Cost of College?

Molly Shannon- AM session- Honorbound

Every choice we make in our lives costs us something, whether that be time, money, resources, etc. These choices and costs are called opportunity cost. “Opportunity cost refers to a benefit that a person could have received, but, gave up, to take another course of action.” [1] How to choose what path to take when both come with a set of things one must give up? Charles Wheelan, author of Naked Economics, states that “every decision that we make involves some kind of trade-off.” [2]

Going to college can cause a loss in time and money, the opportunity costs, and some people would rather not have those opportunity costs.  They would rather start their careers after high school and start making an income right away and do not want to or cannot pay for 4 years at a university. What are the costs of that? Well, when a person goes to a university, they are giving up four years of an income. This loss of income can pile up, so instead of making an income, they are putting themselves in debt. Who is better off? Is the tradeoff for not getting an education better in the long run?

“For example; we have two students who are graduating high school. One decides that he will go straight to the work force and the other decides to go to a four year college.  The student who chose to go to college will pay, or more likely owe, $71,440 when starting his or her career. But not only that, they will also be out an additional $120,000 in lost income. The $120,000 sounds like a lot but it is really pretty conservative, just take $30,000 a year multiplied by four years.  So college for that student came at a $191,440 cost of opportunity. At 22 years old after graduating college that student is down $191,440; let that sink in for a minute.” [3] The student who went straight to the work force may seem like he was better off, but was he actually?

While not going to college may seem as though it would be a great choice, one would be making an income, not having to go to school, etc., there is a set of opportunity costs that goes with that.  Although a college graduate will not have those four years to earn an income, by becoming a college graduate, they will in turn make more money than non-college graduates in the long run. ‘College graduates, on average, earned 56% more than high school grads in 2015” [4].  The cost of not going to college is less money over a longer period of time. So one option is a short term gain, and the other is better in the long run. It is up to the person to decide what opportunity costs they are willing to give up.

While there may be no set solution to this problem, based on statistics, if one can afford to attend college, it is a tradeoff that will financially benefit them in the long run.

 

  1. Staff, Investopedia. “Opportunity Cost.” Investopedia. November 15, 2016. Accessed June 19, 2017. http://www.investopedia.com/terms/o/opportunitycost.asp.
  2. Wheelan, Charles. Naked economics: undressing the dismal science. New York: W.W. Norton & Company, 2010.
  3. Blanchard, Jered. “Opportunity Costs for Going to College.” Live Declared. March 17, 2014. Accessed June 19, 2017. https://livedeclared.wordpress.com/2013/08/02/opportunity-costs-for-going-to-college/.
  4. Christopher S. Rugaber, The Associated Press. “Pay gap between college grads and everyone else at a record.” USA Today. January 12, 2017. Accessed June 19, 2017. https://www.usatoday.com/story/money/2017/01/12/pay-gap-between-college-grads-and-everyone-else-record/96493348/.

 

 

 

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