I have been writing about the shrinking value of a college degree for some time now. It’s a fact that college costs have escalated at a pace FAR in excess of family income, dampening the return on college costs. Of course, if that degree makes the difference in landing a job then that probably beats the alternative. What are some alternatives? Working, going to community college, working and then going to college, staying studying at an state school or a trade school.
Today, a client visited me with some good news: their daughter was accepted to an Ivy League school. What a great accomplishment! She has an eye on education, and is a dedicated and ambitious student. The bad news: tuition + room/board is OVER $50,000 per year. Most parents are financially ill-prepared for that high cost. In this case, the client decided to share the cost and allow their daughter to take out loans to pay the difference between the out-of-state cost of U. of Wisconsin, since it was a benchmark school that was recommended for her area of study. Fortunately, if she gets her degree in the specialty field she has her eye on, the reward should be a high-paying job that would make paying back the loan reasonable. Unfortunately, in today’s tough job market, many kids are getting common degrees and stuck with a more bleak outlook.
Among recent college graduates, ages 20 to 29, the Bureau of Labor Statistics reports, unemployment stands at 10.9%, more than three points higher than in 2007. A study from the Federal Reserve Bank of New York finds that of the recent college graduates who have managed to find work, more than 40% are in jobs that do not require a college degree; more than 20% are working only part-time; and more than 20% are in low-wage jobs.
They are not alone. A recent report from the National Employment Law Project found that low-wage sectors such as food services and retail trade accounted for only 22% of jobs lost during the Great Recession, but fully 44% of jobs gained since the bottom. Mid-wage jobs accounted for 37% of losses, but only 26% of gains; higher-wage jobs, 41% of losses but only 30% of gains. The wage structure of the entire economy has shifted downward since the Great Recession, and young adults trying to start careers and families have been the principal, but hardly the only, victims.
Today’s economic report was very bleak (.1% economic growth) for the country; U.S. Economy Stalls and U.S. Economy Barely Grew were all over newspaper headlines. While most of the U.S. Economy is crawling along (not sure how much slower it can get), I don’t see things turning around anytime soon. Meanwhile, the federal government continues to try and prop up the economy by borrowing money to pay for more and more programs, all the while our National Debt continues to grow. Despite the Fed pumping, the average family income has been decreasing the past several years.
The future job picture is not bright for many of our children, so make the post high school education choice wisely. Anything to cut back on the cost of college may be worth looking into for kids that are not in a high-end niche with a lot of future demand.
What’s next? I would like to hear from those that have been through this process with their kids and what they are doing to save money. Are there any parents looking for alternatives? I can almost see the College of DuPage from my office as it takes over the southern half of Glen Ellyn. Business is booming for that community college.
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