Table of Contents
Almost every American child has grown up hearing the same advice: “Go to college. Get a degree. It doesn’t matter how much it costs or what you decide to study—it will pay off.”
For the current generation, that’s starting to seem like bad advice.
One of the most depressing emblems of the Millennials is the “boomerang kid”—the college graduate returning to live at home. The New York Times reports that about 20% of those in their 20s or early 30s now live with their parents. That’s double the rate for the previous generation.
This has led to a lot of finger-pointing. Many members of older generations recall the ease with which they got a job, paid off their tuition, bought a house, and began raising a family. Some accuse “kids these days” of being spoiled and lazy. Others chalk it up to the economy and direct their anger at the government. Another faction asks if the colleges might be to blame.
I had a tough time believing in the laziness argument. I saw graduates spending 12-hour shifts on factory floors while endlessly searching for the jobs they had studied for. I saw them working 70- or 80-hour weeks to make rent. And yes, I saw them living in their parents’ basements—hard at work trying to pay their student loans or applying to job after job.
One such struggling graduate was John Boucher. An environmental science major at the University of Vermont, he emerged near the top of his class with a GPA “higher than 3.76.” He soon found that his degree and high GPA were no guarantee of getting a job.
John worked hard to find employment, completing an internship even though he felt it would do nothing to help him get the kind of position he really wanted. When he could find nothing in Vermont, he moved to Boston, which many Vermonters have come to view as a sort of Mecca for job hunters.
Eight months passed without him finding a job.
“I was extremely diligent for the first four,” he said, but the lack of interest from employers soon left him feeling like the whole thing was pointless. His efforts in the next four months were halfhearted.
A year and a half had passed by the time he finally found work, and even that soon slipped from his grasp: “I . . . landed a [part-time, entry-level] job at a shipping company a year and a half after I graduated. . . . they hired me as a one-month trial period for the both of us to get a feel for the position and decide if the other was the right person/place. When they let me go at the end of the month, the manager said they appreciated my attitude and effort, but I wasn't the right person for the position. . . . [It was] pretty rough on my already-trampled confidence.”
With no other choice, he resumed searching for jobs.
I’m not the only one who’s seen situations like this. William Bennett and David Wilezol interviewed struggling graduates for their bookIs College Worth It?
Among them were a 34-year-old bartender with $40,000 in student debt and a political science graduate who owed $100,000 and had been unable to find a job.
Others talked to college students who, despite their admirable work ethic, just couldn’t shoulder the financial burden. In College (Un)Bound, Jeffrey Selingo shares the story of a young woman working 25 hours a week while studying full time. Despite her hard-earned income and significant financial aid from her college, she was soon forced to drop out because of tuition hikes.
It just didn’t seem possible that today’s generation was to blame for their situation. Where was the promised payoff for college? Where was the success that was supposed to meet any hardworking American willing to pick themselves up by their bootstraps?
I didn’t want to rely on my personal experiences or on the stories told by others. I wanted hard numbers and real answers. With that as my goal, I set out to answer one question:
Is going to college still a smart financial decision, or has it somehow become a waste of time and money?
A Tough World for Today’s Graduates
The situation for college graduates has worsened tremendously over the last few decades.
A 2014 Pew Research Center study examined the poverty rate among 25- to 32-year-olds. They found that it has risen severely, even for the highly educated. Just 3% of those with a four-year degree or better lived in poverty in 1995. By 2013, the impoverished population had doubled to 6%.
One graphic designer I spoke to, Sebastian (not his real name), said it took him “three years and eight months” to get a full-time job after graduating with a bachelor’s degree. Up until that point, he had slogged through an internship and a part-time job he was badly overqualified for. Only by deferring his college loans and regularly visiting the local food shelf was he able to escape living paycheck to paycheck during those first years after graduation.
Highly educated Americans have another ugly growth: unemployment. The numbers have fattened for decades. In 1986, your chances of being unemployed a few years out of college were about 2.3%. Nine years later, in 1995, they reached 2.8%. The odds swelled to 3.8% by 2013. That’s a 0.5% increase in unemployment every nine years.
- Young Americans with bachelor’s degrees are more likely to be unemployed or living in poverty than ever before.
Even those who do land jobs have a tough time doing so. In the same 25-to-32 age bracket, the number of weeks unemployed graduates have spent searching for jobs has escalated dramatically:
- 1979: 12 weeks.
- 1986: 14 weeks.
- 1995: 17 weeks.
- 2013: 27 weeks.
That’s more than six months for an average college graduate to find a job. That means that plenty of others end up searching far longer before finding employment. And guess how long graduates have before they need to start repaying their federal student loans?
You guessed it: six months.
John Palladino, a college dropout and a manager at Burger King in upstate New York, perfectly encapsulated the growing mood in the country: “It’s become increasingly [hard for] people with college degrees to get a job that actually matters. If I had a degree, I don’t even know where I would try to get a job around here. . . . Even if you get a really good job, it takes forever to pay it off.
“I just don’t know how a college degree would help me at this point.”
The Rising Cost of Tuition
While poverty and unemployment have grown at frightening rates, tuition costs put them to shame.
The College Board, the nonprofit behind the SAT, examined the changing cost of tuition and fees over time. They adjusted everything for inflation, and the figures you are about to see are in 2014 dollars. They do not include room and board.
In 1980, one year studying for a four-year degree at a public college cost an average of $2,316. It increased to $4,837, over 100%, by the year 2000.
Tuition and fees averaged $9,139 in 2014.
- After adjusting for inflation, it costs four times more to go to a public college today than it did in the 80s.
Public colleges aren’t the only ones that have changed. In that same period, the price of one year at a private, nonprofit, four-your college tripled from $10,420 to $31,231.
Today’s generation is not lazier than others. In fact, they’re getting a raw deal. They have to shell out far more money while dealing with ever-more-likely prospects of unemployment and poverty. Yet their parents keep telling them to go to college.
How did things end up this way?
Not Your Grandpa’s College Degree RSIT AMET CONSETCTEUR
For older generations, there was no question that a college education would pay off. I started to wonder: What did they experience that universally causes them to push their children toward college? More importantly, how will the Millennials’ experience stack up to theirs? Are today’s higher costs somehow worth it?
Let’s take a look back.
Note: Education rates are for Americans aged 25 and up. Income figures are medians for Americans aged 25 to 32, and use 2012 dollars. Tuition, fees, and room and board costs are adjusted for inflation in 2014 dollars. $1,000.00 in 2012 was the equivalent of $1,031.11 in 2014.
1950. The end of World War II has transformed the US educational system. Prior to the war, college had been a rare luxury reserved for the upper crust. Now the GI Bill allows millions of young men to attend college for free.
This has an immediate impact. To quote the U.S. Department of Veterans Affairs, “By the time the original GI Bill ended on July 25, 1956, 7.8 million of 16 million World War II Veterans had participated in an education or training program.”
By 1950, the percentage of Americans with a bachelor’s degree has increased from 5% to 6%. At least 13% have some college education, compared to just 10% before America entered the war.
That might not sound like much, but even a high school diploma is a rarity at this time. 66% of Americans have not completed high school.
1960. 17% of Americans have gone to college and 8% have a bachelor’s degree or higher.
1965. The average high school graduate can expect to earn $31,000 per year. Those with some college education make about $33,500, while those who hold a bachelor’s degree or higher have a median income of almost $39,000 per year.
1970. For the first time, more than half of the population holds a high school diploma. 21% of the population has attended college, and 11% have bachelor’s degrees or better.
1971. Getting a bachelor’s at a public college costs just over $10,000, not counting room and board.
1979. A few years after the Vietnam War, it’s a good time to be an American. People of all education brackets are getting wealthier. A high school diploma provides even odds of earning $32,000 or more.An associate’s degree or partial college education, $36,500. A bachelor’s or better, $42,000 per year.
Things are better all around. But in the last 14 years, the income gap between high school and college graduates has increased by more than $2,000. Making room for taxes and carving a little extra space for interest, a college graduate’s higher earnings pay for their tuition after about a year and a half in the workplace. Going to college clearly offers an extreme edge over the competition.
- In 1979, Americans were making more money than ever before, even if they hadn’t attended college.
1980. More than two-thirds of Americans have a high school diploma or better. For the first time, more people have at least some college education (32%) than have not completed high school (31%). 17% hold a bachelor’s degree or better.
A four-year education at a public college is even cheaper than it was nine years ago: about $9,250 before room and board.
- A public college education cost less in 1980 than it did in 1971.
1986. Suddenly, things stop improving for everybody. High school graduates now have median incomes of $30,500, less than in 1965. Those with some college make $2,000 less per year than they had in 1979. At the same time, holding a bachelor’s or better means a median income of $44,500 a year—a $2,500 increase.
A four-year college degree suddenly seems indispensable. Holding one means making 46% more than someone with a high school diploma, and incomes for everyone who has less than a bachelor’s degree are continuing to drop.
For this generation, there’s no question: going to college is the best thing you can possibly do for your future.
- In 1986, holding a bachelor’s degree meant making nearly 50% more than someone with only a high school diploma. The value of any lesser education was slipping. Anyone could see that getting a college degree was the best option available.
1990. The cost of higher education has risen to reflect the benefits. Tuition and fees for a bachelor’s at a public college now total nearly $14,000. Americans are rushing in despite the price: while only 21% had any college education at all in 1970, now 21% hold a bachelor’s degree or better.
1995. Generation X faces lower income levels across all education brackets. Have a high school diploma? You can expect to make under $28,000 a year. An associate’s degree or similar? $32,000. Both of those are down $2,500 from 1986 and are significantly lower even than in 1965.
Even those with bachelor’s degrees have been hit. Their median income is now $43,500 per year, a grand less than in 1986.
- 1995 sees college graduates paying more and earning less, but it’s far worse to be someone without a college degree.
2000. At the turn of the millennia, more than half of the country has gone to college. 26% have graduated with bachelor’s degrees, and for the first time, there are more people with four-year degrees than without high school diplomas.
Colleges continue to charge more. A four-year college tuition costs more than twice as much as it did in 1980: over $19,000.
2013. Four years at a public college will now set you back $36,000 before room and board. Want to live on campus and get the full college experience? Then college will likely cost you about $75,000.
How have earnings changed to justify such an incredible expense?
For high school grads, things have gotten just a little bit better since 1995. Median incomes have risen back to an even $28,000.
For dropouts and those with associate’s degrees, though, things have only continued to worsen. Their median income is now $30,000 per year. That’s a lower income than one could have expected with a high school diploma in 1986.
I asked John Palladino about what it’s like to be a dropout in the current economy. He responded bluntly: “It ****ing sucks. . . . The amount of debt I’ve accrued . . . wasn’t worth it at all.”
And for those with bachelor’s degrees? Are they possibly earning enough to make up for $75,000 of debt?
It turns out that the average young person with a bachelor’s or better makes more money than ever before: $45,500 per year. That’s 62.5% more than a high school grad, and 51.7% more than someone with an associate’s degree.
Yet, for an expected income just $1,000—2.25%—higher than someone with an equal education in 1986, today’s public college students are paying 391.28% the tuition of those who entered college in 1980.
- Millennial college students are paying nearly four times as much as Baby Boomers and earning just 2.25% more after graduating.
I think we can all agree that the appropriate reaction to that is . . .