College Enrollment Surges, But Is It Worth It?

College enrollment has been surging over the past 4 years with 67.4% of high school men enrolling directly in college after high school in 2016 versus only 61.3% in 2012.

Ask any economics professor at an Ivy League school what is driving the trend of higher college enrollments and you’ll get a quick response that implies that our young 18-year-old snowflakes are simply hedging their future employment opportunities against the devastating consequences of globalization and a deteriorating manufacturing base in the United States.

And while their complex econometric models prove their point well beyond a shadow of a doubt (even though you’ll never understand them so don’t even try), we suspect the real answer may have something to do with the federal government throwing student loan dollars at anyone with a pulse while simultaneously offering to erase all that debt when you graduate.  Call us cynics. 

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Meanwhile, we find it absolutely shocking that a bunch of 18-year-old boys would happily take $40,000 from the federal government every year to do this:

But, whatever the reasoning, there is no doubt that college enrollment is soaring.  Per Bloomberg:

And while over-educated elitists of our liberal bastions of higher education are all too eager to explain why more kids are choosing college these days, you’ll rarely hear them comment on whether or not it’s actually worth it…it just wouldn’t progress any of their liberal narratives or serve their self-interests, so why bother?

So we decided to take a quick look at the math of a college education.

First, according to Quora.com, attending college these days can cost anywhere from $22,500 per year for a public, in-state university to $75,000 for a private education.  So, lets just assume that, on average, our snowflakes are spending $30,000 per year on a 4-year bachelor, or $120,000.

• Attend a public in-state university for four years, living on campus ($22,500 per year for four years) for $90,000
• Attend a public out-of-state college for four years:  $35,000 per year for four years for a total of $140,000
• Attend a private four year college in an expensive area like Manhattan at $75,000 per year for a total of $300,000

So what do they get for that?  Well, per the Bureau of Labor Statistics, that $120,000 degree in Anthropology will earn you roughly $464 extra dollars per week or ~$24,000 per year.

So, doing some quick math, we find that $24,000 tax-effected at a 25% tax rate equals about $18,000 of extra annual earnings for a college grad and implies a 15% return on invested capital. 

Not bad…but, unfortunately, the story doesn’t end there.  You see, by choosing the college route our snowflakes not only incur the cost of college, in the form of massive student loans, but also forgo 4 years of earnings, which equates to roughly $110,000 ($692*52*.75) on a tax-effected basis.

So lumping in that opportunity cost brings the true average cost of that Anthro degree up closer to $250,000, implying a roughly 7.2% ROIC.

Of course, that’s assuming that young Tripp Hollingsworth III actually graduates in 4 years and then promptly finds a job shortly thereafter rather than returning to mom’s basement.

So you decide, is a 7.2% return on invested capital sufficient to take on a life time of debt?  In fairness, it is awfully difficult to calculate the present value of a frat party, which for an 18-year-old boy may be infinite.

Reprinted with permission from Zero Hedge.

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