With recent college graduates facing high unemployment rates, substantially lower wages and large sums of debt from loans, it begs the question: Is college worth the cost? Most experts agree that it is.
“Yes, I absolutely think it’s worth it,” Paul Conway, a former chief of staff for the U.S. Department of Labor, told VOXXI about the value of getting a college education. “The key issue is that it has become a major decision for young people.”
Conway pointed to a report released Monday by the nonprofit Generation Opportunity, of which he is president, that shows 32 percent of young people ages 18-29 are putting off plans to go to college or get more training.
He said much of the uncertainty stems from the current state of the economy and concerns about whether or not jobs will be available upon college graduation.
Unemployment rates for college graduates
The Georgetown University’s Center on Education and the Workforce indicated earlier this year that there are advantages to getting a higher education even in this struggling economy.
It estimated that in 2011, the unemployment rate for recent college graduates was 8.9 percent, just below the overall national average for that year. That was also well bellow the 22.9 percent unemployment rate of young people with only a high school diploma and the 31.5 percent rate of those who dropped out of high school.
In its report, Generation Opportunity estimated based on data from the U.S. Department of Labor that the unemployment rate for people 18-29 years old last month was 11.8 percent.
Among young Latinos, it was 12.1 percent and among women it was 11.6 percent. For young African Americans it was substantially higher with 21.0 percent.
Conway told VOXXI that with such high unemployment rates, young people are more interested in job creation than on lower interest rates— even with the student debt rising.
To support his claim, he pointed to findings from his group’s report released Monday. It shows that 64 percent of the 1,003 young people surveyed said the availability of quality, full-time jobs is more important to them than lower student loan interest rates.
“Young adults today, in order to repay their student loans, need to have full time jobs,” he said. “They can’t pay them off if they don’t have any income coming in.”
The Institute for College Access & Success (TICAS) released a report last week revealing that students who borrowed for college and graduated with bachelor’s degrees in 2011 had on average $26,600 in student loan debt. That’s up from $25,250 in 2010.
Heidi Shierholz, an economist with the Economic Policy Institute, told VOXXI that two-thirds of recent college graduates have student loans. She added that students who don’t find a stable job or source of income after graduation oftentimes don’t have money to pay off their loans and are forced to miss payments.
And while Shierholz said lower student loan interest rates are important to make college more affordable and accessible to lower-income students, she agreed with Conway on job availability being crucial for recent graduates.
“By far, the key problem facing new college graduates is the labor market,” she told VOXXI.
Another problem she pointed to is the high number of recent college graduates who are underemployed. This includes people who want a job but have given up looking for one. It also includes people who have jobs but are getting few hours to work.
According to a report Shierholz and three other economists released in May, the underemployment rate in 2011 for young college graduates was 19.1 percent. For young high school graduates it was 54.0 percent last year.
Historically, the unemployment and underemployment rate is usually higher for young people, even college graduates, than for the overall working population. But Shierholz said these rates haven’t been this high in years.
“This is the worst economic downturn we’ve seen in 70 years and young people are the ones who have been the hardest hit,” she told VOXXI.
But according to the National Association of Colleges and Employers, job outlooks for recent college graduates might be starting to improve.
The association released last month its Job Outlook 2013 survey results that show employers expect to hire 13 percent more new college graduates from the Class of 2013 than they did from last year’s class. It also showed that employers expressed particular interest in hiring new graduates with business, computer science and engineering-related degrees.
Shierholz told VOXXI that while these are “gradual improvements,” she predicts that for the next 10 to 15 years, new college graduates could face employment instability. She said they would also earn less than they would have if they had graduated when there were more job opportunities. This all translates to lower lifetime earnings.
“It’s going to be a tough road for them,” she said of new college graduates. “But the positive thing is that there’s evidence that suggests that within a couple of decades, all of that will be gone.”