By Clayton Dines (Creighton University)
Once upon a time, college was considered a guaranteed ticket to career success. But these days, many college graduates enter the real world with a degree in one hand and a massive amount of student loan debt weighing them down in the other. A college degree can be a great tool for career advancement but it comes at a very high cost – tuition, time, (and for some) your mental sanity. So in this post, I ask the very important question: is a college education worth the investment?
What is the cost?
For the past few years, college tuition, fees, and room board have increased at a steady rate. According to the National Center for Education Statistics, in the 2015-2016 academic year, the average student paid $16,757 at public institutions and $43,065 at nonprofit private institutions. That’s a total price increase of 34% at public institutions and 26% at private non-profit institutions since 2005-2006. A College Board report estimates that from the 1988-1989 school year to now, the total cost for a private nonprofit school has risen from $24,800 to $48,510. And for public institutions, the total cost has risen from $9,480 to $21,370. (This won’t be a surprise for any parents with college age or recently graduated students – the hole in your wallet’s as good an indicator as any College Board report!)
These sharp price increases are directly correlated to a significant increase in the number of students choosing to attend college. Demand has forced price increases, as more people see the need to obtain a bachelor’s degree. The government has advertised student loans, employers have pushed the requirement of a degree, and high schools advertise college as the best way forward. As a result, the demand for degrees has progressively increased over time, pushing the cost of college to extremely high levels.
Worse news for soon to be students, the return-on-investment for a degree has flatlined in recent years. According to the Economic Bureau of Economic Research, from 2010 to 2015, the wage gap between a bachelor’s degree and high school diploma remained unchanged. So college students take out a lot more in loans to get through school, but they aren’t seeing matching higher incomes in the real world. The study attributes this to a decrease in “middle-skilled occupations” and a shift away from “advanced cognitive skills.” Essentially, employers have started to find more value in workers who have skills (hard & soft), rather than just possessing a college degree. A bachelor’s degree used to signal to employers a worker came with certain above average skills. But because so many people have bachelor’s degrees, it’s harder for a recent graduate to stand out in the job market. In order to show potential employers why they should hire him or her, a student is forced to seek additional credentials, including a master’s degree, to achieve the same results of a current bachelor’s degree.
Consequences & Results
A student loan crisis has formed as a result of skyrocketing costs. The increasing rate of loan balances in the United States and the number of defaults outstanding. The rate at which students are borrowing continues to increase, as the cost of college continues to rise.
Graduates are taking longer than ten years to pay back their student loans and the likelihood of default has increased. They are also defaulting earlier in their post-education years. It is no secret some degrees open the door toward more lucrative careers than others. A graduate with an engineering degree can slide into the petroleum industry (or any industry, really) and become one of the highest income earners in the country, while someone with a human services degree might end up working for a much smaller paycheck. Ultimately, some degrees are shown to be a better investment than others, leaving certain subjects in the dust.
A Bubble Waiting to Burst
As the student loan crisis has continued to expand, many experts fear that a giant bubble has formed, like the housing market in 2008. According to a Fortune article, higher education makes up one-sixth of the U.S. economy. Postsecondary education’s market share is so large, that the bubble “bursting” could create a “blockbuster-level perfect storm.”
Instead of treating expensive college as a one size fits all solution, high schools should focus on determining the best fit for each person’s individual characteristics and interests. Good alternative options could include apprenticeships, the military, vocational school and more. When a student does choose to go to college, finding a degree that fits their interests and will lead to a job with enough pay to justify the investment is of utmost importance. Students should also take into consideration the likelihood they’ll need additional degrees after graduation. After all, the best way to discover the true value of education is to become educated about it.