Is Student Debt Worth It?
At the end of January, the Center for College Affordability and Productivity (CCAP) released a report asking the question, “Why are recent college graduates underemployed?” It’s a question with built-in pessimism, and as the facts show, the statistics are indeed nothing to be optimistic about.
According to the AP, approximately one in two college grads are underemployed, meaning that they are either not employed, working very little, or working at jobs that have historically not required higher education. The CCAP report sheds more light on the plight of underemployed college students: in addition to being underemployed, many recent grads are applying to and working at jobs that don’t require college educations. Stunningly, for example, more than 15 percent of taxi drivers and firefighters have college degrees, compared to the one percent in 1970!
Not only are applicants without a college degree facing competition, but it creates a path where grads work at low-paying jobs that don’t afford them the ability to pay back their college debt, which is soaring at the same time college degrees become less valuable.
This is sobering news. CCAP’s report shows that the nature of the job market has not changed substantially in the recent decades, but the number of students who have a college education has increased, perhaps not to their benefit. The CCAP says that “a not inconsequential number of Americans who obtain higher education do not achieve the economic gains traditionally accompanying the acquisition of college-level credentials.”
The country’s mentality towards higher education has also changed over time, which drives up the number of students getting college degrees. It is the norm to expect students to pursue higher education, just like it’s becoming the norm for employers to expect that applicants with college educations would make better employees than those who don’t, even when hiring for positions that don’t require college degrees.
The problem with this is that it creates an excess of college graduates while the number of jobs stays stagnant. Combine this with skyrocketing tuition costs and getting a college education can become almost a punishing prospect.
The unrelenting cost of higher education
In an October report, the Institute for College Access and Success found that a good two-thirds of the class of 2011 had student loans, and the loan totals averaged $26,600. Meanwhile, the unemployment rate for 2011 grads is still at a staggering 8.8%. More importantly, “most students in the Class of 2011 started college before the recent economic downturn, but the economy soured while they were in school, widening the gap between rising college costs and what students and their parents could afford.”
As of December, student debt approached the $1 trillion mark. It eclipses both credit card and auto debt, and the Federal Reserve Bank of New York says it’s the “only form of consumer debt that has grown since the peak of consumer debt in 2008.”
The burden college is already starting to alter young people’s perceptions on pursuing college degrees. The Wall Street Journal reported that colleges are losing pricing power because there has been lessening demand for four-year degrees due to uncontrollable tuition costs. On the graduate school front, things are looking even more drastic for law programs: applications have fallen to a 30-year low. Admissions offices are seeing a 20 percent decrease compared to applications received at the same time last year, reports the New York Times.
I personally have about $40,000 of student debt, and though the national average is $26,600, I still feel lucky that my number isn’t any greater. I’ve heard numerous horror stories from friends who are barely beginning to pay off loans that they’ve taken out, and some of their loan amounts are twice or even triple mine. Student debt and loan repayment has become such a monstrous burden that loan-payoff parties are worthy of writing trend pieces on. Has it really come to this?
The leaders of America constantly stress that we as a country have to put more young people in college so that we can stay competitive in the global market. But how can students get higher education without shouldering on decades -- if not a lifetime -- of debt repayment? How can college seem “worth it” when the likeliest follow-up to college graduation is months of underemployment, or worse, complete unemployment?