I agree with Annie Lowrey’s take that comparisons between higher education and the subprime mortgage bubble obscure more than they reveal. But I’m also not as sanguine that the existence of a wage premium shows that high-end institutions are delivering value:
A diploma is a polymorphous investment. It is a guarantor of higher lifetime earnings: The “college wage premium” for highly educated workers is in the tens of thousands of dollars per year. It is also an insurance policy against unemployment, a signaling device to employers and peers, a prestige line for your resume or New York Times wedding announcement, and a place to make friends and connections. Most importantly, it is a way to learn new skills and information.
It could be that Thiel is right, that college students, en masse, are overpaying for their educations. But it seems more likely that some college students attending certain types of schools are overpaying. If you want to be an aerospace engineer and have the chops to get into CalTech, the quality of the education, contacts, and fellow students on offer might really be worth $200,000 to you. A diploma from the school practically guarantees a good salary.
She says, rightly, that the low end looks different and I agree.
I’ve been ruminating about the higher end for the past couple of days and have some somewhat different notions from the ones I’ve espoused previously on the blog. The summer after my sophomore year, I interned for Chuck Schumer’s communications director and wound up getting a semi-serious offer to drop out of school and just work as a press aide on the Hill. According to the Peter Thiel view of the world, I should have said yes. The value of my college “education” in this view was basically the signaling mechanism that helped me get the internship in the first place. Having obtained the internship I was able to demonstrate actual competence in the job and get an offer for an entry level position in a field I was interested in. Two years of low pay versus two years of high tuition would be financially worthwhile and I would have learned more about subjects I’m interested in—politics, public policy, and political communications, etc. But I didn’t even give the idea serious consideration, nor did anyone in my family seem to think I should give it serious consideration. We didn’t sit down to work out the costs and benefits in a real way, and even the guy offering me the job didn’t really present it as if he expected to me to say yes or thought he should spend time trying to talk me into it.
Flash forward a few months back to campus when Lawrence Summers was a newly installed university president and I was a campus journalist and I recall him making a disparaging remark at some point about the college being too much like a summer camp.
That sort of clicks, though. I went to Camp Winnebago when I was a kid and it was great! But it’s not cheap. I assume the alumni of an institution that disproportionately serves a client base of high-income Jewish families earn a substantial “wage premium” and I made friends and connection there and I definitely learned new skills and information. Nobody, however, would be so naive as to suggest that the Winnebago wage premium is attributable to the archery, canoeing, and campcraft lessons I got. Which isn’t to say that the education “didn’t work” or I didn’t learn anything. I really am quite good at starting campfires. These just don’t happen to be economically valuable skills.
This is not a very well-formed thought, but I’ve already gone on at some length so I’m just going to leave this as a placeholder.