Thursday, July 01, 2010

Declining ROI of College Education

by Daniel L. Bennett

New research by Bloomberg Businessweek, which makes use of Payscale salary data, suggests that:
the monetary value of a college degree may be vastly overblown

College is not the million-dollar slam dunk people talk about

Over the past 30 years, the S&P 500 Index averaged about 11 percent a year. Only 88 schools out of the 554 in the study had a better return than the S&P. Everywhere else, students would have been better off—financially, at least—if they invested the money they spent on their college educations and never set foot in a classroom.
The new research corroborates what CCAP has been saying for some time - the value of a college degree is diminishing. Richard Vedder was even cited in the article:
One big conclusion that can be drawn from the PayScale data is that college—and college alone—may not be the great investment it was once thought to be. Richard Vedder, director of the Center for College Affordability & Productivity in Washington, D.C., notes that with the college-educated accounting for a larger percentage of Americans, the bachelor's degree has been devalued, and its ROI has taken a hit. "We have credential inflation in America. A college degree has become mundane and ordinary," Vedder said. "We used to send kids to college to become lawyers and doctors. Now we send them to college to work at Walmart."

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