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How to Make Sure College is “Worth It”

by Michelle Kretzschmar

With the rapidly rising cost of college and fear of a college loan bubble, an increasing number of families are wondering if college is worth it. The short answer is yes, college is still worth it. Now let’s get to the longer answer which is still “yes” but with the inevitable qualifications.

Let’s take a simple analogy: transportation. Is it worth the money to buy a car? Given that a car is the most efficient and reliable form of transportation to get to work for probably about 90% of the population, the answer is yes.

But we already have an exception don’t we, for the ten percent that live in population centers with efficient mass transportation and where owning a car is expensive. Like most things in this world, it’s a qualified “yes.”

Then there’s the issue of the type of car to buy. You can buy anything from a twenty-year old junker that you’re thankful that just starts every morning to a luxury sports car that costs more than the average family income. Both provide transportation, are they worth the cost?

See where I’m going with this? With cars we know that we’re paying extra for leather seats and a moon roof. We know that we really don’t “need” a V8 pickup truck to commute to the office every day but that’s what we want.

Most people understand that there are trade-offs with financial consequences. We take the truck knowing it has a lower gas mileage so we’ll be paying more at the pump. The used car is cheaper but we think the lower price is worth the probability of future car repairs.

And we can actually make these decisions based on some readily available, reliable data. Between government gas mileage, insurance ratings, and Consumer Reports, the average car buyer can make an informed decision so that buying a car is “worth it.”

Unfortunately, while the same is true for college, many people don’t act like it.   The same people who would never consider buying a car for the prestige factor will put their retirement at risk so that their children can “benefit” from attending a prestigious college. While there may be jobs out there where driving a BMW is a prerequisite for an interview, they are few and far between. The same is true for a degree from an elite university.

While there isn’t an equivalent of Consumer Reports for colleges (no, US News College Rankings doesn’t count), there are some hard numbers every family should consider when looking at colleges. And if you’re looking for the best college at the most reasonable price, I suggest you look at 50-50 schools.

The first 50 is the graduation rate. Attending a school with a poor graduation rate is the equivalent of buying a car without any sort of warranty. The car may turn out fine but it’s still a risk. And with all the cars, new and used, that offer warranties, why buy one without?

Why a 50% graduation rate? The sad fact is that only a third of the over 1.500 four-year colleges in the United States have a graduation rate of 50% or better. Consider this a minimal acceptable standard. After all, the basic premise of college is to graduate, right? Ultimately, this a rough indicator for the long-term payoff of your investment in college.

The second 50 refers to the acceptance rate. This number is often, but not always, related to your potential investment in college. The lower the number, the more you’re likely to pay for college. It’s simple supply and demand. The more people want something, the more the supplier, that is the college, can charge. So the higher the acceptance rate, the less you are likely to pay.

The one significant exception to the high costs associated with low acceptance rates is that the elite among these schools are able to provide generous financial aid for even middle-class students. You just have to be one of the lucky ones admitted.

Of course there is a still wide variety of colleges among 50-50 schools. Families will still have to research program offerings, financial aid possibilities, and availability of personal preferences. But this isn’t all that different from deciding to set a price range and minimal gas mileage requirements when buying a car. Sedan or SUV? Blue or Red? Actually, having just recently been car shopping, I think the only color choice is some version of silver.

Anyway, the answer to the question of whether or not college is worth it depends on what you invest and what you ultimately gain from the investment.  One way to improve your chances of getting an excellent education while minimizing your costs is to start your search with a list of 50-50 schools.


Michelle Kretzschmar is the creator of the DIY College Rankings Spreadsheet which contains information on over 1,500 colleges that families can use to identify schools best for them. She is also very interested in college graduation rates and has created a 50-50 list of colleges that accept at least 50% of their applicants and have at least a 50% graduation rate. Michelle received her Bachelor’s Degree in Plan II and History and Masters in Public Affairs from the University of Texas at Austin with research focusing on high school dropouts.

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