Even at a steep cost, college remains an investment worth making

All right, take out your No. 2 pencils.

When it comes to a college education:

a. A record number of young adults are applying
b. Only half of undergraduates get their degree in 6 years
c. Both of the above

Students are borrowing more to pay for college because:

a. College costs have risen faster than the consumer price index
b. Family incomes have stagnated
c. Both of the above

College graduates earn:

a. About 100 percent more than their peers with only a high school diploma
b. Wages that are stagnant or down
c. Both of the above

If you answered "c" to all three questions, go to the head of the class.

Little wonder college is controversial. If you want to spark a fierce discussion at a neighborhood gathering or during a lunch break at work, ask why college is so expensive. You can really get the conversation going by adding, "Is it worth it?"

The topic animated a conversation at St. Michael's Lutheran Church in Roseville. I gave a talk on Sept. 18 about the economy and personal finances and, as always at such events, worries and doubts about the spiraling cost of college came up. Parents typically fret over how they're going to pay the bill. Grandparents are afraid about the student loan debt burden their grandchildren are taking on.

A college diploma is costly. This year, the price tag for tuition, fees, books, room, board and other expenses for an in-state student at the University of Minnesota is $23,982. An academic year at Macalester College runs to $51,417. (To figure out what a four-year degree costs, multiply these figures by 4, assume an average annual rate of 6 percent for college cost inflation ... and take two aspirin.) It isn't just that kids are living off a tight budget and a diet of Ramen noodles. So are their parents.

There is a lot to get upset about when it comes to college. The price tag isn't just high, it keeps spiraling ever upward, running about double the rate of overall consumer inflation. The financial aid process is intrusive, byzantine and arbitrary, fueling legitimate mistrust among parents about a gamed system. Students and their parents are borrowing more than ever to meet the tab, especially since the median working-age household earned roughly $6,300 less in 2010 than in 2000. The wages of college graduates over the past decade are stagnant (women) and down (men). Worse yet, far too many young adults drop out of college owing big bucks on their student loans without the benefit of a degree.

That said, the current fad for totting up a handful of negatives and dismissing the worth of college is wrongheaded. So is the fashionable emphasis on an impressive list of college dropouts — from Steve Jobs of Apple to Mark Zuckerberg of Facebook — to argue that young people can succeed without a degree.

No, the unmistakable message from the turbulent economy of recent years is that postsecondary education remains valuable in the job market, perhaps more than ever. Postsecondary education is a necessary, even if not guaranteed, ticket into a middle class job and lifestyle.

"Step back for a minute," says Terry Fitzgerald, senior economist at the Federal Reserve Bank of Minneapolis. "If I'm talking to a 17-year-old, am I really going to tell her, 'Don't go to college?' No!"

Fitzgerald is spot on. For all the legitimate controversy swirling over the costs and benefits of a college education, the real job and earnings problems in America are concentrated among workers with only a high school diploma and less. Yes, parents and students have to be wary of taking on too much debt. They should both embrace the wisdom of getting postsecondary education — from a community college certificate to a B.A. to an M.B.A. — and bring a green-eyeshade mentality to shopping for the best deal and calculating the risk and return on investment.

The U.S. economy is mired in the worst labor market since the 1930s. Some 25 million Americans are unemployed or involuntarily working part-time. Still, people with a college education are faring much better than their less-educated peers. For example, the Minnesota unemployment rate for adults 25 years and older with a bachelor's degree and higher was 3.7 percent in 2010 (the latest education-linked state data available). The comparable figure was 6.8 percent for those with an associate's degree, 8.3 percent for high school graduates and 13.5 percent for dropouts. The actual numbers are different in the national unemployment figures published monthly by the Bureau of Labor Statistics, but the significance in the percentages is the same: The more educated the workers, the lower the unemployment rate.

The result reflects deep changes in the labor market. The share of jobs requiring postsecondary education has increased from about half in the 1970s to more than three-quarters today, according to researchers at the Georgetown University Center on Education and the Workforce. More than half of the jobs requiring postsecondary education are for workers with a B.A. or higher. These jobs pay better, too. For example, in 2010 the median earnings of a college graduate 25 years or older with a B.A. or more, working full-time, were $63,265 (for men) and $45,232 (for women). Their high-school-only peers earned $32,501 and $22,452, respectively. The Smokestack America era, when a high school graduate with a strong work ethic could get a job on the factory floor and a big enough paycheck with benefits to join the middle class, is gone.

Postsecondary education is also the way of the world. Some 26 percent of young adults, or 150 million students, are enrolled in higher education worldwide, up from a fraction of 1 percent, or about half a million, in 1900. Employers everywhere that are somehow engaged with the global economy — business, government and nonprofits — demand an educated workforce that is comfortable analyzing words and numbers, at ease in a global community linked by computers. A college education is a critical certificate for getting a good job in the United States and elsewhere. It's also tightly linked to shared ideas about personal fulfillment and the good life.

The message I hope I left with the parents and grandparents at St. Michael's is this: Yes, you're right to appreciate the practical and personal value of a college degree over a student's lifetime. You're also correct in working hard at making sure your student isn't saddled with a lifetime of debt. It's the challenge of our generation.

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Chris Farrell is economics editor of American Public Media's Marketplace Money and author of "The New Frugality: How to Consume Less, Save More and Live Better." This essay originally appeared on the website for the American RadioWorks documentary, "Who Needs an English Major?" American RadioWorks will host an event at 7 tonight in the UBS Forum discussing the value of postsecondary education. Reserve your free ticket here.

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