Are Four Years of College Still Worth It?

Saif Alnuweiri

More and more Americans are attending college every year. As the great egalitarian force of a democratic society, improved access to higher education is one of the hallmarks of socially equitable society. But that may be about to change.

The benefits of getting a college education are undeniable. The income gap between a university educated American and a technical school educated one has never been greater. A millennial college grad will earn around $15,000 more a year than a millennial who went to a technical college or trade school. Among people who have completed their bachelor’s degree, the unemployment rate sits at 2 percent, the lowest unemployment rate by level of educational attainment.

The Economist recently dedicated an entire section of its weekly to addressing the state of education today. America’s university education system, considered one of the best in the world, was the main focus.

The magazine championed America’s university system, which was the marriage of the Oxford model, which provided classical university training, and the German model, which promoted the scientific research that universities are expected to take part in today.

But it also identified that the status quo cannot be maintained. American universities are becoming more expensive to attend. Students collectively have $1.2 trillion dollars of debt as a result of attending a four-year degree program. Tuition rates in American universities have increased five times faster than the inflation rate over the past 25 years. New York University, home to one of the most expensive tuitions in the country, costs an estimated $74,000 a year for tuition and living expenses. That adds up to $250,000 over the course of a four-year program.

Similarly, a 2014 study by the Federal Reserve Bank of New York found that 36 percent of recent graduates worked in jobs that paid around $45,000 jobs a year. In the early 1990s, that number was closer to 50 percent of graduates. And the number of graduates who were paid $25,000 a year, or were classified as underemployed by the Fed, rose from 15 percent to over 20 percent in the same time period.

There are 115,000 janitors with a bachelor’s degree. Nearly 40,000 cab drivers also have bachelor’s degrees. “We may be over-educating America,” said Richard Vedder, a distinguished professor of economics emeritus at Ohio University. Vedder thought a bachelor’s degree was still worth it for many Americans. The root problem is something different. “We have a mediocre college problem,” he said. “We are sending too many people to college.” As a result, employers have become more discriminating than they were in prior decades where a bachelor’s degree was almost a guaranteed path to employment. Degrees from high-ranking schools, he said, still do provide a return that most other universities don’t anymore.

The number of university educated cab drivers and janitors reflected the current job market in the U.S. There’s a dearth of vocationally trained graduates, and a surplus of university educated graduates. The “jobless recovery,” as Vedder called it, that has gripped the American economy since the recession has resulted in job creation that doesn’t require a university education to do. But that hasn’t deterred people from continuing their studies. “Everyone has told students they won’t succeed unless they go to college,” he said. “It’s just what we’re taught.”

Graduation rates from bachelor programs are also in trouble. The percentage of students graduating on time stands at around 40 percent today, according to a report by the Department of Education. It has become the norm for students to graduate after six years of undergraduate studies

Sure, there are premiums that university educated people still get from attending college. But they are not as noticeable as they used to be. The Economist wrote, “When just a small elite went to university, plenty of decent jobs were available to those with only secondary schooling. That is no longer true.” But more and more people have enrolled into university than at any other point in history. Between 1992 and 2012, worldwide enrollment rates increased from 14 percent to 32 percent, more than doubling in two decades.

But employers have not been impressed with the graduates put out by the American university system. While American universities are ranked amongst the best in the world they have not been providing students their students with the necessary skillset to enter the job market upon graduation. Skills like time management, leadership skills and personal finance are among the many that employers find lacking in recent graduating classes.

A joint study in 2013 by Chegg and Harris Interactive revealed that less than half of all employers found university graduates were prepared for a job in their field of study. In the study, 39 percent of hiring managers thought graduates displayed a sufficient degree of job readiness. The same study showed that college students were also discouraged with the education they received. Only 50 percent of students thought they were employable.

University graduates still get paid more than non-university graduates, according to a study by Pew on income levels across various generations. The gap was less pronounced 50 years ago, when the difference between the incomes of a high school graduate and a university graduate was only $7,000 a year. Among millenials, the gap expanded by $17,000 a year.

At first glance, the study by Pew would show that the value of a bachelor’s degree has gone up. Undeniably, it has gone up. But the number of jobs requiring a bachelor’s degree has gone down in proportion to the number of university graduates. It’s like comparing apples and oranges, said Vedder. “What if you’re one of the 40 percent who don’t graduate?” he said. “These are the things that the studies don’t pick up.” Vedder also said that his earnings are included in such studies, despite having graduated from college more than 50 years ago, skewing the earnings data for studies like Pew’s. “Where are the statistics for young people?” he asked.

The statistics for young adults points to income stagnation, at least according to National Center for Education Statistics. Across all educational levels, from less than high school completion to master’s degree or greater, incomes have stagnated or decline slightly since 1995. A bachelor’s degree earned just under $50,000 two decades ago, and continues to earn just as much, adjusted to real dollars. The cost of four-year college, on the other hand, has gone up. Private, four-year programs cost $11,864 per year, on average, in 1995. A recent graduate could pay that off with a $50,000 salary. Today though, the average cost of the same program sits at around $31,000 a year while wages have stagnated and the jobs providing those wages have shrunk.

The graph appears to contradict the chorus of voices decrying the state of American higher education. But, what isn’t included is job demand by educational level. In a U.S. Bureau of Labor Statistics report outlining job demand from 2012–2022, “about 4.6 million new jobs will require only a high school diploma.” A large percentage of those jobs will be in the service industry like fast food, food preparation and administration, occupations that many college graduates have been forced to take. Another 4.2 million jobs are expected to be created that require less than a high school diploma.

That’s greater than the number of jobs being created that require a bachelor’s degree or higher. The number of jobs requiring bachelor’s degrees is lower, with the number of new jobs projected to be around 3.1 million. Combined job growth for master’s and doctoral degree jobs stands at just over a million jobs for the next decade.

A different study by Harvard estimated that between 2011–2017, “47 million American jobs expected to be created between now and 2018, about two-thirds will require some sort of education beyond high school, yet a much smaller proportion will require a four-year college degree. About 14 million of these new jobs will be in ‘mid-skill’ occupations that require just a post-secondary certificate or associate’s degree: jobs such as dental hygienist, construction manager and electrician.” People studying in two-year trade programs will spend substantially less money learning skills that will lead to jobs more cheaply, if not faster, than university graduates.

The federal government also has plans to tackle the problem of overqualified, indebted university students. President Obama’s College Promise program, aims to make two-year community college programs free for all Americans, on the condition that they are employed while attending college. That’s good news for the 14 million Americans who can fill those “mid-skill” occupations that community colleges would educate them in. These jobs will see increased employment figures, fitting in with Obama’s condition that students work while receiving free education.

In that way, America will attempt to resolve its college tuition and employment woes in one fell swoop. The program would benefit as many as 9 million students in the U.S. who pay an average of $3,347 a year for community college. Tuition at a state school runs around $9,000 a year today. That number goes up to $31,000 for private four-year institutions.

The problem has continued to persist as university programs struggle to update their curriculums to include classes that teach organizational and leadership skills and general street smarts. The importance of a well-rounded education has taken on renewed importance as millenials overtake baby boomers as the single large age demographic in the American workforce at some point this year.

Americans once did benefit from an educational system that taught vocational skills. The system came to an end through a series of reforms initiated by the findings made in a report called “A Nation at Risk” in 1983. Under pressure to fix what was seen as a failing education system, President Ronald Reagan set up a commission to reform how and what Americans learned in school.

“There was a cultural and educational shift that made college the goal for everyone,” said Anthony Carnevale, director of Georgetown University’s Center for Education and the Workforce. “The BA was the gold standard. Everyone wanted to go to college.”

While the report was filled with well-meaning reforms, namely improving Americans’ test scores vis-à-vis other advanced industrial nations, it primarily led to an obsession with standardized test scores and cut funds to extracurricular activities.

Shifts in industry have also contributed to the problem. In prior decades, a university degree guaranteed a basic skill set that could be used in and outside one’s field of study. But as education has become more specialized, university students have been relegated to specializing in a very narrow field of knowledge. “The system has become more ‘vocationalized’,” said Carnevale. There is no vocational training that goes along with this, it’s simply that graduates are being employed by having a vocation, or specialization, in a certain field.

But that hasn’t translated into better job prospects for university graduates. Coupled with the rising cost of attending a university, students are racking up enormous debts. The tech industry has tried to fill the gap left open by universities’ inability to change their curriculums to take on the new demands of the workplace. Skillshare, a New York based learning initiative that connects skilled professionals with people who want to learn new skills. Users pay a one-time fee for a multipart video course in a variety of areas, ranging from work productivity to logo design.

The tech industry, reflecting its confidence that the solutions to most of the world’s problems can be solved under their tutelage, has taken part in providing solutions. Since 2010, when online learning programs like Skillshare, Udemy and others were being founded, the press wrote about increasing vocational training as a way to tap into demand for trade jobs and decrease an unemployment rate that hovered around 9 percent for most of the year.

Among the techies who took to the media championing the tech industry’s promise in resolving America’s educational and labour problems was Skillshare’s founder, Michael Karnjanaprakorn. In an article he penned for Good magazine in 2010, he said, “The grievously undervalued human capital issue here isn’t quality education in school but quality of skills in markets. This is the basic premise behind the edupunk movement: learning new skills that result from a Do-it-yourself attitude.” And when it comes to the outrageous cost of a bachelor degree today, the do-it-yourself attitude becomes even more of a necessity. Degrees can now cost up to a quarter of a million dollars today.

The very universities that charge such incredibly high tuition rates have also jumped on board the very cheap, or completely free, education bandwagon. With institutionally backed initiatives like the Open Learning Initiative and iTunesU, users can choose from a variety of classes and don’t have to be registered students. These initiatives are laying the foundation work for the tech industry to play a part in how Americans are educated.

While studies have shown that online education could be as effective as learning in a physical classroom, many obstacles remain. One of the most important ones is the accreditation process, given accreditation is bestowed upon an institution but not a class.

The future of the American educational system will be hard to predict. But given the massive monetary constraints it has placed on millenials, a generation debt-rich and job-poor, it needs an overhaul. Aspiring Adults Adrift, written as a sequel to Richard Arum’s and Josipa Roska’s 2011 book, Academically Adrift, revealed the current educational crisis. One-in-four students were still living at home two years after graduation, up from one-in-eight a generation ago. More than a third said they studied less than five hours a week. Arum was critical of universities who invested in amenities to lure students to their programs, rather than in developing real world applications to class material.

The myriad problems of the American university system ensure that there will not be any easy fix. The costs of higher education are high, and the job prospects have decreased as the job market shifts. A problem that affects a whole generation will likely take a whole generation to rectify.

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