

      Thanks again for your contributions to a thoughtful discussion.

      • “At the end of the day – when I’m typically enjoying a glass of wine – I still believe that for most people, in most situations, a four-year degree offers the best opportunities for career advancement and lifetime earnings.”

        What a beautiful summation! I love it. And in my opinion, it’s the winning argument. But I have my eyes on the college-industrial-complex. If things continue on the same trajectory, I’ll have to write some more snarky posts.

        Thanks again, James, for this rollicking exchange of ideas. This is how debate is done. We respectfully make our points, and then we all head to the bar for a friendly glass of wine–or two, or three, or four…

  3. I know my undergrad and grad degrees paid off handsomely for me. And I think for many degrees you pay for what you get, or at least you get out of it the effort you put into it. The stats on employment and income supports this.

    It reminds me a little of “pay for play” and “it takes money to make money”.

    • Agreed that the stats support the idea that for most people a college degree results in higher lifetime earnings. As has been said before, the keys are to choose the right degree program and take actions to minimize costs.

      Thanks for stopping by, my friend.

  4. Here’s a quick reply since I have to take what I learned getting a doctorate in Educational Leadership over to my school district right now to meet 100 new families to our district. I am a leader in a building with over 1600 kids and 200 faculty and staff. The soft skills you spoke about learning in a degree program are incredibly important for teaching. The broad, general education curriculum is also vital to produce teachers who can instruct 6 different subjects at the elementary level. The advanced coursework required to earn a Master’s Degree deepen teachers understanding of literacy, mathematics, instructional technology,and instruction for students whose first language isn’t English (to name just a few). And then for those of us who went beyond that degree to earn a doctoral degree – good luck finding school leaders who can manage everything we are asked to do without considerable coursework in law, finance, human resources, instruction… I think you get the idea. Is a degree necessary for everyone? Probably not. Are people paying way too much for a degree? For sure in many cases. Can they do it a lot cheaper? Most likely – if they try. OK – rant on this end is over too.

    • So very well stated, my friend. Thanks for sharing your intimate insights as an educator.

  5. Case for no degree.

    My sister & her husband live in GA, he is a fire fighter and she has worked in financial services for over 20 years. Neither have a college degree, relative to success they have done well above average. Income, beautiful home, savings, retirement planning and raising two intelligent daughters.

    My cousin lives in VA where she owns and operates multiple businesses; flower shop, concierge service and wedding planning. No college degree. By every measure I would call her very successful.
    I’ll concede that income is higher with a degree however there are many jobs where degrees are looked favorable upon but the execution does not involve a technical skill other than the use of technology. A degree in this case is used as a measure of merit and justifies paying people without degrees lower wages and or excluding them from the work force when work is a necessity.

    Perhaps this can have some attribution to the percentages above.

    • Great, great feedback and insight covering a lot of the intricacies going, or not going, to college. Ultimately, for most people, in most situations, I believe college is worth it; particularly when I look at numbers like those from the BLS and when I think about it this way, “Would I encourage my own children or niece and nephews to attend college or not to attend college?” For me it’s an easy answer, with the caveat that I always mention, do so, but first, take a look at the business and economic environment (and individual strengths/desires) and determine which degree program makes the most sense. Second, determine the most economical/efficient way [e.g. military service, community college, living at home the first year or two, part-time work, etc.] to finance the education.

      With all that said, you are absolutely correct that college isn’t necessary – or a guarantee – for success. There are any number of examples out there of people with no diploma, a high school diploma, a two-year degree, or a trade school that have done remarkably well.

  6. I’ve kind of been against college for a while, But it’s because if I could do it over again I wouldn’t get a degree. I now know I could make the same money and not spend 5 years and $30k on a degree. Since my degree was mostly science and math, I don’t think it was worthless by any mean either, but do I use the knowledge today? a little bit, but nothing I couldn’t have reasonably taught myself. I don’t think college is bad, but this whole “everyone needs a 4 year degree” is kind of ridiculous. People assume you need a degree for everything these days.

    I don’t agree with Groovy’s point #6. I deleted my rant, but research suggests the real number is much less than 25%. Then again, it’s obviously not zero like we’d hope.

    Some of the other points are probably dependent on the specific college. I graduated 5 years ago, most of those were not a problem at all in Wisconsin. I did jump through extra hoops to reduce my amount of superfluous required classes that had zero to do with my degree.

    • “I now know I could make the same money and not spend 5 years and $30k on a degree. Since my degree was mostly science and math, I don’t think it was worthless by any mean either, but do I use the knowledge today? a little bit, but nothing I couldn’t have reasonably taught myself.” Good point. However, one part of the question has to be, “could you have gotten your foot in the door without that piece of paper?” Additionally, one of the things often overlooked when discussing the value of attending college is learning the soft skills (e.g. the cluster of personality traits, social graces, communication, language, personal habits, interpersonal skills, managing people, leadership, etc.) that are necessary for success. Can they be learned other places? Sure, I joined the Army after high school – which is where I learned – and didn’t earn my MBA until I was in my thirties. If not college or the military, where else can an 18 year-old reasonably expect to have meaningful interactions with others from different backgrounds and cultures; and hone soft skills?

      • True, I recognize hindsight is also much clearer. I more likely would’ve drifted in low level IT work without college. You also often get treated differently when you have the degree and that helps grow your confidence. Shortly after graduating getting put in situations where people with decades of experience looked to me to solve major problems and trusted my advice on things to check. It was humbling and a confidence boost to be treated as an equal with guys with so much experience And knowledge. Far tougher road to achieve that without a degree.

        • All great points, my friend.

  7. As you (Savvy James) know, our daughter is a senior at the University of Arizona so Kathleen and I are full aware of the rising cost of tuition. Fortunately, we started saving when she was 2 years old in a UGMA account then transferred to the 529 plan. We’re also very fortunate that my parents have covered 75% of her tuition!

    Regardless, it’s important to note that the cost of tuition at the three state university’s has shown the largest increase in the nation, up 84 percent since ’08 compared to 29 percent nationally. The reason for this is solely due to the Great Recession and subsequent cuts from the state of Arizona’s budget. In fact, the state of Arizona has cut it’s annual stipend to the three university’s by 46 percent since ’08. Also, in ’15, the state cut all funding for both the Maricopa and Pima Community College systems.

    The big question now is a four year degree still worth it? I feel that it is under certain circumstances.

    First, ensure that the incoming student picks a degree that is suitable for employment upon graduation and has a starting salary that is commensurate with the amount of debt (student loans) that will be need to be repaid. Going to a private university at $50 – 60,000 per year for four years for a teaching degree that will pay $30,000 per year is foolish. Secondly, parents must shore up their retirement accounts prior to giving financial assistance to their kid(s). Many of my co-workers have little savings and are planning on funding (in the form of home equity loans) their kids college education. What’s happening now is that the parents are in their late 50’s and have little retirement savings and over $150,000 in home equity loans!

    Finally, if a student borrows the money, they need to be held accountable to pay every cent of it back regardless of promises from our elected leaders. If they (students) don’t pay it back, it’s safe to say that the American tax payer will be stuck with the bill.

    • Great, great points, my friend. As you’re keenly aware, we see eye-to-eye on this topic. Part of one of my responses over at Freedom Is Groovy was, “parents and their kids need to do two things. First, take a look at the business and economic environment (and their individual strengths/desires) and determine which degree program makes the most sense. Second, determine the most economical/efficient way [e.g. military service, community college, living at home the first year or two, part-time work, etc.] to finance the education.” As you note, someone that spends x on a degree that is not commensurate with what they can expect to earn (I’m looking at you ROI) in the labor market can’t lay the blame elsewhere.

      Thanks for taking the time to stop by and provide insight from someone that is currently experiencing financing college; and providing some background on what is happening with the university system in one state.

      • One other comment I’d like to make (although not entirely in line with your topic of education costs, but indirectly) is the ability of a college student to have a good cross flow of ideas in the classroom with not only their professors but other students as well. We were anxious for our daughter to discuss her thoughts on many of today’s news topics in her humanities/social science classes and allow her scope of reference to expand, meaning that there are many moving parts in sensitive topics. Hearing both sides of an issue in an open forum, moderated by their professors and then allowing her to formulate her own opinion is a healthy way to learn. We told her to go into these classes with an open mind. This unfortunately wasn’t the case. In many classroom discussions, her viewpoints on certain social topics were dismissed by her professors because they didn’t align with theirs. I was stunned at the comments written by her professors on the cover pages of her papers, many times in red bold letters saying how her thoughts were “inconsistent in today’s world”. This was routinely the case she had with tenured professors. I do believe this is an issue with many universities across the country.

        Maybe it’s time for students to be allowed to take only courses directly targeted towards their major and still get credited with a BS/BA? Interesting concept………..

        Just for the record, she’s a Bio-chemistry major carrying a 4.0 GPA in her core classes but a significantly lower GPA in her humanities/social science classes.

        • Great points, Gage. I believe what you’re talking about ties into the ‘soft skills’ I referenced in another reply. The value of spending time in an environment that exposes you to different ideas/beliefs/values helps to build those soft skills is difficult to quantify when we talk about the ROI of a college education.

  8. An interesting topic for sure. With two high school seniors getting ready to submit college applications for their right to earn bachelor’s degree I do believe there is still value in a degree. It certainly take good planning to make sure you get good ROI on it. Picking a college based on the prettiness or vibe of the campus is not the way to go. The end game should be a a degree from a reputable school with little debt as possible, and a career path.

    • “The end game should be a a degree from a reputable school with little debt as possible, and a career path.” Agreed. And I still believe it’s possible to do that with a little bit of thought, research, and planning.

  9. Hey James! Funny, I just read Mr. Groovy’s article this morning! We run in similar circles! There’s a lot of debate on this one….personally, I think there’s value in the degree (just look at lifetime earnings with vs. without a degree!), but it’s getting out of hand. As the cost/benefit equation tips (cost up, and up), I do believe we’ll see a fundamental change in continued education. An example is Scott Young’s innovative “MIT Challenge” (, where he earned an MIT equivalent education for free, and got tons of job opportunities as a result. More than one way to skin a cat….and those will continue to develop as the cost of college escalates. If Universities aren’t careful, they could certainly put themselves out of business, but it will take time.

    • Great points. Like you, I noted in the comments section of his blog post and elsewhere, the numbers don’t lie. For most people, more education equals greater lifetime earnings. You can check out my full response(s) over at Freedom Is Groovy.

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