Aug. 19 (Bloomberg) -- A high-priced college may not be worth the price of admission.

As the economy forces more students out of the classroom and graduates into under- or unemployment, a college enrollment bubble may be starting to deflate.

The recession, combined with rising college costs, has accelerated a college affordability crunch that is exacerbated by shrinking family incomes, diminished home equity and reduced household wealth.

As many as one-third of all private colleges surveyed by the National Association of Independent Colleges and Universities said they expected enrollment to drop in the next academic year.

Almost 40 percent of those colleges said some of their students dropped out due to personal economic reasons and a quarter said full-time attendees switched to part time. Half said families had to cut back their expected contributions as the value of college savings plans dropped 21 percent last year.

The job market is so awful that I have encountered several graduates this summer who weren’t able to line up full-time employment, even though they had sound academic records. Some are even “taking the year off” or doing internships.

Worth a Degree

It would be ideal if I could refer you to some research, database or Web site that would tell you how much you could expect to earn after gaining a degree from certain institutions. Yet such independent research, to my knowledge, doesn’t exist.

The most recent studies are vague and not very helpful for today’s students and graduates. The U.S. Census Bureau “Education Attainment” study from 2007 tells you what you probably have heard for generations: A bachelor’s degree will increase lifetime earnings.

Median earnings for those with a B.A. are 74 percent higher than workers with just a high-school diploma. A master’s degree sweetens the pot somewhat more: 31 percent higher earnings than those with just a B.A.

Unfortunately, the government’s numbers don’t tell you about the economic handicap of repaying a six-figure college loan over decades or the resulting diminished ability to buy a house, car or comfortable lifestyle.

When it comes to college debt, less is more, unless you have a job waiting for you upon graduation so you can pay off your loans quickly.

Running the Numbers

Which colleges are truly worth the price of admission? The ones highest ranked by magazines and books?

Laurence Kotlikoff, a Boston University economist, said college-ranking information is “worthless” because it can’t tell you if your investment in a higher-priced college will pay off over time.

“A huge investment is made on very little information,” he says. “Large amounts of non-dischargeable debts can come back to haunt people because lenders can garnishee wages if loans aren’t paid back.”

Kotlikoff says students should take into account reduced living standards -- by including loan repayments over time -- when they consider the total cost of college.

While community colleges still offer the best values, certain state universities are a close second.

One positive note was a July 14 speech by U.S. President Barack Obama, in which he called for funding a $12 billion “graduation initiative” for community colleges.

There are also some deals in four-year colleges. Louisiana, Nevada, New Mexico, Utah and Wyoming state colleges all average less than $5,000 a year (for the 2008-2009 year) for in-state student tuition, according to Burton Baker of 1693 Analytics, an investment-management and research firm in Williamsburg, Virginia.

Compare Tuition Rates

You could spend a lot more for an Ivy League college, of course. Harvard University and Yale University charge $33,696 and $36,500 respectively for tuition alone for the 2009-2010 year. Add in room and board, as well as other expenses, and you’ve cracked $50,000 a year.

Compare that with a national state-university tuition average of $6,762 and you know how much of a deal Wyoming is at $3,621. At the high end are New Jersey, $10,874; New Hampshire, $10,522; Vermont, $10,500; and Illinois, $10,353.

Keep in mind Burton’s figures don’t include room and board, books or transportation expenses.

If you are planning ahead, an even more important number to watch is the rate of tuition increase, which has averaged 7.3 percent annually for state universities over the past half- decade. Your college-savings portfolio rate of return will need to match or beat that number if you are going to keep up with the cost of college -- no easy feat over the last few years.

You would be particularly challenged to match the tuition increases in Hawaii and Kentucky, which have averaged more than 12 percent over that period.

An even simpler approach is to shop for a lower-priced college, search for grants and limit your debt as much as possible. That way, even if the job market is sour upon graduation, it will be less of a financial burden while you wait until all of the other financial bubbles have fully deflated.

(John F. Wasik, author of “The Audacity of Help,” is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: John F. Wasik in Chicago at jwasik@bloomberg.net.

Last Updated: August 18, 2009 21:00 EDT