 while Dean of the Gerald R. Ford School of Public Policy. And it is great to be able to spend this evening together. And especially to see so many familiar faces. I look forward to the opportunity to talk with many of you later on in the evening. So with help from so many of you in this room, Jennifer Niggemeyer, Tom Phillips, and Elizabeth Johnson have put together a really wonderful two days of career panels for the more than 30 Ford School students who are here on this year's annual Washington DC trip. And you've come for what is the keynote event of that two day trip. And that is a conversation with two very distinguished researchers, our own Professor Susan Danarski and a Brookings senior fellow who is a longtime colleague and friend of mine, Gary Burtlas. And so we are very grateful to have both of you here with us this evening. Thank you. In a moment, and we're going to keep this relatively informal, but I do want to know how much we appreciate their spending this evening here with us. So in a moment, I will tell you a little bit more about them formally and introduce them. But first, I want to just say a little bit about some of the things that are going on at the Ford School. Earlier this week, I sent out the electronic newsletter, The Feed, the latest edition, Ford School Feed. And I hope all of you saw it in your inboxes. If you didn't, please give us updated contact information because we do not want to lose touch with you. Let me just give you highlights of two of the things that we are involved with at the Ford School. One is that we are actively recruiting faculty. We are in the midst of an extremely busy faculty hiring season. In fact, we were hosting a candidate just today before coming down here to Washington. In particular, we have already made an offer to a candidate in social policy. And we are quite likely to make some additional offers in that field. We are bringing on board another senior faculty member who is an expert in international politics. And we're searching for the right person to lead our new center for public policy in diverse societies, as well as looking for additional faculty in international development. So as you can see, we have a lot of things that are going on. And stay tuned. We will be in touch with you as that proceeds. We're also in the very early planning stages for our 100th anniversary. We will be celebrating our 100th anniversary in 2014. Most of the activities will be in the fall of 2014. And I have to note that some of you may know Harvard just celebrated only at 75th anniversary. So we're certainly very proud of that. And we will be in touch about that. So you can view this as a very early save the date. But please stay tuned. And we hope many of you will be involved as we recognize and celebrate the 100th anniversary of the Ford School. Now to the main event. Tomorrow morning, President Obama will be at the University of Michigan in Ann Arbor, delivering remarks on exactly the topic that we picked to focus on this evening, his topic, college affordability. And he will be amplifying one of the themes that was in the State of the Union earlier this week. And so just to quote one of the things that he said during that speech, higher education can't be a luxury. It's an economic imperative that every family in America should be able to afford. So economic inequality, access to education, the cost of higher ed, those are all very important public policy issues. And we are really fortunate to have two scholars to talk with us about those issues and many of the related developments and kind of policy challenges and opportunities with us this evening. So your program has complete bios of both of them and I'm not going to go through that in detail, but let me just say a couple of points. Gary Burtlas is one of the nation's very influential economists. He's an expert on labor market policies and a widely sought after analyst and commentator on the sources of the growing wage and income disparities in this country. Sue joined the Ford School's faculty in 2008, helping to put the Ford School on the map as really a powerhouse in education policy. And she has done groundbreaking work on charter schools, on financial aid, and trends also in educational inequality. So again, my thanks to both of you. Before I invite first Gary and then Sue up to make their remarks, let me just tell you what our format will be. So each of our speakers will speak for around 10 minutes and they each have presentations and then we'll open up the floor and I'll have both of them come up here and field questions. There is a mic up there just to make sure that everyone can be heard and we'll then have an open Q&A session and we will go no later than seven o'clock. At that point, I will come back and I'll tell you a little bit about what we have planned for the networking reception, but with that, Gary, we turn the floor over to you. Well, good evening. Thank you, Susan. Susan Danersky and I spoke briefly about what we should do tonight and we decided we would like to have a conversation about the developments in income inequality in the United States and the relationship between these developments and a question that seems to bug reporters and parents and cable news producers, namely, is it still worthwhile for our 18 year olds to go to college or is that a waste of effort and money? I'm mostly gonna talk about inequality and Susan is going to mostly talk about the value of a college sheepskin, but I'm sure we'll poach on each other's territories a little bit because we both have a lot of things to say about both topics. So let's start right off the bat with a chart. It's launched a thousand ships or at least it's launched 100 big city demonstrations, many lasting months at a time. I have a nephew who's, believe it or not, occupies Syracuse and I keep asking him is he freezing to death up there because it does look awful, but anyway, this is the chart that launched a lot of this trend. This now famous chart was produced by two French economists, one of whom teaches here in the United States, Tomas Piketty and Emmanuel Sayez as part of a major cross-national and historical survey of evidence about trends over the long run in income inequality in the major industrial countries. The red line shows the percentage of taxable income in the United States that is received by the top 1% of the income distribution. The numbers start in 1913, which is the beginning of the modern income tax and they go through the end of 2008, which was the first year of the Great Recession. You can see this famous U-shaped pattern back in the late 1920s before the great stock market crash of 29, about 20% of all income was received by the top 1% of Americans. But that fell in the late depression and especially in World War II and it kept on falling, although much more slowly, until the late 1960s when the share reached a low point of about 8% of all incomes. Since then, the income share of the top 1% has soared 10 percentage points to 18%, not much below the peak that was attained in the late 1920s. Now, keeping track of the income distribution is generally a bit like watching paint dry. It's very boring. The only thing that changes is the commentary of the chattering classes or the cable TV anchor persons about it. Sometimes, however, it takes people off a long time to even notice that you've repainted the living room and in this case it is kind of surprising that it's been so recently that this kind of chart has commanded so much attention. I have followed income distribution statistics since the early 1980s and I think everybody who's a specialist in this realized by 1985 that there was a real shift in the trend in income inequality in the United States and then it was soon followed by shifts in the rest of the industrialized world. A 10 percentage point increase in the share of income going to the top 1% seems pretty big and seems like something you would notice. So why did it take the journalists and the cable TV producers so long to notice what was happening? Well, one reason I'm sure is that a lot of this increase that we attribute to the top 1% in fact was received by the top 1 tenth of 1% or even more spectacularly by the top 1 100th of 1% and there aren't very many ordinary newspaper reporters or even very many cable TV producers who know anybody that is in that income range and so they perhaps didn't notice it. Another reason is that in spite of the fame of this picture and in spite of all of the discussion that it has aroused in the nation's newspaper it only reflects part of the income that most of us receive. This is taxable income and I'm an economist and so I like to ask myself the question, well how much income that we receive in total is called taxable income and each of these lines gives the percentage of total income consisting of taxable income where I use different definitions of total income. So that red line at the bottom is all the personal income you receive including things like social security and unemployment benefits, all sorts of untaxed items, Medicare, Medicaid. The blue line shows what share of total income, taxable income is of disposable personal incomes. Out of that I've subtracted the taxes people pay and the top line I've also subtracted out all the income that we receive in the form of government health benefits, employer provided health subsidies to us and you can see that there's a, not only is the income reflected in this picture only part of the total. I mean for the red line there it started at 75% by the most recent year it's about 63%. So we're missing 37% of income that is not included in the income that is reflected in this picture. So okay, no matter what alternative we look at it seems that Piketty and Sia's are looking at less than the total amount of income we have and what's more important they are excluding a bigger part all the time and the most important of all for thinking about inequality a disproportionate share of what they're ignoring is tilted in favor either of low income people or people with moderate incomes. Income items like social security, public assistance, Medicare, those are much more equally distributed than is taxable income and also the tax system does redistribute some in favor of low income people and is a little heavier for higher income people. But still if we look at a somewhat more inclusive measure of income one that includes government transfers this is what the trends have been since the early 1980s. These numbers at the end show how much income rose at different poor parts of the income distribution so there's been a 12% increase for people at the 20th percentile there's been a 17% increase in the median 33% for people at the 80th percentile 50% increase for people at the 95th percentile and then as you probably can imagine at the very top the gains have been much much bigger but a point to bear in mind is in the bottom three quarters of the income distribution of the United States in fact the changes in the income distribution have been relatively modest. They have been in the direction that everybody knows about it's just that they're not so enormous that you would notice them. And the income items that I just showed you the trend in ignore a very important part of our consumption these days and that is we consume an awful lot of medical care much more medical care than our parents and grandparents did. And almost all the medical care we receive is paid for some way besides out of our cash incomes. If we're employed our health insurance plan provided by our employer covers it we only pay for a small share of that. This picture divides the American income distribution into 10 different parts from the lowest over here on the left to the highest on the right. And I made a very conservative estimate with detailed medical spending information by person in the United States. How much medical care do people receive that they don't pay for with their money income? They don't pay directly the doctor. They don't pay directly the hospital. They don't pay the pharmacy. They don't pay for all the health insurance that they receive because someone else is paying for most of the premiums. Well if you're in the bottom one tenth of the American income distribution you get about $2,610 on average in the beginning of the past decade in the form of medical benefits that you didn't pay for. If you're in the top one tenth you get about $1,400. Clearly this is much more egalitarian in its distribution than is the cash income that a lot of people focus on. And so far as I know, essentially no one has calculated over the long haul how this influences inequality. The Congressional Budget Office has tried to do a little bit better job. They have a more inclusive measure of income. Once again you see that people near the middle and at the bottom there hasn't been a dramatic change in inequality. It's really only at the very top the green line there is an inclusive definition of income. It doesn't include medical benefits unfortunately but it includes everything else and it subtracts out taxes. And it's really at the very top especially since about 1995 that the gaps in income have gotten wider. It's not really then in the bottom three quarters of the distribution there's been appreciable increase in inequality but there has continued to be some. So what does this have to do with going to college and the payoff to college? Well, as surprising as it may seem even in that first chart which just focused on taxable income and focused on the share of all income going to the top 1% of the income distribution as amazing as it might seem most of the rise in inequality has been due maybe between 50% and 65% of it has been due to one factor and that's the growing inequality in people's earned income. Not capital gains, not some fancy new kind of income just old fashioned earned income wages, net self-employment income and a noticeable part of that rise in the inequality of earnings is because of growing gaps between how much people earn depending on how much education they receive. So here are some straightforward calculations of what the percentage earnings gap is in hourly pay between people who have completed high school that's the left out group and these other groups here. People who have obtained one to three years of education this shows how much the pay premium has risen over time. There was virtually no pay premium at the very beginning of the period here in 1972 and it's grown to be I don't know maybe 15%, 10% but the bigger the more spectacular gains have been for people who complete college and for people who get a degree after college that's the blue line and this is just the picture for men. The patterns for women starting in about 1980 are pretty much the same really. There's just been a dramatic increase in the gap between the hourly earnings received by a median person who has completed college and the median person who has graduated from high school and gotten into a schooling beyond that and I think Susan is now gonna talk about that part of the conundrum. All right, so who here has taken Pergmavel with me? All right, you're all hiding in the back. I'm terrified of falling off this thing I have to say and I move around a lot when I talk. All right, so I'll be cold calling. So I'm actually gonna start with the graph which takes these same data and looks at them slightly differently. These are all relative I assume to say a high school graduate so it's what percent more does somebody with some college, college degree, post college earn than a high school graduate? I'm gonna bring in the high school graduates so we can see them. So this is on the left is females, on the right is males and the bottom gray line is high school dropouts. Next up, darker line is people with a high school degree. Then we've got some college and the top one is a BA or higher. Let me just zoom in on one of these so you can see it better. All right, so this is men and what you see here mostly is things going down. All right, so real earnings for people with anything less than a BA have been dropping steadily over this period. Okay, so indeed there's still sort of how close these lines together is a measure or rather how far apart these lines are or a measure of how much what the return to education is, right? The more spread out they are, the bigger the return to education is, right? Because it means that somebody with a bachelor's degree makes a lot more than somebody with a high school degree. But the main thing I think that is striking here is that basically one way to put it is there's never been a worse time to not be a college graduate, right? In terms of the college graduates there, it's actually kind of flat, right? It's not like their earnings have taken off enormously. It's just that relative to, and here's the women so I can be even-handed, right? There's the women, it's that they've dropped quite a bit for anyone who doesn't have a college degree. Okay, so at any point in time, the return to college is the distance between those lines, right? But if you're looking at somebody who say their parents went to college and they're up there on top in that blue line and they're looking back at their parents, the earnings are looking kind of about the same. However, the cost of college has gone up. So they feel like they're getting a raw deal, right? They feel like they're worse off or really they're comparing themselves to their parents, really in terms of where they could be, it's the green line down the bottom, right? So there's further to fall than there was 40 years ago. But I suspect that's part of what's going on with people's frustration about college costs, about loan debt, as I'm gonna show you, to get to that blue line costs more money now. It's worth more once you get there because you're keeping yourself from dropping down pretty far. But it still costs more now to get there than it used to. All right, so here is a pictorial of those earnings, but net of loan repayment for tuition and fees, okay? So this is what we're plotting here is lifetime earnings. We're going from age 18 out to age 64, right? The bottom line, the gray line to somebody who comes right out of high school, doesn't go to college so they start working right off the bat and they start having money right off the bat. So they're going up right from the start in there, but still because they're making a lot less than other folks they end up with less money, but they have an advantage at the start because they are working well while we're slacking off in college here, right? Here are the people who get an AA, here are the people who get a BA. The folks who are getting some college education essentially make up for their lost time in the labor force right around age 32, right? And what you see at the end there, the gap there is the difference in lifetime earnings between somebody who gets a BA versus an AA versus a high school degree. And what you can see here is that somebody who gets a BA is expected to end up with about 1.2 million in earnings while somebody who just finishes high school is gonna end up with 900,000. So over the lifetime, this is net of tuition. This is net of the opportunity cost. This is net of loans. It's gonna end up with 300,000 more over their lifetime, okay? So for the question, is college still worth it? Yes, right? There's still a net benefit of $300,000 a year, even net of all the costs of college. For those who like footnotes, there they are. Now has college debt been getting bigger? Have student loans been getting bigger? They're certainly getting a lot more press. This is a picture of the debt loads of people who get a BA from public four-year institutions, such as University of Michigan, right? So, and on the bottom, we have the share, not everybody who gets a BA takes out debt. In fact, it's been pretty stuck at about 55% going back to 1999, okay? That stuck at 55%. The blue line is for those, the half who actually do borrow, they're average debt. That looks pretty flat too, right? That's basically at about 20,000 bucks. And then the shorter one is if you average it over everybody, your avenue is zero, so it's about half the height, right? So basically not much going on here, right? So the average debt load is not going up. There's been a lot more media attention to the whole thing, but average debt load is actually not rising. At least not at the majority of the institutions that the vast majority of students go to. If you go to proprietary schools, you might see some bump up, right? In fact, there is a bump up in debt load. But for people going to the publics, going to community colleges, there has not been an increase in debt load. And this is just some perspective on what that amount of debt adds up to. So there's that 19-8, that's the median debt for borrowers, over a 10-year payment plan, that would be $2.28 a month. If you took the 20-year, which you can if the debt's that high, it's 150 bucks a month, okay? Which, and for perspective, I've got the cost of, this is from the Fed. I felt like a real economist when I looked this up, from the Federal Reserve, historical figures, average new car loan $27,000, five years, 4.75%, 500 bucks. So the BA is something that pays off over your entire working life. The car is basically junk after five years. You can't sell it for much, right? That's why they won't give you a loan longer than five years. So one of my policy proposals has actually been that we should be making the standard a 20-year payoff or even a 30-year payoff for that matter rather than 10. But students are pressured into paying off in 10. You see these graphs that are in your payment documents that say, if you do 20 years, you're gonna pay this much. And if you do 10 years, you'll pay this much. The difference, though, the issue is that the first 10 years are when your earnings are lowest and most unstable when you first got to college. They level off and they start to grow. They stop being so variable and they start growing strongly in your 30s, 40s, 50s. That's a time when it's a lot easier to deal with this 228 or 150 a month than it is when you're in your 20s. I gave this talk at UC Davis last week, which you might know has been the center of some discussions and issues about college costs. And you'll notice that sort of the theme of this is kind of like quit your whining and I thought I was gonna get gassed, but they actually were okay with it. It actually turned out okay. And just to sort of drill home, the point I'm making here in terms of how do we reconcile what I just showed you with the headlines we see about tuition costs going through the roof? Well, the distinction is sticker price versus net price. The sticker price is what you see in the headlines. Who has the highest sticker price this year? Is it Harvard or is it Bennington or who has it this year, right? But you net off from that whatever you get in terms of grant aid, in terms of subsidized loans, and in terms of tax credits and deductions. When I say net off the loans, of course you have to pay back the loans, but a piece of the loan is subsidized. You're getting it at below market rate. And in particular, while you're in college you don't pay the interest at all. So that part we would count against the net price of college. So if you take all this stuff and put it together, let's zoom in again on a public four year. So we got 95, four periods, 95, 96 through current. The blue line is room and board. The dark orange line is the sticker price and the light orange line is the net price. And what you see is that actually net price has been going down. And that's because most recently, because of the increasing generosity of the Pell Grant and that the tax credits for college became refundable. So in particular, 10-11, this is the Obama Education Initiative. It was pretty flat for these three periods, right? That little chunk there, 2000 around, but it dropped down to 15-40 for the most recent completed academic year. This takes the same data, but erases it by family income. So take families of kids who go to college and break them up by income quartile, lowest, all the way up to the highest on the right are independent students. But let me focus on the dependent students. If you look at, here again, the dark blue is net tuition and fees. The light blue is grants. The orange is room and board. If you're looking for the dark blue, I'm on the lowest, it's not there because there is no net cost if you're in the lowest income quartile. Basically, you've got room and board, but you are, the zero there indicates that the Pell Grant and other grants are gonna basically drive that to zero. So in the lowest income quartile, in the next one up, the net cost is quite low. 1,400, 4,000, 4,000. I put these out not to say, there's no barriers to college, why don't people go? But to sort of make clear that what's going on is not necessarily that we're not throwing enough money at the problem. I spend time on the design of the financial aid programs. So one problem might be that the people on the bottom here don't know that college is free. If their families don't know that college is free and they're just instead seeing those headlines about it being $50,000 a year, they might be discouraging their kids from going to college because they don't wanna disappoint them when it comes time and they can't pay the bill. So sort of publicizing this information and getting it out, I think can do some good. I'm closing, this is a wonderful, we didn't even plan this. I'm closing with a graph from the same paper that Gary opened with, which is taxes on the top 1%. So he opened with a picture of the share of income going to the top 1%. This is taxes on the top 1% and how they've changed from 75, 79 to 2004, 08. And so the change in the top marginal tax rate, there's the US up there, has dropped more than 30 points. Okay, so that's a chunk of change, right? That's a bunch of money. It's made more specific in the paper, but it's a bunch of money, right? And that money could be used in part to make college yet cheaper. So for our parents' generation, go back, not your parents' generation, my parents' generation, college was free essentially. So you could go to a community college, to a public institution for basically nothing. And there was a social compact in place where basically you went for free and then you paid higher tax rates out of your increased income. And that paid it forward for the next generation to go to college free. That depends on this intergenerational pact about income tax rates. And as we can see, the tax rates have dropped considerably and we no longer have that pact. And we're now moving to a model of self-pay. Now I showed you that the payoff to college is quite large. And the model now is, the payoff is quite large, you should pay for it, right? In the form of loans, for example, over your lifetime. And that's the model we're in right now. And that's the model we're gonna stay in without a substantial shift in the way in which we tax income in the country. And that's it. We're supposed to have a conversation now, right? Coming up here. And before we... You gotta rebut me? No, no, no. I was gonna say before we take questions, I think it's interesting to also just mention what has been the response on the supply side to these developments. First of all, Susan talked about what the price is. There were the net price is. And both of us talked about what the payoff is in terms of how much your income is improved by completion of college or post-college degree. The numbers that I showed, and perhaps maybe even some of the numbers Susan showed, may not have captured one thing that also increasingly is different between people depending on educational attainment. And that is how many years after age 22 do they remain in the workforce? How many years do they have positive earnings? The numbers that I showed were median hourly earnings. What is the percentage gap in median earnings? But this only accounts for the people who are employed in the week where we can record what their wage rate is. And in fact, it turns out there are enormous gaps in the percentage of people who are employed depending on their educational attainment. So one of my colleagues, Adam Looney, performed the following calculation. He looked at about three recent years of surveys from the unemployment rate survey, the current population survey. And he looked at the people by educational attainment, but just at the people who were 23 or 24 years old. And he said in an average month, how many of them are actually employed in earning wages? And here are the numbers. These are, this is the recent two years. Actually 2009 and 2010, the great recession is on. Less than high school, 23 and 24 year olds, 43% were employed in an average month with a high school diploma, 64% were employed in an average month. People who have some college, one to three years of college, but they haven't completed their college education, 79%. And people who have a college degree, 88% were employed in an average week. Now, bear in mind, my calculations were just of the people where we can observe an hourly wage. Well, for the high school dropouts, 57% do not even have an observed wage. They're not even in the calculation. That picture I had was full time, full year workers. And so the one, the picture I showed of men and women and the trends over time, those are for people who are working full time, full year as well. So if you accounted for differences in unemployment, it extenuates that considerably. Right, so his calculation is, with a colleague at MIT, he calculated, okay, so what, just take the current numbers for the last five years, the current numbers. Well, how much does it cost to go to college? Let's assume you pay the full tuition, which you don't, but let's assume you do. And it calculate the foregone earnings. What is the rate of return that you get from spending $100,000, which is what he figures is roughly what it would cost to go to a good four year public university. The rate of return is 15.2% a year, 15.2% a year. Now, for the past 75 years, the average return from investing in the American stock market has been 6.8% real. So this means the rate of return from going, spending $100,000 on sending your kid to college is considerably greater than the rate of return on investing in stocks. And so what is the response to this immense increase in the returns to school? Because compared with the 70s, it is really enormous. Well, the amazing thing is how little, how small the increase in college attendance has been amongst American young men. It's been relatively small. It's pretty flat for men. Women are responding as expected. Much more, yes. The returns have gone up a lot, and women are going to college. So because labor economists traditionally only study men, everyone was puzzled that lots of people weren't going to college because for men it was like, and then if you happen to bother to take a look at women, you would see it actually is going up in response to the returns. So the gap, the gender gap now in college going is quite large, but you guys are supposed to be able to get to ask questions. So go ahead. Don't disappoint us. Don't need to go back to the, and also this is going to be on YouTube. So they're going to want to hear you. LOL cats. Thank you. So my question was actually, I think you did a fantastic job of demonstrating that you are much better off financially by going to college and getting a degree. My question was, is there any data connecting the degree program that you actually go into to the job that you actually have? In other words, how well are the skills that you're learning in college preparing you for your actual eventual career? So what we saw were averages, right? And one thing that's true is that even the dispersion within those groups has been growing. So inequality has been growing both across education groups and within education groups as well. So within education groups, you definitely see that, say, the STEM business and econ degrees are getting a better payoff. Even within, say, the masters, the MBA, pays off more than the masters in social work. And even among PhDs, the PhD in economics pays off more than the PhD in O education, for example. So there are definite patterns by degree, and they kind of go as you would expect. Thank you. You guys all look so spiffy. Yes, I feel like I dressed appropriately. I assure you, this is not the way people dress at Brookings usually. They don't usually look like this either. They don't usually look like this either. They always look great. Oh. Hi. I'm wondering if we look at the top 1% of earners, do they actually have demonstrably higher education rates? They do. If you're talking about, excuse me, you see the inequality where that top group is really jumping away from everybody else. Has their education level correspondingly jumped away from everybody else to that extent? I don't know whether that's true. I do know that there was a very neat little table in the New York Times economics section last week in which they said, what did the top 1% major in? I was amazed at such data exist, but they had it. It turned out, if you want to maximize your chance of being in the top 1%, it looked to me. You want a major in economics and business economics. And then just below that was a lot of things having to do with biology. So, bio, mad, biochemistry, health care, some kind of a health care degree, but something in biology. So those were the top two and then below that. But even English, I was amazed. English, so my older son has a chance. That's the power of a liberal arts education. And just in terms of the data, it's very hard to, if not impossible, to get at that 0.001%, because in the general household surveys that we get this from, they mask the very highest earners. They top code them. Because you could figure out who that guy is who lives in Omaha, who makes a billion dollars a year. So you can't find the 0.001%. You can maybe find the 1% with a number of years. So sort of getting their education characteristics as a matter of going out and fielding surveys, I would imagine. Well, the income tax form, if you've ever filled it out, actually does ask your occupation. Doesn't ask education. No, that's right. But it does ask your occupation. So we can say something about the occupations of the 1% also. But not the education. So in the tax stuff that we were showing, the Piketty and Sias, no education data. Right. Hello, good evening. Is that your person? Yeah, how's it going? Hi, Joe. Good to see you again. I'm not really a 40. I'm a recovering 40 alumni. I was curious if any of these studies address the particular type of educational institution, particularly with undergrad, if there were disparities between public state universities or to the extent to which there are disparities between Ivy Leagues, public state universities. And I'm also curious if it addressed at all the rise of the for-profit colleges, University of Phoenix is a whole bunch of third tier law schools and a whole cottage industry that's kind of emerged in the last 30 years. I think a lot of the discourse and outrage over tuition hikes has kind of centered along some of these other institutions. So on the proprietary schools, there's far too little research given how important a policy issue they are. And a lot of that's being driven by data. So the best research I've seen has looked at, if you look at people who are going back to college from the workforce, sort of going in and out and they compare community colleges versus proprietary schools. And the return is a bit lower for the proprietary schools but not too much. That's not to say there are not some institutions in which it's really horrible So I think part of what's going on in the proprietary school world is that there are some extremely bad apples. And naturally they get a lot of press and a lot of outrage but you don't want to see your public policy if your typical institution being driven by the couple of media outrages. So I mean the bulk of the evidence it looks like they're actually doing OK by people. In terms of differences and returns across the private versus the public versus the community college, that's a disputed literature still. But what people have concluded is that, yes, you do make a bit more if you go to one of the elites than if you go to our elite, for example. But it's not, I don't think the numbers are nearly as large as what we've been showing here in terms of gaps between college going versus not college going. Is that your? There are websites where alumni from various schools can put in their age and their wages. I'd be selection bias in those. I was about to say, I would not consider that to be reliable information. On the other hand, the current chairman of the Council of Economic Adviser, Alan Krueger, with a colleague in Princeton, tried to figure out what was the value of going to a more selective as opposed to a less selective school. And they had a very ingenious method to do this. For some reason, they knew where everybody applied in their sample, and they knew every school to which they had been admitted. The college and beyond data set. Yes. And what they then did was they looked at people and made comparisons amongst people, depending on the schools they got admitted to. And so some people are admitted to more selective schools, but instead go to less selective schools. And so with that kind of information, over tens of thousands of students, they can figure out, well, controlling for where people got admitted. They can look at all the people that went to Harvard and all the people that were admitted to Harvard but went somewhere else, and they can figure out, well, so how much was the Harvard degree worth? My recollection is what they found was it was worth about as much as the extra amount you had to pay if you went there. So Harvard is probably going to be a more expensive place to go than if you go someplace else, unless you go to Bennington. Bennington would be more expensive, but it wouldn't be as selective either. In terms of admitted variables, bias, however. So the issue with this study was that, since he got into it. So if somebody gets into Harvard but instead goes to Northwestern, that's kind of puzzling, right? So one possibility is that they wanted to go into journalism, or something that Northwestern has a specialty in, and you'd actually do better off going to Northwestern than going to Harvard. So the concern is that that study provided downward biased estimates of the impact of selection because people, they don't just randomly choose to go to not go to Harvard instead go to someplace else, right? Anyway, it's been a lot of people have studied it. There will be a quiz at the end. A lot of the original studies showed, I think that there were big payoffs, but there was very little. At least Allen and his co-author tried hard to come up with a fair comparison to decide which one to answer. Well, you prevented it. The data that you presented on the Unemployments of the 23 to 24-year-olds certainly suggest that the college education is going to be worth a lot in relative terms. My question then is, is it going to be continued to be worth as much in absolute terms? I mean, is though 88% of the people who have some college degree in that demographic have a job, but are we looking at actual career-building jobs? Are we looking at Starbucks hiring the college kids instead of the high school dropouts here? And kind of related to that is a tangent, I guess, I'll ignore it if you want to, but is just sending kids to college the way to reduce inequality? Because I mean, if everyone then goes to college, will there be enough high-paying college jobs to go around? I mean, someone's still got to watch the digits. That is one reason that more college gets proposed is to reduce inequality, right? Because one reason why you have a high price for something is that you have a shortage of it. So if you increase the supply, so yes, our nefarious goal here is to get more people to go to college so that your returns get driven down. So you have to work at Starbucks. That's a myth. The Starbucks question though is a good one. I think the thing to bear in mind, and this is featured in many newspaper articles and short television bits I've seen is that yes, these college graduates are working in Starbucks and they have a master of fine arts or something, and my thought is yes, it's true, you don't need a master of fine arts to be a barista in Starbucks, but on the other hand, if it gives you a leg up to get this job and people with less education are not even getting this job, it still has some net value to you. If you go to, can I just add to this? If you go to the publications, so of course I've got a bibliography, where is it? Bibliography. If you go to some of these publications, the education pays in particular, they show distributions of earnings for each education group, and there you can see that there are some people with just a high school degree that are earning more than people with a college degree. The distributions overlap, right? So there are gonna be some people who don't go to college, who make more than somebody who does, but the average differences are what you saw before, and they're enormous. I'll be quick, but I'm a assistant principal in a local high school, and so I'm curious about the graph that you had that showed for the bottom quartile that the cost of tuition at least comes to zero, and the policy implicate, when you talk about restructuring financial aid, how does that message get, what could we do at the federal, state, local level to get that message out? Because I feel like starting with ninth graders, and they seem like the group that is most likely to become the lowest bar on that line, if they knew, and their families knew that, it would potentially change everything. And how do we get that message out that that group, really that aspect of college is taken care of, because I don't think that message is out there in any kind of consistent way. Our aid system is extremely opaque and complicated, and so it's not obvious to people that their net price is zero. And unless and until they redesign the aid system to make it simpler and more straightforward, so you can know that it's free to go to college, the onus is on people like you and nonprofit groups to go out and educate people. And so the Gates Foundation did a big campaign around education pays, but there are slews of organizations out there trying to get that message out to parents. My understanding is that some very good statisticians and economists have tried to figure out what part of the price of college people are most sensitive to. And it turns out that the sticker price seems to be much more influential than it ought to be. What ought to matter, if you're a self-interested, rational person, is the net price. After all of the subsidies you receive, what is the net price you pay to go to college? But a number of studies suggest that the sticker price really does matter. You react to the price that you know. And if they don't know, then that price, for example, they can't react to it. In New York State, when I was growing up, if you scored high enough on a certain exam, they just gave you tuition-free admission to any institution in New York, including Cornell and Columbia. Well, that's pretty simple to understand. You're not gonna pay any tuition if you go to a place in New York State. That was very simple. You didn't have to do a lot of complicated. And then it turned out, of course, that if you were from a low-income family, really, you got the same deal wherever you went in the country. Now, I did not know that, but that turned out to be true. If you had that test score, you could go any place in the United States and they would give you basically free tuition if you were a poor enough youngster.