The recent rise in tuition at Cornell, as well as cutbacks in both Federal and State assistance, has increased student emphasis on the cost of a college education. With a majority of the debate taking place at the trillion-dollar level, let’s step back and look at some stats.

First, the average cost of college tuition has risen at a compound annual growth rate of 7.74% since the late 1970s, as opposed to a 3.9% CAGR inflation rate for the US economy as a whole. This price premium for higher education has not been tied with an above average rate of college enrollment, with only a 3.28% growth in undergraduate enrollment over the last decade. Assuming that the supply of higher education isn’t static, which it is to some extent it is, we have to assume that other factors justify the above average growth in costs.

Another factor that should be analyzed is the annualized returns from a college degree. In 1980 the annualized returns for a high school and college education were roughly equal for men at about 8% and 9% respectively. Then over the next 15 years returns of college grew to roughly 13% while high school graduates grew to 9.5%. In 1995, the average earnings for males’ college graduates was $50,000 compared to $34,300 for high school graduates, as of 2010 income was $49,800 and $32,800 respectively. Female earnings have also been flat since 1995.

Of course income isn’t everything. Job security and quality are also important. As seen in the table, unemployment rates drastically decline as education increases. Similarly, college graduates typically have access to white-collar jobs that tend to have less of an adverse impact on one’s physical health. While lower unemployment rates are generally pretty appealing, especially in this job environment, college generally hasn’t justified its cost on an enrollment or earnings basis.

Now there are some holes in this basic presentation of data. I’ve made no attempt to control for bias and for that you’ll have to look into some papers on multiple regression analysis. With that said, the argument that a college education is simply allowing people to tread water isn’t controversial.

While most people look at college in terms of debt, this perspective is simply a product of reduced job opportunities. Ironically, an increased emphasis on debt and the value of degrees has not caused people to shift their chosen major. High-growth fields such as the medical and engineering sectors are still short on undergraduate students.

This current mismatch exhibits one of the major flaws with our current financial aid system. Since allocations are based upon need and not on merit, there are few ways that the market can provide short-term financial incentives for high school students to become engineers. If the US had a functional private student loan market, students going into high demand fields would likely receive better loan conditions than English and Philosophy majors.

As much as we may focus on Pell Grants and the percent-of-need being met by Cornell, what we really need to discuss is how college graduates can get a higher rate of return on their investment. Similarly, we need to look closely about how our financial aid system impacts short term incentives. In the long run freezing student loan rates isn’t going to matter if we don’t get this economy going.

Andre Gardiner is a junior PAM major in the college of Human Ecology. He can be reached at apg58@cornell.edu.