The cost of attending college in the United States has drastically increased over the past thirty years; at the same time, the economic environment has fundamentally changed. Reexamining the collegiate landscape triggers many questions. Are college degrees necessary? If so, what do the costs look like? What are options the average student has to pay for college? In this article, we examine these questions in an attempt to gain a better understanding of the economic situation surrounding college degrees.
Is it necessary?
Today’s bachelor’s degree is like yesterday’s high school diploma; it is quickly becoming a dividing line between those who can earn a living wage and those who struggle to do so. Workers who have a bachelor’s degree typically earn 66 percent more than those who have only earned a high school diploma. Over the course of a lifetime, the average graduate with a bachelor’s degree will earn approximately $1 million more than someone who does not have a postsecondary education. It is estimated that by 2020, nearly two-thirds of job openings in the United States will require postsecondary education or training. Workers with degrees often tend to weather periods of economic recession more easily; in 2016 the unemployment rate was 4 percent; but when that statistic is subdivided into educational levels, the unemployment rate was 5.2 percent for high school graduates but only 2.7 percent for college graduates.
A college degree often helps to make life less stressful; according to a 2015 report by the Pew Research Center, the divorce rate for high school graduates is 43 percent while that same statistic for college graduates decreases to 26 percent.
Not only is the completion of a college degree a barrier, access to higher education can often be a defining obstacle in obtaining a lifetime occupation. Although 77 percent of students from the top income quartile in America graduate with a bachelor’s degree by age 24, only 9 percent of students from the lowest income quartile accomplishes the same.
According to the US Department of Education, tuition at public, four-year colleges has more than doubled over the past thirty years, even after adjusting for inflation. A recent survey of the costs of attending college showed that a moderate college budget for an in-state public college during the 2017-2018 academic year averaged $25,290, while the costs for attending a moderately-priced private college was double that at $50,900. Unfortunately, the ability of the typical student to pay these fees has not kept pace; between 1992 and 2012, the average amount of student loans owed by a normal student has more than doubled to a total of nearly $27,000, just for graduating with a bachelor’s degree.
One of the major things to consider is not college entrance, but rather college completion. Over the past thirty years much of the focus of opening up higher education for lower-income individuals has been on access and acceptance into a university. By and large, that is not the primary concern any longer. The focus of that has shifted to ensuring that as many individuals as possible complete a degree. Unfortunately, only 19 percent of students at most public four-year universities complete a degree on-time, and at two-year institutions that decreases to only 5 percent of full-time students earning an associate’s degree in two years. In fact, only 50 out of 580 four-year public schools nationwide graduate a majority of their full-time students on time. Worse than not completing a degree on-time is not completing a degree at all; this has adverse effects for not only the borrower but for society as a whole , since many of these student loans are backed by the federal government. Individuals who take out student loans but do not complete a degree or certificate are three times more likely to default on their loans than graduates; in fact, the amount of debt taken on is less of an indicator of default than is whether or not a borrower graduates.
The federal government has engaged in many programs to make a college degree more
accessible and affordable. In 2010 Congress ended student loan subsidies for private banks through the use of Pell Grants, creating more than $60 billion in savings for students and taxpayers. Over the last ten years, the maximum Pell Grant has been increased by more than $1,000. More importantly, for the first time it is now tied to inflation. During this period the number of Pell Grant recipients have expanded by more than one-third.
In an attempt to address college access, President Obama began his America’s College Promise initiative, which would make two years of community college free for many students and enable hundreds of thousands to earn the first half of a bachelor’s degree at no cost. Once enacted, this would provide more than $61 billion in postsecondary funding over the next ten years. While this program has not yet been fully realized, it is certainly one avenue towards decreasing the overall cost of a college degree for many students. Expanded gainful employment regulations hold colleges and universities to higher standards for not only higher graduation rates, but ensuring that the degrees that are awarded are worthwhile. For many graduates and former students who are struggling under the weight of student loans, some income-driven repayment plans are available. These programs set payments according to someone’s ability to pay, which decreases the likelihood of default by meeting a graduate where he or she is, rather than employing a cookie-cutter approach based on where they ought to be. While not a panacea, these efforts are certainly aimed in the right direction.
As America’s economy has transformed over the last thirty years, a postsecondary degree has become increasingly necessary. More attention to this issue is needed to ferret out worthless for-profit institutions with meritless degrees; to encourage higher rates of not only admission but graduation; and to provide better ways for students to fund the cost of pursuing an education.