The real cost and value of higher education

Finance touches so many aspects of our lives, including things that we don’t commonly associate with it. Take higher education. In today’s United States, families and students pay huge sums to get a college education. The average cost of attendance at a state school is $25,000 per year. That’s $100,000 per student for a four-year education. At a private institution, it’s double that. That means that middle-class families can’t afford to send their children to college without using debt and investment tools that are given to them by the government and financial industries. They are sucked into finance in order to achieve the most basic goals of middle-class life.

Middle-class families were drawn into debt through the vast expansion of loans in higher education. This took place at the same moment that finance was expanding in lots of other dimensions.

A college education is very valuable to the students who complete their degrees. There is no question that students who complete a four-year degree will be better off in terms of income.

A four-year degree is also predictive of other things, like having a stable family, living longer and voting more frequently. Having a four-year degree supports young adults’ lives, both in their earliest years away from their families and all the way through their careers. College education is really essential to gaining a foothold in what we’ve always thought of as the middle class.

Being middle class and staying middle class in the United States today really depends on education. What we know from economic research is that it has become less and less likely since at least the 1960s for children to stay in the same life situation as their parents. Decline is quite likely – much more likely than it has been before. At the same time, the possibilities for what wealth can do for you as a middle-class person are absolutely enormous.

In short, there is a huge upside and very little downside in completing a degree. Going through higher education is one way to make a bet that you will be able to beat the odds and maintain a middle-class life, or perhaps even come into a position of real wealth.

More people have access to a college education today than ever before. We need to consider the implications of that. For example, there are community colleges that give two-year associate degrees and essentially take everyone who applies. These are also the places that have suffered the most cutbacks in funding and are in the weakest position to support the students who go there.

Black families, as we might expect, have more difficulty accessing higher education. They take more loans than white families, in part because they also have less wealth and have faced discrimination in the labour market. They are coming into higher education with fewer financial resources in their pocket. They borrow more and then have more trouble paying back the loans that they have taken.

The historical discrimination and present discrimination that Black families face continues through the pursuit of higher education. It’s one of the terrible ironies of our current situation. Black middle-class families, like their white counterparts, believe that their children should have an open future; that they should be able to cultivate their talents and choose where those talents will take them. But the historical discrimination and present discrimination they face means the opposite occurs in practice.

Higher education is just one of the ways that financial markets invade our everyday lives. I’ve talked about the debt that families have to take on, which is actually given by the government. But even in their early years, couples across the United States are instructed to start saving and investing their money in order to get their kids to and through college. Families start worrying about this investment very early on. And for most families, there is actually little chance that they will be able to save money for a goal that is 18 years in the future. At the same time, the federal government and financial advisers are all giving messages that this is what they should be doing if they are responsible parents; that they will, in fact, be saving and investing for their children. That is one of the fundamental ways that finance has moved into daily life and into our most intimate spaces.

Middle-class students and the young adults they become after they leave college should have a right to the future. They believe that this is their due and something that is an inheritance of the American middle class more broadly.