Are Bachelor’s Degrees Worth It? asks Jeffrey Selingo, author of College (Un)Bound: The Future of Higher Education and What It Means for Students, in the Wall Street Journal.
With unemployment among college graduates at historic highs and outstanding student-loan debt at $1 trillion, the question families should be asking is whether it’s worth borrowing tens of thousands of dollars for a degree from Podunk U. if it’s just a ticket to a barista’s job at Starbucks.
In Arkansas, Colorado, Tennessee, Texas and Virginia, families can now compare colleges and majors based on the first-year earnings of graduates of in-state schools. First-year salaries are higher for workers with an associate degree in an occupational field than for four-year graduates. ”
In Virginia, graduates with technical degrees from community colleges make $20,000 more in the first year after college than do graduates in several fields who get bachelor’s degrees,” reports Selingo.
Four-year graduates usually earn more over a lifetime than two-year graduates — but only if they actually complete the degree.
“Not all college degrees or college graduates are equal,” warns a Brookings policy brief, Should Everyone Go To College?
While the average return to obtaining a college degree is clearly positive, we emphasize that it is not universally so. For certain schools, majors, occupations, and individuals,
college may not be a smart investment. By telling all young people that they should go to
college no matter what, we are actually doing some of them a disservice.
Going to a highly selective college and majoring in a STEM field lead to high earnings. By contrast, education or arts majors ”in the service sector” earn less than the average high school graduate over a lifetime, according to Brookings. (It’s not clear what “service sector” means.)
Is College Worth It? Consider the alternatives before going into debt advises William J. Bennett, a former U.S. Secretary of Education, and co-author David Wilezol. A four-year degree isn’t necessary for success, Bennett tells U.S. News.
By 2018 there will be 14 million jobs available, well-paying jobs, which will require more than a high school diploma but less than a college diploma, Bennett says. Community college graduates (with a technical certificate or two-year degree) can earn more than four-year graduates.
Community college, trade school or working for a year and thinking about are all alternatives to pursuing a bachelor’s degree, Bennett says.
Put some money in the bank. Join the military is another alternative where you earn great trade skills. We heard from an expert that there are 115,000 janitors in America with B.A.s. It’s fine to be a janitor, but you didn’t have to spend that kind of money to be a janitor.
Parents and students may be surprised at “the large array of options available, other than the B.A., that can give you success and economic success, and not have to make you defer for 10 years getting married and starting a family and buying a house,” says Bennett.
Track graduation rates and default rates for all students — not just full-timers — advises Education Sector in Degrees of Value: Evaluating the Return on the College Investment. In addition, it’s important to take into account whether colleges are enrolling low-income, high-risk students or taking only affluent students. Other suggestions:
First-year earnings matched by College Measures are simply too limiting given that employees’ salaries are often volatile in the years right after college graduation. A more useful dataset would show lifetime earnings, sortable by institution and major, and connect to other government data sources, so policymakers could more easily track the earnings of those who received government aid, such as Pell grants or student loans.
When viewed in isolation, career earnings can be misleading, if for example an institution places most of its graduates in public-service fields. A better consumer information system would give students and policymakers a snapshot of the types of jobs graduates from particular colleges and majors end up taking.
Student satisfaction surveys also would help prospective students evaluate their choices.
Federal aid is subsidizing colleges with low graduation, loan repayment and employment rates, writes Judah Bellon on Minding the Campus. Instead of singling out for-profit higher education, regulators should scrutinize the outcomes of all colleges and universities that rely on federal loans and grants.
For-profit colleges enroll more black, Hispanic, low-income and older students than public and nonprofit institutions. Their no-frills programs attract working students who need a flexible schedule, writes Bellon. Technical training is the strong suit of for-profit colleges, which adjust quickly to employer demand. For-profit students are more likely to complete certificates and associate degrees than community college students.
However, for-profit students are much less likely to complete four-year degrees and much more likely to default on student loans. That inspired the U.S. Department of Education’s attempt to enforce “gainful employment” rules limiting aid to programs whose graduates don’t earn enough to pay back their loans.
Regulate the bad applies, writes Bellon. But don’t single out for-profit higher education. If students are failing to graduate for jobs or unable to pay back their loans, it doesn’t matter if they attended a for-profit, private nonprofit or public institution.
A “more understandable effective and fair” student aid system doesn’t need to cost taxpayers more money, concludes a New America Foundation report, Rebalancing Resources and Incentives in Federal Student Aid. The study was funded by the Gates Foundation’s Reimagining Aid Design and Delivery project.
To eliminate any future “funding cliffs,” Pell Grant funding should be guaranteed, turning it into a true entitlement, the report recommends. In addition, the maximum grant should be increased and year-round funding restored to help students complete degrees more quickly. The “ability to benefit” provision would be restored, opening the door to students who lack a high school diploma or GED.
All this would cost more money, but the report also calls for limiting Pell eligibility to 125 percent of program length to encourage students to move along. In addition, eliminating “the outdated Supplemental Educational Opportunity Grant program that disproportionately benefits wealthy private institutions” would save money that could help fund Pell Grants.
The report proposes a Pell bonus for community colleges with a graduation and transfer rate of at least 50 percent. “Eligible schools could either use the additional money to reduce the net price they charge their neediest students or to create support programs to help low income students earn their degrees and transfer to four-year colleges.”
Other recommendations would redesign student loans and tax credits.
• Significantly simplifying the federal student loan system and reducing the dangers of default by requiring all borrowers to repay their debt based on a percentage of their earnings. Encouraging colleges to hold down their costs by eliminating both the Parent PLUS and Grad PLUS programs that currently allow for unlimited borrowing.
• Eliminating poorly targeted higher education tax benefits, such as the American Opportunity Tax Credit, in favor of direct aid for students.
The report also calls for strengthening accountability by “creating a federal student unit record system to provide a clearer picture of how students fare as they proceed through the educational system and into the workforce.”
Eligibility for federal student loans should be limited to 150 percent of program length to discourage prolonged enrollments, the report proposes.
Borrowers who turn to private student loans should be able to declare bankruptcy, if necessary, to clear their debts.
While the report is “wonderful and thought-provoking,” Community College Dean questions whether students can finish a two-year degree in 2 1/2 years. Very few do. Setting a tight time limit would make it hard to offer “stackable” certificates or integrate developmental instruction in mainstream courses, he adds.
Then there’s the political challenge. Capping student loans and eliminating tuition tax deductions to pay for Pell could alienate middle-class voters, he warns. “Once the middle class decides that a program is really just for the poor, that program tends to wither on the vine.”
“The University Of Phoenix plans to roll out more than 100 new partnerships with community colleges in the coming year,” reports the Huffington Post. The nation’s largest for-profit university will offer bachelor’s degree programs to two-year graduates, gaining students who are more likely to graduate and repay their student loans.
Partnerships with community colleges in Virginia and Arizona have been announced. More are coming, said spokesman Ryan Rauzon, including several in California.
Under increasing regulatory scrutiny, the University of Phoenix has seen enrollment drop precipitously from a peak near 500,000 to 320,000.
Community colleges and for-profit schools typically serve the same working, non-traditional student demographic. They “divide up the market,” explained Dr. Anthony Carnevale, an education expert from Georgetown University.
And as increased demand for bachelor’s degrees is driving many four-year public and non-profit private institutions to become more selective, it is unsurprising that community colleges seeking to build new programs would find an eager partner in for-profits like the University of Phoenix, Carnevale pointed out.
“It’s a fairly obvious deal,” he said. “It’s kind of a wide open market space at the moment.”
The new partnerships will expand on articulation agreements already in place that help community college graduates transfer their credits to a bachelor’s degree program, say executives at Apollo Group, which owns the University of Phoenix.
When community colleges in Arizona wanted to offer their own bachelor’s degrees, the University of Phoenix lobbied against the low-cost degrees. The for-profit giant “provided research and political muscle for a multi-year lobbying campaign,” reports Sarah Pavlus in the American Independent.
Community colleges are losing students to high-cost for-profit competitors. Now Ozarks Technical Community College in Missouri is fighting back with an ad campaign that compares its tuition to its competitors, reports Inside Higher Ed.
A TV commercial the college unveiled last week compares the $3,300 annual cost of tuition, fees, books and supplies at Ozarks to $32,000 at Bryan College, a small Christian for-profit, $18,000 at ITT Tech and roughly $14,000 at Everest College and Vatterott College.
“When looking at the costs, there is no comparison,” a voiceover says during the commercial. “The numbers speak for themselves.”
With rapidly growing enrollment, Ozarks is struggling to meet demand and has turned away allied health and technical students, Inside Higher Ed reports. While chancellor Hal Higdon says his college isn’t losing enrollment to the for-profits, he wants students to be “smart consumers.”
For-profit dropouts who enroll at Ozarks bring along their debts for federal reporting purposes, which raises the colleges loan default rates.
College borrowers with $75,000-plus in debt say they didn’t understand what they were doing, according to a new report, Lost Without a Map: A Survey about Students’ Experiences Navigating the Financial Aid Process.
“High-debt borrowers often do not have a clear idea about the consequences of the loans they take out, with many experiencing misunderstanding or surprise regarding repayment terms and interest rates,” says the report, by the firm NERA Economic Consulting and the youth advocacy group Young Invincibles.
Only 55 percent said they’d received financial counseling before taking out federal loans, even though colleges are require to provide counseling.
When financial aid falls short, colleges encourage parents to take out federal Parent Plus loans, reports ProPublica in The Parent Loan Trap.
As the cost of college has spiraled ever upward and median family income has fallen, the loan program, called Parent Plus, has become indispensable for increasing numbers of parents desperate to make their children’s college plans work. Last year the government disbursed $10.6 billion in Parent Plus loans to just under a million families. Even adjusted for inflation, that’s $6.3 billion more than it disbursed back in 2000, and to nearly twice as many borrowers.
. . . The loans are both remarkably easy to get and nearly impossible to get out from under for families who’ve overreached. When a parent applies for a Plus loan, the government checks credit history, but it doesn’t assess whether the borrower has the ability to repay the loan. It doesn’t check income. It doesn’t check employment status. It doesn’t check how much other debt — like a mortgage, or other student-loan debt — the borrower is already on the hook for.
If the parent can’t pay the loan, the government can seize tax refunds and garnish wages or Social Security checks. With a few exceptions, Parent Plus loans aren’t eligible for deferment or income-based repayment plans open to student borrowers.
Nineteen percent of households owed student loan debt in 2010, more than double the share two decades earlier, according to a Pew Research Center analysis of government data. Forty percent of households headed by someone younger than age 35 owe such debt, also a record high.
The debt burden is heaviest for low-income families.
The average debtor family owes $26,682 in unpaid college loans, up from $23,349 in 2007.
The U.S. Education Department has released two-year and three-year default rates for student loans that came due in 2009 and 2010.
In three years, 13.4 percent of the 2009 cohort defaulted on student loans. Three-year default rates hit 22.7 percent for for-profit college borrowers, 11 percent at public colleges and universities and 7.5 percent at private non-profit institutions. The national two-year rate rose to 9.1 percent for the 2010 cohort, up from 8.8 percent in 2009 and only 4.6 percent five years earlier.
The default rates don’t include borrowers who’ve deferred payment because of hardship, such as unemployment, notes the Wall Street Journal. ”Over the long haul, the government projects that nearly 1 in 5 borrowers will default on federal student loans at some point.”
Underemployed graduates with federal loans can link repayments to their discretionary income; the balance will be forgiven after 20 years.
Debtors are likely to postpone buying a new car, much less buying a home.
“A small but growing number of California community colleges have stopped participating in the federal loan program … out of fear that rising student loan default rates could lead to sanctions,” reports California Watch.
Some 16 colleges have stopped disbursing the loans, and at least one more school – Bakersfield College – is considering ending its participation in the program.
. . . College officials say they stopped participating in federal loans because they were worried that an increase in student loan defaults would jeopardize their ability to offer federal grants. Colleges where students default on federal loans at high rates for several years in a row stand to lose eligibility for federal grants under sanctions issued by the U.S. Department of Education.
Community colleges are unlikely to face sanctions, argues The Institute for College Access and Success. Without access to federal loans, students may take out high-priced private loans with less flexible repayment terms.
The University of California at San Diego tops Washington Monthly‘s list of the top colleges for social mobility (enrolling and graduating low-income students at an affordable price), research and service. Next in line are Texas A&M, Stanford, University of North Carolina and Berkeley.
Only one of U.S. News‘ top ten schools, Stanford, makes the Washington Monthy’s top ten. Yale fails even to crack the top 40. New York University, which has floated to national prominence on a sea of student debt, is 77th. NYU does particularly poorly on the new “bang for the buck” measure.