Despite debt, college still worth cost -- to a degree

'WAGE PREMIUM' | Grads earn far more in a lifetime, but loans can be a problem -- and there are other options

Karnell Black faced a difficult decision his senior year at a Dallas high school: He liked his job as a law firm file clerk and was making decent money -- $10 an hour. His family wasn't pushing him to go college, which he knew would be expensive. Should he apply, take out loans to attend, and then try to succeed in college when no one else in his family had gone?

But after a school counselor persuaded him to try, Black now says his decision to attend Loyola University Chicago changed his life.

After he graduates from the school this weekend, he'll start a job at Loyola in which he'll help students succeed during the first year of school. Despite the fact that he is $30,000 in debt -- about the same as his starting salary -- he is confident he'll eventually be able to pay back the money. But he says it's more than just the money.

"I feel I definitely made a good decision,'' said Black, 21. "I expanded my knowledge about the world, and I found my calling.'' He hopes to become a college dean.

The question Black faced as a high schooler is one many face now: Is a college degree worth the cost?

Tuition and living costs at the University of Illinois top $20,000. Costs at Northwestern and the University of Chicago approach $50,000. Loyola costs about $35,000.

Nationwide, college students graduate nearly $20,000 in debt, on average. Meanwhile, average starting salaries, after being adjusted for inflation, have dropped slightly since 1980, to $31,200.

The answer, experts say, is yes, a degree is still worth the cost. Nearly every study on the topic shows earnings of college graduates far outpace earnings of those with just a high school diploma.

"Even though tuition is going up and the costs of loans are going up, it's still worth it,'' said Lisa Barrow, a senior economist with the Federal Reserve Bank of Chicago.

The reason is the so-called "wage premium" college grads make. The median income for college grads working full-time is nearly $51,000, compared with $31,500 for someone with only a high school diploma, according to U.S. census data.

Over a lifetime, a college grad will make the equivalent of $280,000 more than someone who didn't go to college, even after figuring lost wages, tuition costs and loan interest payments, according to "Education Pays,'' a College Board report released last fall.

"The rate of return to investment is very high,'' said Sandy Baum, co-author of the report. Still, Baum notes a widely quoted figure claiming a degree to be worth $1 million more is an "exaggeration.''

The report said advanced schooling has other benefits, too: Graduates pay more taxes and are less likely to be on public assistance, exercise more and smoke less, and vote and volunteer more.

Should you go to a pricey private school? Data are mixed on how much value such a degree adds compared with one from another school. One study found that 20 years out of college, Yale grads earned 30 percent more than Tulane grads. But the authors also found wages for students who got accepted at Ivies but attended a different school were the same as the Yale grads'. They concluded it was the background of the students, not the value added by attending an Ivy, that led to the higher wages.

While most private colleges offer financial aid, experts caution against too many loans to get a bachelor's degree, particularly if students plan to enter a low-paying field.

"If somebody is thinking, 'Should I borrow $100,000 to go to a private college?', no, you shouldn't," Baum concludes.

And college is not a ticket to success for everyone. Just over half of students actually earn a degree within five years of enrolling, according to the National Center for Education Statistics. While more eventually do get a degree, Alan Collinge, founder of a group advocating for reforming student lending laws, says statistics focusing on averages don't do justice to those at the bottom. Many have a difficult time paying off thousands of dollars of debt.

"Sure, [college] works out for some, perhaps most,'' he said. "However, what about those who it doesn't work out for?''

Baum said parents and students should be cautious.

"You have to think if you are a 'D' student in high school and not really motivated, you shouldn't borrow a lot of money and go to college,'' she said. Still, she notes that even those who went to college but dropped out earn nearly 20 percent more than those who didn't go at all.

Students unsure about college should also consider other alternatives, experts say, including less-expensive vocational training or community colleges. Community college grads, for example, earn about $140,000 more than a high school grad over a lifetime.

Skilled tradesmen can even out-earn college grads, although they also must attend intense training.

After attending three colleges in two years, Mike Omiecinski, 22, of Crete, decided, "This ain't for me.''

"It just cost too much,'' he said. "I got tired of paying for it.''

He now is an apprentice with the International Brotherhood of Electrical Workers Local 134 -- and makes about $35,000 while completing a training program. When he gets out after four years, he'll be making about $78,000.

But there are very few positions in the union apprenticeship program: 1,700 applied for 400 spots last year.

It's even harder to become a union plumber, another well-paying job that doesn't require a degree. After finishing a five-year, paid apprenticeship with the Chicago Journeymen Plumbers Local 130, which covers Cook and Will counties, plumbers make $41 an hour, or more than $85,000 a year.

But it's almost as hard to get accepted in the journeyman program as Harvard. More than 1,000 applicants sit for entrance tests each year, but there are typically only 100 spots in the program.

James Sullivan, business manager for Local 130, said the program shows "college isn't for everyone.'' He'd like to see more apprentices join right out of high school -- before students rack up loans or drop out of college. Right now, the average trainee is 30 years old.

"We got too many parents who say, 'You can't do anything without college,'" said Sullivan.

That was the case for apprentice Kevin Moeller, 27, of Palatine, who said his mom "pressured'' him to get a degree. He went to a small, private school in Indiana and was working as a math teacher when he decided it wasn't for him. He regrets the time it took. "I'd definitely be financially a lot better off if I'd done this right away,'' he said.

Paul Barton, a former official with the U.S. Labor Department, says apprenticeship programs should be expanded and improved.

He also says it's wrong to claim the U.S. economy is in danger if more people don't go to college. The federal government projects that only 31 percent of all jobs will require a college degree in 2014, up from 29 percent in 2004. But the jobs that won't require a college degree will be in lower-paying fields.