In assessing the degree to which there may be a gap between the cost of a college degree and its value, a lot depends on what you assume about the people doing the evaluation. If we were all strictly rational long-term-income-maximizing automata, a college degree would still look like a good deal on average. After all, you make substantially more by the end of your life. Let’s call this the efficient market theory of college pricing. But as we have recently discovered much to our pain, markets aren’t always efficient. A more reasonable theory might be that most college students and their parents simply don’t do this calculation. They take it on faith, with perhaps a sprinkling of anecdote and experience of generations past, that having a college degree is worth the investment prima facie. This evaluation would be helped, of course, by the fact that there can be very good reasons to go to college other than pure economic pay-back. But at the very least, I suspect that the number of people who would be willing to get a degree knowing that it may not pay off for quite some time would be significantly smaller than the number of people who are getting their degrees right now.
via mfeldstein.com