In a recession, is college worth it? Fear of debt changes plans

The College Board, a non-profit association of more than 5,400 colleges and universities, estimates the lifetime "earnings premium" for a college graduate is $450,000 in today's dollars, or $570,000 for workers with graduate degrees.

"That's a much more accurate" estimate than the $1 million figure, says Sandy Baum, senior policy analyst for the College Board.

But Baum argues that a college education is more valuable during a recession, not less.

In a downturn, she says, "Most of the stories that say maybe it (college degree) isn't worth it any more find some unemployed college graduate," she says. "But unemployment among college graduates is still half that of high school graduates. A college education payoff is at least as high as it was before the recession. You're so much less likely to struggle if you have an education."

Laurence Kotlikoff, an economist at Boston University and developer of ESPlanner financial software, says his analysis of median earnings shows that college graduates nearly always fare better than those with just a high school diploma. But the amount students borrow can significantly reduce that advantage, he says.

Brenda Jaeggi, 26, of Galveston, graduated last May from Texas A&M University with a degree in maritime studies and more than $39,000 in student loans. About $22,000 of her loans are private loans, which are costlier and carry less flexible repayment terms than federal student loans.

Now, Jaeggi is struggling to make her $400 monthly payments. She's considering moving to a less-expensive apartment, although that likely will mean living in a neighborhood that isn't as safe as the one she's in now.

"I don't have any regrets about going to Texas A&M," Jaeggi says. "I'm proud to be part of that school and that culture. I very much regret how easy it was to get a student loan. Now, I'm stuck in this really bad pickle."

Graduates of elite schools contend that attending such a school gives them an edge in a tough job market.

Michelle Talbert, 39, has more than $90,000 in student loans from her undergraduate studies at Cornell University and law school at the University of Pennsylvania.

She recently was laid off by a law firm in Fairfax, Va., where she was a corporate associate specializing in mergers and acquisitions. Talbert says the connections she made in college helped her obtain contract work. Her current salary varies from month to month.

"I'm really enthusiastic about not letting circumstances that could appear to be a hurdle stop you from achieving a dream," says Talbert, a mother of two who got her undergraduate degree when she was 30. "For me, my dream was to go to college and go to law school."

College financial aid specialists say students should take a hard look at average salaries in their chosen profession before taking out student loans.

"If you think you want to be a preschool teacher, you should be more hesitant about borrowing than if you think you're going to be an engineer," Baum says.

Darla Horn says that if she had to do it all over, she would have taken a year off to figure out what she wanted to do with her life before attending college.

"Some kids know what they want — they want to go to medical school, or become doctors or lawyers," she says.

"But for someone that doesn't know what direction they want to head in, I would say, take a break, get to know yourself a little more, before you spend thousands of dollars on an education."

Contributing: Michelle Walbaum

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