For years, conventional wisdom has held that the college degree is any American’s ticket to a well-paying job. But banking investment firm Goldman Sachs is saying that is just not true anymore, and it’s time to stop pretending otherwise.
In early December the company wrote that students might just be better off skipping college — especially students who attend colleges ranked in the bottom 25 percent. Goldman arrived at this conclusion after calculating that it will take eight years for students who started college in 2010 to start making money from their degree. Class of 2015 graduates will need nine years to break even. If current trends continue, the firm speculates that by 2030, students starting college straight out of high school without financial assistance will not see financial returns on their education investment until age 37.
Perhaps unsurprisingly, these grim predictions change some according to the degree sought and the institution at which a student seeks said degree. Graduates of the bottom 25 percent of colleges earn less on average than high school graduates, the report states. Likewise, Goldman Sachs notes that lower paying majors (arts, education, psychology and history, for example) have an even greater chance of negative return on investment. Unlike the starving artist, however, people with degrees related to business, health care and tech are more likely to graduate seeing green.
Skyrocketing tuition gets most of the blame for the inexorable cost of college, but Goldman says there’s more to it than that. The investment firm said that college’s true cost can be defined as the “total all-in cost of college (net of grants and scholarships) and the wages foregone during the four years of study versus the wage premium that undergraduate degree holders enjoy versus high school graduates over their working life.”
There are, of course, other values of attending college that a numbers-focused company like Goldman Sachs wouldn’t consider in their study, with friendships, critical inquiry and general fun times serving as just a handful of non-quantitative values that can make college “worth it.” But when private universities charge an average of $43,921 per year and public colleges cost students $20,000 each year, a ten-year wait to start making money on that investment is asking a lot, even for the best colleges.