"Today’s college degree is more valuable than one earned 30 years ago"

From the Walker College of Business blog:

Earlier this month the UNC System announced a series of tuition increases system-wide. At Appalachian State, tuition will increase by $467.74. The news prompted a graduate of NC State to write a letter to the Charlotte Observer. Bill Wood argued that college today, in relation to starting salary, may not be worth the cost.

I graduated from N.C. State University in 1978; tuition was $232/semester. Starting salary for an engineer was about $16,000 a year. Now, tuition for my sophomore son at NCSU has exploded to around $3,400 per semester. He can expect about a $60,000 starting engineering salary - about a four-fold change. Yet tuition has gone up by 15 times! Good luck finding an equally inflated salary of $240K.

This letter prompted a response by Walker College economics professor Dr. Timothy Perri, which was published today. In short, he argues

Using the numbers provided by the critic, along with data on the college earnings premium, the discounted value of the inflation-adjusted dollar return to an engineering student (his example) is 2.5 to 3 times as large as it was in 1978. Thus, the degree is a better buy today than it was in 1978.

Perri supplies a link to a more detailed response [PDF]. It involves mathematical formulas to arrive at a conclusion. His calculations show the estimated PV (present value) net return on a 2010 engineering degree is $285,100. The PV net return of an engineering degree in 1978 is between $89,000 and $116,300 (based on inflation rate between 2.58 and 3.37).

via www.business.appstate.edu