As I pay the first college bills of the coming academic year, for just the oldest two of my four kids, I realize that this is where most of my earnings will go for the next 10 years.
As a casualty of my divorce, I no longer own a house or hold any stock market assets. So paying for my kids' college educations has become both my most extravagant form of "consumption" and my greatest "investment."
Yet I've decided that's exactly as it should be.
My oldest daughter will enter her sophomore year at Princeton University this fall, while my second daughter starts at Sarah Lawrence College. These are two of the priciest institutions in the country; in fact, with an annual cost in the high $50,000s, Sarah Lawrence had the honor of being the single most expensive higher education institution on last year's College Board list. Princeton is not much cheaper, with an annual cost in the low $50,000s.
I'm very grateful that both of my girls received generous financial aid from their schools. Still, this has not turned out to be the "good bargain," in-state, public college route I had expected my kids would take when I made the decision to settle in northern Virginia when they were just babies.
But despite a relatively high price tag on Princeton, Kiplinger labels it the No. 1 "best value" of all private universities in the country, based on academic quality and affordability.
Sarah Lawrence doesn't make Kiplinger's liberal arts list (it doesn't show up on many college rankings) because its admissions process doesn't consider standardized test scores – a common metric of student "quality."
For both of my daughters, I think their college educations – despite the high costs – will turn out to be a good deal for our family because they'll deliver high benefits, too.
Evaluated on a purely pecuniary basis by the Brookings Institution's Michael Greenstone and Adam Looney, the benefits of a four-year college degree are equivalent, on average, to an investment that returns 15.2 percent per year. The payoff on a lifetime-earnings basis is even more impressive: The average college grad earns about $570,000 more than the average high school (only) grad. That implies a more than 5-to-1 return from the average $102,000 cost of the college degree.
At schools like Princeton and Sarah Lawrence, the full costs are more than double that, but I'm betting that the payoff is probably much larger as well. At Princeton, the benefits of Ivy League "branding" and the social networking that lingers well into one's career are said to boost the lifetime earnings of their grads. At Sarah Lawrence, broader human qualities – such as the ability to notice keenly, reflect deeply, relate sympathetically, and therefore act and react intelligently – are well cultivated in the intensely interactive mentoring environment of a 9-to-1 student-teacher ratio.
And investment goals aside, what we buy in a college education is a lot of consumption, too. Many of our kids will enjoy a higher standard of living and "life experience" in college than they had at home or could experience anywhere else – ranging from the richness of extracurricular activities and the "college lifestyle" in general to the little details like gourmet-quality dorm food or "free" and readily available transportation.
Parents like me may get stressed out about our big college bills. We should relax and remind ourselves that it's hard to imagine a better way for us to spend our money.