Does a College Education Matter Anymore?

As the interest rate on government-backed Stafford college loans prepares to double today -- from 3.4% to 6.8% -- for new student borrowers, the value of a post-high school education is, once again, under discussion. As many have sought to battle the recession by enrolling in college or graduate school, stories of the crippling debt a great number of students have taken on have been grabbing headlines. With unemployment remaining stubbornly high, many wonder if obtaining a college degree is worthwhile at all.

William C. Dudley, President and CEO of the Federal Reserve Bank of New York, recently addressed this very issue. Late last week, Dudley answered the question, "Are recent college graduates finding good jobs?" with a qualified, "Sort of." Like others who have taken a good look at this issue, he found that the answer is not an easy one.

College still has value -- with qualifications
Most studies continue to show that workers with a college degree fare better than those without, particularly in times of economic recession. With the total U.S. student loan debt load totaling $1 trillion, however, much of this research has been trained on which degrees are apt to win the graduate a well-paying job.

The consensus of opinion remains that a college education puts job-seekers in a much better position than those with only a high-school diploma. A study published last summer from Georgetown University showed that from 1989 to 2012, job opportunities for those with at least a four-year college degree increased by 82% -- compared to 42% for a two-year degree. For those with high school diplomas -- or none at all -- employment prospects dimmed by a depressing -14%.

The latest news from Georgetown researchers takes a look at the type of college degrees that give students an edge -- and those that don't. Overall, the authors of the study maintain that a college degree is still valuable, noting that even an initial 8.9% unemployment rate for new graduates, while high, pales in comparison to the whopping 22.9% experienced by those heading into the workforce armed with only a high school diploma.

Some of the report's findings do not surprise at all. For instance, the study notes that unemployment is very high for architects because of the housing crash. And while information systems majors tend to have a high initial unemployment rate of 11.7%, the rate drops to only 5.4% as those who gain experience move up. Recent graduates in the health care and education fields find jobs rather easily, experiencing a low 5.4% initial unemployment rate.

Cost versus results
For college to be "worth it," then, students must weigh the value of a particular degree against its cost -- usually in long-term student loans -- and the chances of actually landing a job. For many, this scenario has not played out well at all, and a majority of Americans are now saddled with tens of thousands of dollars in student debt, which numerous graduates are finding to be an onerous burden.

This crushing debt is turning out to be a drag on the economy, too. The FRBNY noted earlier this year that money owed on student loans is preventing a whole generation of graduates from purchasing new cars and homes. In fact, the study showed that 30-year-olds without college debt, for the first time in a decade, are buying more homes than their debt-laden counterparts.

This is a real problem. A recent article in Forbes shows that 60% of all student debt has settled on the shoulders of those over 30 years of age, and that it takes, on average, 20 years to pay off such debt. Indeed, 15% of college loan debt is held by those over age 50.

For recent graduates, the feeling that they have made the right decision seems to be waning. A survey back in May showed that fully one-third of those polled said they now think they would be better off if they had entered the work force rather than pursued their college degree.

This feeling is shared by other age groups, too. An awesome series on the site Gawker.com collected "Unemployment Stories" for one year, and the personal stories are worth more than a casual read. Now, at the end of the series, the author outlined five lessons showcased by the responses, one of which is this: A college degree doesn't always help. Many reported lingering unemployment, now complicated, regretfully, by a higher debt load.

Still worthwhile?
Whether or not a college education is advantageous, it seems, depends on many variables -- not the least of which is a student's ability to pay the costs associated with a four-year degree, which seems to deliver the most bang for the buck. Still, the Great Recession has made having that piece of paper more important than ever.

Persistently high unemployment and rising education costs have left their mark, but the recession has been especially tough on those without college degrees. The disappearance of nearly 80% of jobs associated with an education level of high-school diploma or less since the recession began leaves workers with no choice but to retrain.

The interest rate hike on new student loans may yet be overturned, but the stark reality of the new job market is unlikely to give the vast majority of job seekers any true relief.

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Read/Post Comments (16) | Recommend This Article (7)

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  • Report this Comment On July 01, 2013, at 11:49 AM, sabebrush6 wrote:

    Thinking college ? Good idea, but also analyze the costs involve first. $700/800 a month for 25 years ?

    A good trade school can make you a lot of money also. Pay & benefits from most trades are very good and you have very little cost involved by comparrison.

    Total up your costs of going in debt for 4 years of college (payback costs) vs a quality trade school.

    It's not for everybody but it sure is worth revueing .

  • Report this Comment On July 01, 2013, at 12:24 PM, banmate7 wrote:

    Of course it matters, but as in all things in life, so does context. Make sure your degree is relevant. Don't get into burdensome student debt.

    For example, one can attend San Francisco State University for $7k a year and get a fine computer science degree. With a part time job, you can finish with little to no debt. You also can get a great job in the Bay Area technology ecosystem.

    You can do the same with the city colleges of New York. Across our country there are affordable public school options. There is no need to opt for 2nd tier private schools that charge excessive tuition. Most of all, major in something practical & don't borrow to fund things other than education.

    Best of luck to all the young folks out there.

  • Report this Comment On July 01, 2013, at 12:24 PM, Jnchem wrote:

    Yes, I was doing knowing with myself until I enrolled in JC. Now I have a masters and make bank. Without it I would be dead, it tough me hard work!

  • Report this Comment On July 01, 2013, at 12:28 PM, cccss wrote:

    There's time enough in life for everything. Henry Ford didn't have a high school diploma, but plenty of ambition. But he did send his son off to proper schooling, which he used to garner his own amount of success in the same business. So, it seems the father had a value for education. Helen Keller went on to be a college graduate success. I would encourage it. Where else do you have freedom to choose the classes in which you have an interest and might just meet that one professor who inspires you in your career or taught you something you did not know, that personal touch!

  • Report this Comment On July 01, 2013, at 12:35 PM, BilboBaggins wrote:

    College has turned into a scam. Unfortunately, parents don't recognize the signs and continue to push every kid who can go to college to go. The schools market the product as if it will take four years to graduate and they toss out the old, outdated, inaccurate study that said college students make $1million more than high school graduates. Then they lure students into low paying or jobless majors like the social sciences, ethnic studies programs, (some) liberal arts, etc.

    But the scam benefits a lot of groups. Tenured professors teach 6 - 9 hours per week and are totally unaccountable for the rest of their time. Politicians love to promise more money for loans to students. Each increase in loans is met with an increase in tuition. The schools get the money and the student gets a decade of indentured servitude if they can find a job.

  • Report this Comment On July 01, 2013, at 12:48 PM, 2smartforlibs wrote:

    Yes OBAMA care has to be paid for with the doubling of your interest rates. Its not what your country can do for you but what you can do for your country

  • Report this Comment On July 01, 2013, at 12:57 PM, Hjin wrote:

    @skepticRN, the schools don't do anything to lure students into specific fields. The students choose those on their own. They were taught in high school to pursue their "passion" with a blind zeal when in fact not all hobbies translate into gainful employment.

    And no, the studies are not inaccurate or outdated. They are simply averages and continue to hold true to this day. The only mistake is that students were never told to carefully weigh their options in college before deciding to pursue a specific major. The schools themselves do not attempt to sway them either way.

  • Report this Comment On July 01, 2013, at 1:16 PM, knechitilo wrote:

    Investing in a college education has always been a risk. The expected return has always been much greater if one is intelligent, tall, good looking and have an outgoing personality. That will probably always be true. Some factors such as gender, race and ethnicity are still a factor but may be changing over time.

    Whether college education will provide a financial reward depends on personal characteristics, the nature of the education pursued and the demand for skills enhanced by that education. Unfortunately, students and parents are not often very good at assessing any of those parameters and are enticed by the wishful thinking, pie-in-the-sky served up by educational marketers who mainly want to maximize their own revenues.

    Individuals need to seriously consider what they want to do in life, what talents do they have and what type of education can enhance those skills and what will they do if their desired career becomes out of reach, whether due to factors specific to themselves or to the economy at large.

    Purchasing an educational credential is probably the biggest investment decision a person makes.

    Some will prosper but many will not.

  • Report this Comment On July 01, 2013, at 1:35 PM, Vasarian wrote:

    Believe it or not I would say there are some stipulations. The key is to have a solid goal in mind not in the searching phase.

    If your not sure or decisive it will cost you over a possible long time too. There is a portion of the population of young adults that know what they want to do and school offers the programs. In that sense your education is a partnership with high demand fields. In the end I would say do as much as you can outside the costly education of universities if your a dancer, fine artist, writer, musician, designer even architect, theologian, philosophy, anthropology archeology. The key is to have the interest in mainstream high skill high demand fields to get the benefits of high cost college and for those with the talent try to cut costs and develop the talents through numerous other avenues. If those avenues arent there now they possibly could be because as one door closes another door opens. An example is I am usually amazed at how much one can learn from YouTube tutorials. I fixed my own toilet and briefly fixed an old wall power outlet. Still I think there are better alternatives for the talented arenas.

    At the most it may be ideal to relocate to the optimum environment for a given talent but atleast you can be in the right setting for one, such as Hollywood or places less expensive nearby you just would have to figure out how to commute etc.

  • Report this Comment On July 01, 2013, at 1:50 PM, Bethh137 wrote:

    Most college degrees are still worth it. But if you're dumb enough to major in Philosophy or Liberal Arts or some other worthless degree, you get what's coming.

  • Report this Comment On July 01, 2013, at 2:21 PM, mjakovich wrote:

    A college education is valuable. Fully 30-40% of the majors offered do not get you that "college" education. The system at the major universities is broken and will collapse if not fixed. When tech. schools and 2 year 25k total cost schools have the top spots in the ROI rankings it shows what is wrong. Their teachers TEACH for a living, they dont offer programs that wont get their grads a job. They also actively work with their grads helping them find jobs after they finish. It doesn't help that 80% of grads come out not knowing how an APR works or even basic money management skills.

  • Report this Comment On July 01, 2013, at 2:49 PM, rootkit wrote:

    The people who get hit the hardest in this mega-recession are those in the "gray zone."

    Those that graduated with at least a 4-year degree from a college that "matters" (Harvard, Yale, Stanford, etc.) can write their own ticket.

    High-school dropouts can get hired easily for menial jobs, like: janitor, fry-cook, convenience-store clerk, night-watchman, etc. because employers know that the dropouts will have few routes for advancement. For the dropouts, any job is better than none at all.

    It's the person who withdrew from a run-of-the-mill college after two years because of a parent's job loss and/or a spike in tuition that's out of luck.

  • Report this Comment On July 01, 2013, at 5:46 PM, Itsjustmeagain wrote:

    You can have it both ways, and stay out of debt. I went to a technocal HS learning electronics. Graduated and did a 4 year apprenticeship as a Tool and Die maker. While an Apprentice, I did some College work, and as I moved forward in my career kept working for a BA in Business. Took a few years but frankly without the experiences gained while working the lessons would be sterile.

    Once in the office as a Supervisor with my BA Business Management, it was expected that a senior manager required a Masters degree. Finished that too.

    One lesson I can say without reservations the job I was doing when I retired, managing development of several products with a budget over $200Mil a year, my working experiences were invaluable. The degrees were for the "I love me" wall.

  • Report this Comment On July 02, 2013, at 8:42 AM, KombatKarl wrote:

    It depends on what you want to do. Some fields require a degree. Others a trade school is all that's required. But I totally agree with others that it has to be a degree that matters.

    Our oldest is almost 13 and my wife and I are starting to disagree on the college thing. She is hell bent on sending all of the kids off to college. Even doing a local community college for the first 2 years is not an option. In her mind "the experience" is a large part of it. She's also hell bent on us paying for it. We saved but it won't be enough.

  • Report this Comment On July 02, 2013, at 7:46 PM, TheRealRacc wrote:

    @Hjin, Colleges and universities most definitely try to sell their programs on prospective students. A university's website is a glorified marketing piece. Do you really believe that a high school student who has a passion for math, will continue to sustain that passion for math as he enters adulthood? Simple example. The answer can be yes or no. Nothing is decided when you are 18.

    Colleges and universities need to show high enrollment numbers in particular programs to "prove their worth". They are definitely trying to sell programs on students that the students have no business being involved in.

  • Report this Comment On July 07, 2013, at 12:11 AM, herky46q wrote:

    I dreaded going through college not knowing if it would lead to a decent career and just leave me with a big debt. Looking back, I was unnecessarily worried, but I had to take some risks after graduating to lead to where I am today. And yes, I have one of those throw-away liberal arts degrees from a major university. To not have a degree in my field also would be odd and unexpected, so college was worth it.

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