Making College Pay: An Economist Explains How to Make a Smart Bet on Higher Education

by Beth Akers Narrated by Melinda Wade

Overview

A leading economist makes the case that college is still a smart investment, and reveals how to increase the odds of your degree paying off.

“Full of easy-to-understand advice grounded in deep expertise and research.”-Martin West, William Henry Bloomberg Professor of Education, Harvard University

The cost of college makes for frightening headlines. The outstanding balance of student loans is more than $1.5 trillion nationally, while tuitions continue to rise. And on the heels of a pandemic that nearly dismantled the traditional college experience, we have to wonder: Is college really worth it?

From a financial perspective, says economist Beth Akers, the answer is yes. It's true that college is expensive, but once we see higher education for what it is-an investment in future opportunities, job security, and earnings-a different picture emerges: The average college graduate earns an additionalmillion dollars over their career (compared to those who stopped their education after high school), and on average, two- and four-year schools deliver a 15 percent return on investment-double that of the stock market. 

Yet these outcomes are not guaranteed. Rather, they hinge upon where and how you opt to invest your tuition dollars. Simply put, the real problem with college isn't the cost-it's the risk that your investment might not pay off.

In Making College Pay, Akers shows how to improve your odds by making smart choices about where to enroll, what to study, and how to pay for it. You'll learn
 
¿ why choosing the right major can matter more than where you enroll
¿ the best criteria for picking a school (hint: not price, selectivity or ranking)
¿ why working part-time while enrolled might set you back financially
¿ why it's often best to borrow, even if you don't have to
¿ the pros and cons of innovative alternatives to traditional college
¿ how to take advantage of new, low-risk financing tools
 
Full of practical advice for students and parents, Making College Pay reminds us that higher education remains an engine for opportunity, upward mobility, and prosperity.

Editorial Reviews

From the Publisher

A handy, brief, readable guide to selecting a college worth the cost . . . One of the most prominent voices in the student-debt debate . . . steps back from that debate to tell us how the current higher-ed system works and how students can navigate it. Her advice is invaluable, and students and parents should take heed.”—National Review

“Written as a how-to guide for prospective college students to navigate risk-return tradeoffs as they pursue education beyond high school . . . But the book should also prompt the rest of us to reconsider how we talk about higher education.”—Forbes

“The high cost of college is one of those worries that keep students and parents up at night. If you’re one of them, Making College Pay will help you sleep a bit easier by showing that a college degree is one of the safest, smartest investments you can make in your future, or your child’s. Full of easy-to-understand advice grounded in deep expertise and research, this is the rare book that will appeal to both parents and policy wonks alike.”—Martin West, William Henry Bloomberg Professor of Education, Harvard University

“In practical terms, choosing to attend college and deciding how to pay for it can literally be a million-dollar investment decision. No aspiring student or parent should make such decisions without the wisdom found in Making College Pay.”—Mitchell E. Daniels, Jr., president of Purdue University and former governor of Indiana

“Choosing a college and deciding how to pay for it are two of the biggest financial decisions of a lifetime. Too many people don’t understand their choices and make bad decisions as a result. This book is the cure for that problem. Avoiding the ‘on the one hand . . .’ vice of many economists, Beth Akers offers a jargon-free, clearly written, and well-reasoned guide with very practical advice for young people and their parents about these important choices.”—David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy, Brookings Institution, and New York Times bestselling author of In Fed We Trust and Red Ink

Product Details

BN ID:	2940177423180
Publisher:	Penguin Random House
Publication date:	05/18/2021
Edition description:	Unabridged

Read an Excerpt

1

College Is Still Worth It

Student debt makes for frightening headlines and politics. Millennials being crushed by their payments, being forced to live in their parents’ basements and failing to launch into adulthood: delaying home purchases, marriage, and having children. Professionals in their thirties and forties who find themselves with accruing balances on their loans despite making the required monthly payments. And perhaps the most frightening of all, retirees whose Social Security payments are being withheld to repay the student debts they weren’t successful in repaying before retirement.

Collectively, the current outstanding balance of student loans in the United States is astronomical: over $1.6 trillion. The magnitude of that number has struck fear into the hearts of many Americans and continues to do so, as it is cited on a nearly daily basis on the pages of top newspapers. So too has the rising cost of college: a burdensome, if not financially crippling, expense for students and families across the socioeconomic spectrum.

Or at least, it seems that way, doesn’t it? It seems that way because that is the story you’re being told. Newspapers and the cable news shows have made a habit of telling the horror stories about student loans; after all, these are the stories that get the most eyeballs. But the reality is completely different. It’s not that stories you’re hearing in media are lies; it’s simply that they are outliers. To see the full picture, we need to look past the horror stories experienced by the few and turn our focus to the success stories revealed by the data.

Understanding the Trade-­Offs

I spent the first several years of my career researching the economics of higher education more broadly, in an attempt to reconcile this widely accepted narrative with the evidence. My work confirmed that both the cost of college and the amount of debt that students are taking on are accelerating. But also, student debt is a pretty powerful tool that can help people to afford college who wouldn’t otherwise be able to go. And it turns out that despite the scary price tag, college is, for the most part, worth it.

This notion that college is worth it is implicitly endorsed by policy makers, yet simultaneously rejected in our collective rhetoric around student debt. It’s long been a national objective to put more and more students in and through college each year. We all know on some level, at least intuitively, that college is worth it. If it weren’t, our nation wouldn’t spend several tens of billions of dollars annually to encourage enrollment. If it weren’t, politicians wouldn’t be constantly trumpeting their plans to increase college enrollment rates, and policy makers, advocates, and practitioners wouldn’t constantly be seeking new ways to get more and more people access to education after high school. If college didn’t pay, it’d hardly be worthy of so much effort.

And yet while we all celebrate the promise of college as the path to upward mobility—the ticket to more productive and prosperous lives—there is a simultaneous outrage over the price tag and a belief that students who borrow to pay for their degrees have been victimized by the system. It is precisely the dissonance between these two simultaneously held views that has motivated me to learn more and help others better understand the economics of education after high school. It seems to me that it’s necessary to reconcile these conflicting sentiments, at least individually, so that aspiring students and their families can make sound decisions about how much to spend and if, where, and when to enroll in college. And it almost goes without saying that without reconciling these conflicting notions we cannot craft policy that works ­toward the greater goal of improving the welfare of all Americans, but especially those who aren’t born with a silver spoon in their mouth.

I am in my late thirties, which means that I’m beginning to have friends and acquaintances with children in college or getting close to it. I’ve had the distinct pleasure of being able to talk with many of these college-­bound young adults as they explored the options for after high school. Something that has been quite striking to me during those exchanges is how the notion of financial trade-­offs is so often absent from the decision-­making process.

Recently I spoke with one young man who was considering several different options. He shared with me that he had managed to narrow down his list but was now somewhat torn between two academically similar colleges. The first would likely offer him a full academic scholarship, whereas he’d probably pay full freight at the other—about $100,000. He recognized that the first op­tion was cheaper, of course. The problem, he told me, was that he ­really preferred the look of the campus at the second, more expensive one.

The mother, economist, and all-­around cheapskate in me almost fainted at the thought that he’d throw away the opportunity to attend college on a full scholarship over a matter as trivial as the aesthetics of the campus. Yet I’ve had versions of this conversation repeatedly with different students facing different, seemingly obvious (to me, at least) trade-­offs. These students often cite geographic preference, the competitiveness of sports teams, size of the student body, and availability of certain clubs or extracurricular activities when weighing their choices for where to enroll. And don’t get me wrong, these are all reasonable factors to consider. But they seem to play an outsized role in the decision-­making process relative to economic factors like up-­front cost and the likely employment opportunities after graduation. These young people aren’t ignorant, reckless, or naïve by nature. They are simply a product of a culture that has celebrated college-­going as if it were a golden ticket. By overemphasizing romantic notions about finding “the perfect fit” (as though college were a pair of jeans, or a spouse), our culture tends to discourage aspiring students from being appropriately critical consumers when shopping for colleges.

My instinct in those moments is not to lecture (well, maybe a tiny bit) but simply to help these young people recognize the trade-­offs they are making. I want them to appreciate that the joy of announcing on social media the name of the prestigious college they’ve chosen or playing frisbee on a beautiful campus quad every other weekend will be fleeting but that the financial implications of their choice will last decades. Of course, money isn’t everything. But I want aspiring students to appreciate the economics inherent in the choices they are making.

This book is my attempt to impart all the advice I’d like to give those young people, while also offering a new way of thinking about the decision in front of you.

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