KNOWLEDGE@WHARTON: ‘Will College Pay Off?’ A Surprising Cost-benefit Analysis

Career College Central Summary:

An edited transcript of the conversation follows.
Knowledge@Wharton: Before we talk about the book itself, I wonder if I could ask you a quick question about the title. Normally when people talk about the most important financial decision of their lives, I’ve heard them talking about buying a house. Why is college number one in your mind?
Peter Cappelli: For many families, they are making this decision more than once, so their home could be certainly more expensive than what they spend on college. But if you’ve got a few kids, it begins to mount up. It’s probably fair to say that my view on this is it’s one of the most important decisions you could make because there’s a lot of risk involved. The information is not very good. The outcomes could really vary much more so even than most housing markets — which except for the recent past, have not been quite so bumpy.
Knowledge@Wharton: I want to quote something that you write in the book, which is that you wrote this book because of the proliferation of “unqualified statements about the big payoff to a college degree that are pushing so many students and their families who can’t afford to do so to jump into the deep end of college expenses, taking on debt that they cannot afford for experiences that are unlikely to pay off.” What is your basic counter-argument to these claims?
Cappelli: To rephrase it a little bit, the concern for many families is not whether your kids are going to go to college; it’s a bit of an entitlement in the middle class and upper middle class. For those folks, we can offer some advice about how to think about the economics associated with it. But increasingly over time, a much larger %age of the U.S. population is going to college. For a lot of those folks, it really is a challenging decision to make.

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KNOWLEDGE@WHARTON