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The Economic State of America's Higher Education System
By Peter Kim, Guest Contributor on 02/13/2012 @ 03:30 PM
For years it was the dream of many Americans to send their children to college. However, it has turned into a fiscal nightmare for parents as tuition costs rise while the number of available jobs has not. Students and their families have taken huge sums of debt on the assumption that their college degree will be an instant ticket to a high-paying job, but those jobs are nowhere to be found in the current market. This spring, college graduates are entering a labor market with fewer jobs that require a college education. On top of that, a Yale School of Management study suggests college students who graduate in a recession can earn 40% less than students who graduate in better times. Higher education is turning into a bubble.
According to a 2010 report in Money magazine, the cost of college tuition has gone up 439% since 1982. Another study saw the rate of tuition growth increase four times the rate of inflation and twice as much as health care since 1978. While federal aid has offset some tuition for eligible students, their inability to find jobs has put a strain on their ability to pay back student loan payments. Some columnists blame the government for interfering with the market, arguing that federal aid encourages students to take on debt they may not be able to pay back.
As a result of the stagnant economy and continued high unemployment, college graduates are being forced to take low-paying jobs, sometimes multiple jobs, to pay bills. Graduates who took artistic disciplines have relied on freelance work to help make ends meet, but this is not enough. Others have chosen to do public service; in 2009 at the height of economic malaise, AmeriCorps reported a 42% increase in applications, of which 70% were college graduates. Still, others have decided to stay in school and go to graduate school.
Regardless, the lack of opportunities for capable graduates has forced many to return to graduate programs instead of contributing their skills to society. As a result, increased enrollment in college has resulted in the cost of higher education rising. Upon graduation, 65% of students graduate with debt, with the average student owing $24,000 in 2009. Facing unsustainable borrowing costs and a lackluster economy, graduates are finding it increasingly difficult to pay back their loans. Today, the higher education bubble is bursting at the seams as 10.8% of students at public institutions defaulting on their loans within three years of graduation (default rates at for-profit schools are double!). Today, understanding the long-term costs and benefits of attending a college will be more important than ever before. Digging deep to find grants, scholarships, and using all the resources available to you will be a great way for you to ensure a debt-free future.
For more information, watch this motion graphic created by Education News.
Created By: Education News
With a passion for education and technology, Guest Contributor Peter Kim is getting involved in hopes to help innovate the way information is presented and received. Follow Peter on Twitter.
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