The Opportunity Costs of College
The concept of opportunity costs has much more applications in the real world than I first imagined. The opportunity cost of one thing is the value of that which is sacrificed to obtain it. When I began to research I was stunned by the number of examples and situations, but the one that interested me the most was the opportunity cost of college. We are all about to go to college in just a couple months, so of course, I wanted to see if this upcoming journey is going to be worth it.
The first cost of college: tuition. College is not cheap and according to the College Board, during the 2017-18 school year, the average cost of tuition and fees was $34,740 at private colleges. Now assume it takes you four years to graduate and that is approximately $140,000 that you spend on a college education. Thus, by deciding to go to a private college, the money spent is an opportunity cost as it is something that you did not have to spend if you didn't go to college.
In addition, by going to college you sacrifice time that could have spent earning money through a job. Yes, it may be possible to work part-time in college, but studying and preparing for all of your different classes takes a massive amount of time away from spending time working. So, by going to a university, you forgo an income that could have been earned through a full-time job.
Those were the two biggest opportunity costs of going to college, but of course, there are dozens of others. Really, anything that is sacrificed for college, such as money, time, or travel, can be an opportunity cost of going to college. As such, it's important to value this time that we spend at college because of the large number of costs associated with it and think about is it worth it?
Pictures:
https://www.ohe.state.mn.us/mPg.cfm?pageID=94
Sources:
https://students.collegefactual.com/blog/the-opportunity-cost-of-going-to-college
https://www.collegedata.com/cs/content/content_payarticle_tmpl.jhtml?articleId=10064
https://college.compareer.com/opportunity-cost-attending-college/
The first cost of college: tuition. College is not cheap and according to the College Board, during the 2017-18 school year, the average cost of tuition and fees was $34,740 at private colleges. Now assume it takes you four years to graduate and that is approximately $140,000 that you spend on a college education. Thus, by deciding to go to a private college, the money spent is an opportunity cost as it is something that you did not have to spend if you didn't go to college.In addition, by going to college you sacrifice time that could have spent earning money through a job. Yes, it may be possible to work part-time in college, but studying and preparing for all of your different classes takes a massive amount of time away from spending time working. So, by going to a university, you forgo an income that could have been earned through a full-time job.
Those were the two biggest opportunity costs of going to college, but of course, there are dozens of others. Really, anything that is sacrificed for college, such as money, time, or travel, can be an opportunity cost of going to college. As such, it's important to value this time that we spend at college because of the large number of costs associated with it and think about is it worth it?
Pictures:
https://www.ohe.state.mn.us/mPg.cfm?pageID=94
Sources:
https://students.collegefactual.com/blog/the-opportunity-cost-of-going-to-college
https://www.collegedata.com/cs/content/content_payarticle_tmpl.jhtml?articleId=10064
https://college.compareer.com/opportunity-cost-attending-college/
This is a really interesting example of opportunity cost and it shows how common it is in our society whether it be on a small scale like buying a cookie rather than an apple or something big like going to college. I think opportunity cost can sometimes be looked at like a consequence for our actions; if we choose to stay up late to study, we're going to be tired the next day but we'll be better prepared. There are many example related to school with opportunity cost where we have to think of our options available and we often end up choosing the one with the least opportunity cost.
ReplyDeleteI think this is a very relatable application of opportunity cost to many of us, which makes it a very interesting read. I think one key idea is the return on investment that some people may get from college, namely, more opportunities to attain a higher salary. It also provides an environment for people to foster their interests and gives them a place to realize what they are passionate about. If somebody were to enter the workforce without knowing these things about themselves, it may be much harder to work towards that and a more fulfilling life. The opportunity cost must be compared with these factors and benefits as well as the financial benefits and costs to more fully determine if it is worth it.
ReplyDeleteGoing to college definitely has major opportunity costs, the biggest one being how it's becoming more and more costly each year to enroll. However, the reason we all still go to college is because we expect that with a college education we can get better jobs that pay more and therefore assuming success we'll be able to make enough to get back the money we spent on college and to make a good living. Since these days it's pretty hard to get a good job without a college degree, most people believe that the benefits of college outweigh the opportunity costs. It's also interesting how the opportunity costs of college differ from country to country as many countries in Europe believe in a free education.
ReplyDeleteAfter reading this post, I was wondering about choosing a college after all acceptances. Let's say you get into an Ivy-league and a state school who gives you a full ride. How are you going to choose between these two options right now? The opportunity cost of going to an Ivy is that you lose the free-ride opportunity and you have to pay around $50,000 every year that may place a financial burden to your whole family. Besides, if you decided to go to a graduate school, you may go more into debts.
ReplyDeleteIn contrast, the opportunity cost of choosing a state school is that you lose the potential of better networking, a better job/internship recruit (since some companies only go to feeder schools), and even name recognition that "You're Ivy-league educated!" I think this choice would be much easier if we think about the comparative advantage and specialization. For example, if you want to become a good engineer, go to state school and then go to graduate schools since undergraduate education in STEM is fundamentally similar across the nation. In this case, the state school with the full ride has a comparative advantage, and they would have a better specialization in STEM than the average liberal arts college. Nonetheless, choosing a school is difficult, especially you received multiple acceptance, and you need to consider various factors to find the school that fits you, such as your major, your plan, the environment, the opportunity, and so on.
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ReplyDeleteThis is a super relevant application of opportunity cost that many of us are/will be thinking of in the next few months. Many of us go into high school wanting to achieve the highest of credentials in order to go to a "good" college which most of us have been taught is the correct route to lead a stable and happy life. Going off of your point of "In addition, by going to college you sacrifice time that could have spent earning money through a job. Yes, it may be possible to work part-time in college, but studying and preparing for all of your different classes takes a massive amount of time away from spending time working. ", the time spent studying is definitely perceived by many as a benefit that outweighs the cost of not being able to be apart of the workforce. As a society, we invest ourselves in higher education because we perceive that the opportunity cost does not out-weighs the benefit of being educated. Receiving a college degree is an investment that theoretically should allow us to make even more money than what we would've made in the time not studying or working towards a degree. (https://www.washingtonpost.com/news/rampage/wp/2015/02/17/why-do-americans-go-to-college-first-and-foremost-they-want-better-jobs/?noredirect=on&utm_term=.3ec59bba031a)
ReplyDelete$140,000 is the cost. The opportunity cost would probably be the time spent during college and after college that you now must spend at college and paying off debt. I have a brother who has decided to teach in Afghanistan for two years in order to accelerate the process of paying off debt. The opportunity cost of going to college was so high that he considered it worth his while (despite his family's wishes) to take on considerable risk in the face of making up for lost time and money.
ReplyDeleteThanks for this post! In the Bay Area, college is considered the next step after high school, with little thought to trade schools, the military, or work. While many of us have the opportunity to go to university, the immediate cost of tuition and books (and other expenses) is too high compared to the benefit of working now. As I was looking more into this topic, I found an interesting collection published by the New York Times following seniors in Kansas high schools. The rural and poor area they live in makes it difficult for many of them to go to college; the majority of them cannot afford college, even with financial aid. The cost of college is too high compared to a more immediate return on their investment: trade school or working for parents.
ReplyDeleteIf you want to read more about these teenagers in Kansas:
https://www.nytimes.com/interactive/projects/cp/national/college-applications/one-students-calculation-college-vs-trade-school
In Silicon Valley, the idea of college after high school becomes so ingrained in our minds, that we never really get the chance to consider the opportunity costs of not going to college, so thank you for this post!! In addition to considering present Silicon Valley, I think it's also important to consider looking at the choices second generation immigrants had to make in the past. My dad, for example, was told that after high school he were to take over the family business. However, after considering the opportunity costs of college and leaving his family business behind or taking over the family business, he deemed going to college would have the lower opportunity cost in the long run. At the time, his parents, or my grandparents, were disappointed and could not understand the reasoning behind his actions. This also reinforces the idea that we compare opportunity costs when making decisions daily whether it be when considering college, food, or even clothes!
ReplyDeleteI thought this article was interesting, especially to our class as we move on to college. In today's society, there is a strong emphasis on the correlation between going to a prestigious college and having a successful career/life. As a result, the main idea of this article - of the opportunity costs of paying for an expensive college - is especially relevant. The question that a lot of families are having to ask themselves is whether paying a lot upfront will yield them greater returns in the future through their child's successes. As students choose which college to attend to, one major aspect that cannot be looked upon is the opportunity costs of attending college - money that could be used in other aspects by attending cheaper colleges.
ReplyDeleteGoogle messed up, comment was written by Matthew Der
Deletealso forgot to include source: https://www.businessinsider.com/are-expensive-colleges-worth-it-2015-12
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