Politics
Colleges: Addressing the Rising Costs and Increasing Concerns
May
As the sticker price at some colleges soars to $100,000 a year, protests are shaking campuses, and the admissions process is becoming more bewildering. According to a recent Pew Research Center survey, a majority of Americans doubt the value of a four-year degree if it entails incurring debt.
Changing Perceptions of Higher Education
College enrollment has been steadily increasing, particularly among women. However, the perception of colleges as essential for securing a “good job” is evolving. Only 25% of U.S. adults surveyed by Pew consider a four-year college degree extremely or very important for obtaining a well-paying job, and nearly half believe it is less crucial than it was two decades ago.
Even more striking, only 20% said a college degree was worth it if it necessitates loans, and 29% felt it wasn’t worthwhile at all. According to the Federal Reserve, approximately 40% of adults who attended college took out debt to finance their education.
The Student Debt Dilemma
Escalating costs and a looming student debt crisis, with Americans owing over $1.6 trillion in federal loans, shape attitudes. Low to declining unemployment over the past decade is a factor. Pew economist Richard Fry notes an awareness of improved opportunities for non-college graduates. He’s surprised by the low belief in college’s expense worth.
In recent years, more Americans attend college, but only 37% achieve a bachelor’s degree, as per the Federal Reserve. Income and job prospects for non-graduates declined until 2014 but have improved in the last decade.
Increased college attendance shows promise, but low graduation rates reveal systemic challenges in education, WSJ Print Subscription said.
A Shifting Labor Market
A labor force that has seen minimal growth without immigration and is now facing retiring baby boomers has contributed to a labor shortage. “The labor market has been tight, and that has especially benefited less educated young adults,” Fry tells Barron’s.
For instance, while median earnings for young men with only a high school education are still below 1973 levels, they increased to $45,000 from $39,300 in 2014, adjusted for inflation.
The College Premium Persists
The so-called college premium still exists. The economic prospects for college graduates—both men and women—have also improved.
In 1973, a male college graduate earned 23% more than his high school-educated counterpart. Today, that gap is 71%, slightly lower than the 72% a decade ago. According to Pew, women with college degrees earn 79% more than high school graduates, maintaining a decade-old gap.
Shifting Attitudes Across Generations
The Federal Reserve’s latest Survey of Household Economic and Decisionmaking showed a changing perception of college’s value across age groups. Conducted last fall, the survey painted a less grim picture overall. It found that the self-assessed value of a college education was generally positive. This value varied depending on the institution type, debt amount, age, and field of study.
Of those with bachelor’s degrees, 75% of those aged 60 and older felt the benefits exceeded the costs, compared with 55% of those aged 18 to 44.
Future Uncertainty
Would a significant change in unemployment rates alter the sentiment toward colleges? Fry is unsure.
While a severe recession in the future could worsen the prospects for less-educated Americans, Fry believes it isn’t solely a tight labor market driving the improved outlook for those without a degree.
“We are also not seeing much growth in the labor force, especially without immigrants, in the prime working age group of 25 to 54. Employers will continue to face shortages and difficulties in finding workers,” Fry says.
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