News Clip Roundup: High School in 3 years, the ROI of College, and New Tax Breaks

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As a self-diagnosed overachiever and nerd, I was immediately intrigued when I saw @TheAtlanticWire’s tweet last week: “Overacheiving high school students can’t stop overachieving.”  The linked article referenced a longer WSJ piece on the trend of graduating high school in 3 years.  The fact that some states—faced with tight budgets—are now encouraging this practice is unsurprising: with a potential for 25% savings off an otherwise 4-year high school career (per student), their incentives are clear. What is less clear to me is why any student (or at least those who plan to go to college) would do this.

The Atlantic piece makes the social argument (or what I’ll call the John Hughes argument): missing prom and the opportunity for “skipping class to go to Hardee’s and hang out in the parking lot”, as well as facing additional stress.  My perspective, however, is economic.

  1. Students who graduate in three years have fewer opportunities to take advantage of AP courses or dual-enrollment programs, and the college credits that come with both.  With this CNN article from March putting the current price of a year at a public university at $22,300 (including tuition, room and board, etc), graduating even a semester early would save a student or family over $10k—150% more than the $4,000 the State of Indiana offers (as cited in the WSJ article) to encourage early high school graduation.

  2. According to a study in the WSJ article, students graduating early may face a disadvantage getting into elite schools.  The mechanism for this is the same as the above: with less time, students complete fewer of the advanced classes that top-tier schools expect on applications.  More than snobbery, this is again important from an economic perspective: an incredibly interesting piece (and worth a full read) from Business Week last week looks at Return on Investment (ROI) of various colleges:

     “The only schools that fared better than engineering schools were those in the Ivy League. Seven of the eight Ivies are in the top 15, and the average ROI for all eight was more than $1 million.”  

    Compare that to the average ROI of schools in their survey ($333,455 over 30 years) and suddenly that $4,000 incentive payment looks even smaller.

  3. Higher ed costs for students still in high school are now tax deductible. The IRS changed their guidance on this for 2011, now allowing high school students (as well as those out of high school who didn’t graduate or receive a GED) to benefit from the Tuition and Fees Deduction.  Up to $4,000 can be claimed under this program—you can read more courtesy of H&R Block here.  3.75 million Americans take advantage of this annually, and with the new allowance for high school, that number is likely to grow.

So there it is kids: stay in school.  High school, that is. 

 

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