In a complete departure from the pragmatic approach in previous posts, this blog is for college students. The college experience is so much more than academics, graduation, and careers.  The focus on the outcome and not the journey actually obscures the subtle but genuine benefits of college life.  The lifelong friendships, the abysmal failures, and accomplishments that exceed the imagination are all part of the fabric of college life. Likewise, the passion developed for the college teams, politics, art, music, or whatever are also threads that bind together college life.  And yes, even the parties, the late-night extravaganzas, the spring break road trips, and the enumerable (and often unspeakable) escapades are part of the whole cloth that forms college life. 

Writers, more eloquent than I have conveyed the experiences and memories about the benefits of the college experience.  In their ongoing efforts to enhance student retention, college administrators have tapped into the phenomenon that 1st-year students that engage in campus life and embrace the college experience have a 10% higher rate of returning the following year. This 'direct' involvement 'means' student organizations, fraternities or sororities, intramural sports, or other no academic engagement. It seems that being part of a community on campus has benefits.

But there is more to college life than the community.  The current term is exposure to diversity.  And most often, that diversity is not just ethnicity or culture but a broader disparity in world views.  Of course, different backgrounds are inherent in many college settings.  But also, students are exploring and learning different perspectives.  They may, for a time, adapt or adopt a perspective different from their background.  Interestingly, they may eventually find the new perspective wanting.  The future may find them returning to their original base view and a deeper appreciation for its nuances and subtlety. 

However, they may not.  And all these adaptations and adoptions can lead to conflict.  Some students find pure joy in arguing and debating.  Freedom of expression can lead to some playing devil's advocate just for practice.  Others can learn that debate leads to learning.  These students may push their fellow students not out of spite or malice but to enhance their own understanding.  Inevitably these discussions can lead to discomfort and even pain.  It is a challenging time for students.  But it is also a growth period.  So again, this college life and experience grows the student.
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It comes to my mind that the previous blog focused upon the college education's financial rewards and monetary returns.  The numbers in that post may prove daunting.   Some may use the insights of that post to argue against the pursuit of a college education.  This post, however, focuses on the unmeasurable benefits.  What is the dollar value of learning tolerance?  How do we quantify the benefits to society of cohorts of college graduates that lived and grasped that different viewpoints are actually good?  How to value that tolerance and exposure to alternate views? Or how to place a dollar return on exploring alternatives that help reinforce and deepen our own convictions?  This valuation challenge seems to be the conundrum of the college experience.  College is expensive in both time and money.  All that have the college experience inherently know these benefits.  However, the dollar value we cannot fully explain to others.  College is just invaluable just because it is.

The cost of attending college continues to grow exponentially.  The how and why of these increases has seen lots of debate.   However, rarely does any writer try to refute the fundamental fact that college is expensive.  More often, proponents of college use this argument, "Sure college is expensive but look at it as an investment which has a tremendous ROI" (return on investment).  Actually, this is an excellent argument in the vast majority of instances. However, as I hope to outline in this post, the pay-off approach used is often biased. For example, a recent WSJ article pointed out the shortcomings of this argument for certain under-represented groups.  And this justification for the high cost of college does not fully consider all factors typically included in most business ROI models.

Whoa, you say, aren't you a marketer.  Are you getting ready to take us down a finance path?  The answer is yes.  Marketer or not, if the argument for a college education is based purely on the financial model, then some definitions are needed.   An informed customer needs some layperson terms and definitions to explain the ROI model.  It is also helpful to disclose total costs, investments, and periods associated with college and its subsequent benefits. 

Providing those definitions and then exploring if there is a positive ROI is the approach of this post.  I begin with a few definitions and explanations of concepts first.  After each definition, I discuss some problems and implications with these common definitions.  Then I provide some examples of the application to the college investment model or the ROI approach after making some common-sense adjustments to the current assumptions.  After reviewing these examples, we can see if we reach conclusions about the viability of college education on a purely financial basis.

I will begin with the most common cost discussed.  This is what is now becoming a federal government mandate cost, cost of attendance, or COA.  COA has its roots in the Federal Financial Aid literature, and this is a typical definition. "The COA includes tuition and fees; on-campus room and board (or a housing and food allowance for off-campus students); and allowances for books, supplies, transportation, loan fees, and, if applicable, dependent care. It can also include other expenses like an allowance for the rental or purchase of a personal computer, costs related to a disability, or costs for eligible study-abroad programs."

This is an acceptable definition to help compare costs across colleges and programs.  However, when used in the financial model for ROI (as it most certainly is in most cases), it violates a fundamental assumption of ROI models.  You should only include costs or expenses that would incur if you take the investment action.  That assumption would exclude on-campus room and board (or a housing and food allowance for off-campus students), transportation,  and dependent care.  The exclusion is based on the idea that a person going to college does not 'cause' housing, transportation, or the need for dependent care.  Even the need for a personal computer seems essential across all life situations these days.  However, the tuitions and fees are substantial and are a significant portion of the investment.  Associated with college would be the cost of student loans but only the portion of the loan related to tuition and fees.  Taking loans that allow for higher housing, transportation, or food standards is an issue for a different kind of blog.

An additional issue with the COA is that it excludes an essential cost, opportunity cost.  Opportunity costs in our ROI model would be forfeited income because most of the person's time is spent studying in class.  At a minimum, that would be 4 years of at least minimum wage in a full-time job, though it could be substantially more. Because it would seem likely that a recent high school graduate that earns admission to college is likely to secure more than a minimum wage job. 

Finally, the ROI model discounts future earnings and costs to a present-day value, so all dollar values are equal.  Any model should discount back to the decision point of choosing to attend college.  That would mean the first month of attendance.  The period is neither to a graduation date nor to the date of acceptance.  Therefore, with those assumptions in mind, we can explore some alternate scenarios. There is one other time-related assumption, the length of time to pay off loans.  Most federal models assume a ten-year time though research cited by US NEWS in 2014 shows an average closer to 24 years Link. Since most interest amortization is based on 10 years and most discount models in business use 10 years, we use the 10-year assumption. 

One other aside, we will not assume loan forgiveness as the current administration's policy will become standard practice.  If it should become policy, then the ROI would only increase exponentially.

Next, it is time to build out some scenarios.  This may seem tedious at first, but I assure you that I used the most unbiased sources I could find.  I also made sure to disclose the date of the studies. This is because college costs are changing, and estimates from even a decade ago can be poor representations of current conditions.  Oh, and by the way,  if bored with the numbers, you can jump down and see the conclusions.

First, we start by noting some of the research on the returns earned from a college education.  The first thing that jumps out is these returns really do depend on the degree earned.  This degree earned means not only what university is attended but also relevant is what major.  The recent WSJ article noting that under-represented groups were not earning a positive ROI neglected to account for this difference.

These factors will add quite a bit of variation in earnings.  We try to use on average with considerable caution that any individual should keep the college and major in mind.  One very commonly cited study comes from the US Census Bureau Link (however it is from 2002) showing over 10 years the college graduate earned $195,000 more than the high school graduate or $19,500 more per year.  Again not this study does not provide the complete story.   We have to factor in the opportunity cost of earning $75,600 over the four years of college, which we subtract from the $195,000.  Therefore, for this scenario, we will use $119,400 in additional earnings for the college graduate. The Pew Report from 2014 does not show a great deal of difference though the gap is decreasing Link.  For this scenario, the gain over 10 years is $175,000, and the opportunity cost is $112,000.  Therefore, we have an effective gain of $63,000.
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Next, we need some estimates on the cost of tuition, fees, books, and supplies. The College Board Link  estimates in 2014-15 that the average tuition and fees for 4-year public institutions are $9,300 per year.  Books and supplies add approximately $700 for a nice round figure of $10,000 per year.  Assuming that the student borrows the 31% estimate provided by Sallie Mae in 2014 Link, and then the discounted amount of interest is added on. So we have another $13,500 of college costs.  Our total cost for attending college for four years is $53,500.

Now to revisit the additional earnings estimates for college graduates. Using the same discount rate on the cost of student loans, we have additional earnings of $103,725 from the 2002 census date versus the $53,500 cost of 4 years of college costs with interest on student loans. However, under the Pew Report of 2014, the picture is not so positive.  The discounted earnings surplus for the college degree is $54,730 versus the $53,500 cost of 4 years of college costs.

These examples are using averages.  Degrees in subjects that typically earn less (art history?) will see ROI go down and possibly be negative. On the other hand, the university's brand may raise earnings above typical or average earnings and thus increase ROI. However, using the more recent Pew numbers, should the amount of college funding by loans go up substantially and/or the cost of tuition and fees go up. The positive return on investment is likely to become negative.  While I am a firm believer in the additional non-financial benefits of a college education (see my previous posts), the ROI financial model with significant student loans just does not seem to make a strong case at this time.

If you have read some of the previous posts, the theme has been the benefits of a college education.  A college degree is the culmination of a transformational process.  When it works best, this transformational process should create a new trajectory for the individual's future.  And while I teach in the practical and applied marketing discipline, I believe the indispensable foundation to this transformational process is the liberal arts courses.  Some universities now refer to these courses as the general education program.

As I will elaborate upon below, these courses influence multiple facets of individuals' development as they pursue becoming 'college educated.' First, the liberal arts education forms the historical foundation of what is known as a college education.  Therefore, in that sense, these courses provide a common link to what is considered a college degree. Second, another benefit of these multidisciplinary courses is to introduce students to a breadth of knowledge. Additionally, it is common that for undecided students, one of these subjects might become their passion and major. Finally, beyond the benefit of providing a breadth of knowledge, the courses also form a foundation about lifelong learning both in the process sense and in developing a quest or thirst for new understandings. Each of the above outcomes provides a compelling argument for liberal arts education.  But when the entirety of these outcomes is considered, they provide a compelling argument for these courses as an indispensable foundation. 

To further expand on these positive outcomes, let's begin with the history of a college education.  So far, in these articles' I have used the United States version or definition of College or University interchangeably.  That may not be appropriate as we discuss higher education's origins, which has also been referred to in others cultures as tertiary education. Tertiary is a third-level education or beyond secondary education.  In some parts of the world, this tertiary education is limited to University education. In contrast, others refer to both University and College.   Therefore, we will try to review only the origins and history of third-level higher education, which of course, would assume the existence of secondary education.  

The origins of tertiary education with a liberal arts component are traced to the European institutions that evolved out of cathedral or monastic schools between the 11th and 14th centuries.  These institutions existed for the study of the Arts and the higher disciplines of Theology, Law, and Medicine.  The Arts encompassed arithmetic, geometry, astronomy, music theory, grammar, logic, and rhetoric.  These seven disciplines became the foundation of modern Liberal Arts education.     

There are, of course, different configurations depending upon the institution.  But the core disciplines remain essentially the same. Recently added have been learning outcomes of intellectual and practical skills such as communication, analytical, critical thinking, and problem-solving skills. Essentially though, the core remains the same as was taught for the last thousand years.  The benefit of this continuity is that today's students are uniquely connected to those from hundreds of years ago.   Each student studied these core disciplines and went through a transformation as they strived to earn their collegiate credentials. Thus, an expectation and experience endured over the centuries of what it means to be collegiately educated.

Some intellectual and practical skills develop as outcomes of learning in-depth the content knowledge of courses such as calculus or chemistry. This, of course, is the second benefit of the liberal arts component of college.  However, learning the above skills also develops perseverance as students move through courses or disciplines that do not engage or interest them.  Often their learning is how to develop intrinsic motivation based on persevering to achieve an ultimate goal.  Rare is the collegiate student that has not privately or publically complained, "why do I have to learn this?" This query about a subject or two is usually followed with the youthful assurance, "I'll never use it in real life." Only later will they find the usefulness or perhaps realize that the process of learning as a skill unto itself was enhanced by 'slogging' through the course.
Of course, moving through the breadth of courses also helps the student explore and perhaps find their life ambition.  At my institution, over fifty percent of the students in my discipline change their declared entry major at least once.   This level of change is as it should be.  Expecting an 18-year-old student to understand their life goals is unrealistic.  They often have not even had the exposure during the secondary stage of their education to the breadth of opportunities.  Similarly, these students have limited exposure to the experts in these various disciplines.  These experts are the exemplars of that discipline that can appropriately convey the content and future of the discipline. 
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So, before students get to the expertise development provided by collegiate education and their major, they need to expand their horizons. We have a compelling argument about the transformational nature the general education provides.  A process vetted by hundreds of years.  This general or liberal arts education changes the student, hones intellectual skills, and potentially helps sort through majors and career opportunities.  It is for these reasons that as part of the collegiate experience and the collegiate education that I deem the liberal arts component indispensable. 

A quote often attributed to Thomas Jefferson goes something like, "An educated citizenry is a vital requisite for our survival as a free people."  The actuality is that Mr. Jefferson apparently never said those exact words.  However, perversely the fact that I know he did not use those exact words proves his point. And just as important is the context.  The argument about education comes in a letter to Charles Yancey while arguing for public education, including university education.  The exact words about democracy and education are, "if a nation expects to be ignorant & free, in a state of civilization, it expects what never was & never will be." And I am not overstating my education or memory. Instead, the point is that I learned how to research the background of this famous quote.
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This is an example of an outcome of my university education.  My professors insisted that I needed to be curious and skeptical.  They insisted we as students should always seek out the source of knowledge and not rely on others' opinions or conjectures.  Further, I was educated on how to conduct that original research. I could find the original letter to Mr. Yancey from Mr. Jefferson and read the quote and the context.  This letter is an interesting read, as are most of Mr. Jefferson's letters, but that is an aside.

I need to be clear, I was not a history major though I am a history buff.  I was not a Political Science major either though I took the LSAT for fun one time.  Nope, I was a statistics major.  However, I received the basics of a liberal arts education that formed the foundation of my critical thinking skills and research skills.  To Mr. Jefferson, this training was essential for democracy. Otherwise, Mr. Jefferson felt any government has a propensity to erode the liberty and property of the people. Education and skepticism could be a stalwart against this degradation of personal liberty.   Therefore, that benefit alone might seem enough 'value' of college education to society.  However, I would argue there is more.

An economic impact and multiplier develops from college education on the macro level.  The evidence seems compelling.  In 2003, Sianesi and Reenen concluded in their article in the Journal of Economic Surveys that each year of University education increased overall GDP by 3 to 6%.  The increase in education also increased the rate of growth in GDP in the United Kingdom.  The research has built on these findings to conclude that it is not just attendance but the quality of the education that leads to the "strong evidence that the cognitive skills of the population - rather than mere school attainment - are powerfully related to individual earnings, to the distribution of income, and to economic growth." Page 1 (2008) Hanushek and Woessmann, World Bank Working Paper 4122. These are just two of literally hundreds of papers empirically demonstrating that college or university education accelerates economic development.

It is apparent that University educations transform the individual, and through those educated individuals, their society.  For over 200 years, the foundation of democracy has had education as a pillar.  In addition, for almost as long, the innovation and drive that lead to economic prosperity have come from the same source.  In the next post, we begin looking at the actual mechanisms that lead to university education.

It seems as if we are in the cycle when the articles about college and university education focus upon the income earned after graduation.  Occasionally, there is a slight variation, and the article, news story, or blog post focuses on career success.  And, of course, these stories miss the point.  These are the outcomes of a college education.  There is not a guarantee associated with a college degree.  To this point, many like to point out examples of those with college degrees getting fast-food jobs. But, of course, these stories of less successful career outcomes miss the point as well.
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College is a unique transforming journey tailored to each individual.  The importance of the previous statement compels me to repeat and rephrase.   A successful college experience will transform the individual in a manner that will alter the trajectory of their life.   The goal of colleges and universities is to create an environment where each individual can transcend the projected straight line of their supposed destiny.   The roots of this highly successful system have been around for over 2500 years.  (This history will be the subject of a separate blog).

I read an interesting article pointing out some successful business people that did not complete their college education https://hbr.org/2018/02/how-ceos-without-college-degrees-got-to-the-top. Of course, there is a flip side to the statistics of the article.  That flip side implies that 92% of the 2600 CEOs have college degrees or a whopping 2,392. For now, let me point out the positive impact of this individualized system on a very personal level. By personal, I mean I will relate my own experience.

Mine is neither dramatic, awe-inspiring, or particularly interesting. Instead, I think you may find the essence of the beauty of the college transformation is in its very mundane nature.  My father was an enlisted man in the U.S. Army Air Corps and then the U.S. Air Force.  He was the son of what is called a sharecropper today.  My mother was college educated and the only daughter of a middle-class family. Unfortunately, my father passed away when I was five. This fact is relevant only so much as his Air Force benefits are a big part of what enabled me to go to college.

Now I went to college in the late 1970s and early 1980s.  My degree is a B.S. in Statistics.  I am sure none of my professors would remember me.  I attended the University of Florida, which even then was a large state institution.  I had a great experience, but what sticks in my mind the most is how those years form such a fundamental foundation.  None of the technical computer skills I learned then are relevant, but the decision trees we had to learn still are part of my planning process.  The language I learned was Latin. I remember next to nothing but the words of other romance languages such as Spanish, Italian, and even German have patterns I recognize.

My skepticism of doomsayers and pessimists remains from my college experience.  I remember clearly the abundance of articles about the coming Ice Age (see Time Magazine January 31, 1973). This quote is a personal favorite of mine "Climate experts believe the next ice age is on its way."- Leonard Nimoy, 1978.  You can see more here http://www.populartechnology.net/2013/02/the-1970s-global-cooling-alarmism.html.  Of course, these comments and projections are in direct contrast to the current Global Warming projections.  I am not here to take sides in either projection. But point out, my nuanced view of both projections is a product of my college education that included science, mathematics, languages, social sciences, and breadth in all subjects.  This expansive approach to subjects in a college education changed me forever.

Nor was this an easily accomplished transformation.  I was young and unbelievably self-assured.   My college education launched me in my career, and I was successful beyond even some of my grandiose ideas.  I also had some significant setbacks, which, once again, my college education provided the resiliency for recovery.   Through it all, I continued to transcend what was likely a mediocre path.  I have no idea where a child raised in a single-parent family in the 60s would have ended up, but I do not think it would be where I am now.  Even with a college degree, I am not sure many (especially not me) would have projected me as the chair of an academic unit at a University or a Full Professor.   Nevertheless, I am a college professor teaching B2B digital marketing.  The mere existence of this blog provides another example of the change wrought by my college education. 

Therefore, to me, a college education is not the outcome but the opportunity.  The design of each university and college is to create the opportunity to transform.  Sometimes students do not avail themselves of the opportunity provided but still successfully graduate. That is their loss.  There are other examples of those non-graduates that did encounter the transformation.  That is great.  However, for the vast majority, the opportunity to transcend is there, and they fully embrace all that is offered.  This opportunity is not imposed upon any. Instead, it must be embraced by each individual.  Then the transformation and transcendence can occur, creating the potential later positive outcomes.  Those outcomes will likely occur but are absolutely the byproduct of the college education and not the primary goal.

I encourage all who read this considering college for themselves or their children to reframe your questions.  Do not just ask about the post-graduation outcomes. Instead, ask and listen to the answers about how the university plans to transform.  What systems are in place that make the change and even the transformation in the future graduate?