EMU campus.jpg

Eastern Michigan University's campus in Ypsilanti, Mich.

(Ann Arbor News file photo)

If a gambler zips off to Vegas and slaps down $9,000 on any college football team to beat the point spread, his or her chance of doubling the money to $18,000 is (more or less) 50 percent. Dropping that pile of cash on a degree at one of those colleges is supposed to be a safer investment with a higher likelihood of return. But a new report released last week by the New York Federal Reserve Bank questions the assumption that the financial reward of college spending outweighs the risk.

The report, "Do the Benefits of College Still Outweigh the Costs?," confirms the oft-told statistic that the typical university graduate earns substantially more than a non-graduate. But not all graduates are typical, and not every student plunking down big tuition dollars becomes a graduate.

Begin with the non-graduates, and there's a lot of them. The Center for College Affordability and Productivity noted in 2012 that 45 percent of public university students had failed to obtain a degree six years after starting school. So for every 100 new students, just 55 are graduating.

What has historically happened to graduates?

The Fed report reveals that the income of 25 percent of all Americans with a four-year degree is roughly the same as the average for those with just a high school diploma. This suggests, say the authors, “that the economic benefit of a college education is relatively small for at least a quarter of those graduating with a bachelor’s degree.” They’re talking about 14 of the aforementioned 55 graduates.

Those 14 graduates, plus the 45 dropouts, mean that 59 percent of incoming public university freshman eventually fail to gain a financial upside for their investment. Just 41 percent of them "win" that bet, and the College Board says average annual tuition at the nation's public universities is nearly $9,000 (or $36,000 for four years.) As noted, the chance of winning a lucky bet on a college football game is 50 percent, nine full percentage points higher than winning the tuition bet, but with immediate returns and no homework.

For many of this year’s most ambitious freshman the odds of earning a degree and earning more with the degree is certainly much higher than the 41 percent average.

But that means the probability of success is much lower than 41 percent for the rest of the prospects. Many are in schools where they don’t belong and racking up big debts that won’t be worth it. Compared against the option of risking the money on a college football wager, their chances look that much worse.

We have too many university students and likely too many universities and professors. Many of the students could better use that $9,000 per year attending a trade school or community college (at just a fraction of the cost of university tuition), thus obtaining skills with more certain benefits. Robert Reich, the very liberal former Labor Secretary under President Clinton, made this point last week in an essay entitled "College is a Ludicrous Waste of Money."

But slick apologists for the status quo continue to oversell public universities to parents, students and taxpayers by pointing only to the financial success of the students who win the college bet. That’s as deceptive as showing off National Football League salaries to justify convincing society to invest whatever it takes to create more college football players.

Succeeding with such a fraud would indeed subsidize success for the kids lucky enough to became pro football stars. But the rest of us would be better off betting our money in Vegas.

Ken Braun was a legislative aide for a Republican lawmaker in the Michigan House and worked for the Mackinac Center for Public Policy. He has assisted in a start-up effort to encourage employers to provide economic education to employees, and is currently the director of policy for InformationStation.org. His employer is not responsible for what he says here, on Facebook, or Twitter ... or in Spartan Stadium on game days.