“More than ever a college degree is the surest path to a stable middle class life,” Obama stated.
I have a few problems with this. First, when did the American dream change from “becoming a self-made millionaire” to having a “stable middle class life”? If he’s trying to sell college to 18 year old kids, dangling a “stable middle class life” in front of their nose isn’t much of a carrot.
Second, putting more kids in college doesn’t make sense. Either he’s not reading the numbers provided by the Bureau of Labor Statistics, or he’s just flat out ignoring them.
Here comes the research!
Job Growth by Education Level
Using data from the US Bureau of Labor Statistics, here is a table showing projected job growth between 2010 and 2020 by education level.
So we expect 20,460,800 new jobs in the next 10 years. Fantastic! And how many of those jobs require someone to finish a bachelor’s degree or higher? The answer is exactly 4,964,900, or just 24.3%. Hmmmmmm.
If you include the Associate’s Degree and the “some college” jobs (which are really weird to me. It’s hard to imagine an employer who is not willing to hire a high school graduate, but is willing to hire a college dropout), then you’re up to 7,648,000 jobs, or 37.4%. Still not very high.
In 2012, 2.1 million high school graduates enrolled in college. Again, this is all data provided by our benevolent government. So if we have 2.1 million kids starting college each year from 2010 to 2020, we are going to have 21 million people ranging anywhere from college dropout to PhD, and only 7,648,000 new jobs. Not good.
Also keep in mind that 2.1 million per year is only high school graduates. There’s actually going to be quite a bit more college educated people when you include the non-traditional students.
So we are expecting under 8 million new jobs for college educated people, and a low estimate of 20 million newly minted college graduates and attendees. It looks like we are set up to have a preponderance of over-educated individuals.
Except we have that already. How many more reports do we need telling us that Twice as Many College Grads in Minimum Wage Jobs as 5 Years Ago, 53% of Recent College Grads are Jobless or Underemployed, and the Job Picture Looks Bleak for 2013 College Grads.
There Just Aren’t Enough Jobs for College Grads
If we think back to that table of jobs by education level in 2020, we expect 12,782,800 new jobs in the next 10 years for people with a high school diploma or less education. That number jumps to 14,025,900 jobs when you include those who attended college but never receive an Associate’s Degree or higher.
Why borrow tens of thousands of dollars if you will just end up graduating from school and getting a job that doesn’t require a degree?
Even when you account for all the baby boomers retiring (although many aren’t in a financial position to retire even if they want to), there just aren’t enough jobs for all the currently unemployed college grads and all the new ones we’ll be churning out in the future.
Maybe Barack Obama hasn’t seen these numbers. Or maybe he’s not very good at math. Or, maybe he has seen these numbers, he is good at math, AND he still wants to get as many people into college as possible.
But why would anybody want to do that?
College (And Student Loans) are Big Business
Have you been on a college campus recently? If so, you’ve probably seen a construction site. It doesn’t matter which college you go to; pretty much all of them are getting brand spankin’ new buildings. Why? Because enrollment keeps going up. People still believe you need a degree to get a good job, which is not surprising when people like the president are screaming it from the mountaintops.
If people start paying attention to the numbers and look at all the unemployed college grads, they might decide to skip college. If enough people do that, colleges start losing money. That means no more new construction. That means college professors getting laid off. That means bad news for the education business.
And then there’s student loans.
Why would the government want people taking out student loans, even if there’s a good chance they are going to default on those loans? Because even in default, student loans are insanely profitable for the US Government.
The government loans the money, they make money on the interest.
They also act as the collections agency, so loans in default are charged fees that make even more profit for the government.
Finally, the government created the laws that make student loans immune from bankruptcy, so they will literally take your tax return, garnish your wages, or even take it out of your social security check until they get their money.
The only way to get out of student loan debt is to pay them off, or die. (see the infograph at below)
College is for Some People; Not for Everyone
In general, we have too many people in college. We have too many college graduates. We have too many kids who will enter college over the next few years. Many of these people will become underemployed or unemployed, and many of those same people will be paying off their student loans for decades.
With that being said, college is EXACTLY the right choice for some people. We need college educated individuals to become the next generation of doctors, lawyers, engineers, nurses, teachers, and more.
If you are a young person and you decide to go to college, do it because you have enough money and/or scholarships to avoid student loans, or if you know what you want to be and that job requires a degree. Don’t do it because Barack Obama, your parents, or anyone else tells you that “you should”.
If “you should” is your main reason for going to college, then actually you shouldn’t.
Infographic by College Scholarships.org
Kevin McKee is an entrepreneur, IT guru, and personal finance leader. In addition to his writing, Kevin is the head of IT at Buildingstars, Co-Founder of Padmission, and organizer of Laravel STL. He is also the creator of www.contributetoopensource.com. When he’s not working, Kevin enjoys podcasting about movies and spending time with his wife and four children.
I’m just gonna go on record here and say that I think this is one of my best posts. I would love to get some feedback from readers on this one.
Back in the late 70’s, when I was in college, I noticed something fairly important about the economics of having a college degree.
Austin, Texas had seriously highly-educated bartenders, topless dancers, and restaurant wait staff throughout the city. Most of the folks in this situation (at least the ones with whom I personally conversed) had graduated with degrees in philosophy, art, music, political science, history, journalism, or other “soft science” degrees.
I did not encounter any such folks with EE, Physics, Chemistry, Accounting, or other “hard science” or practical degree. That definitely influenced my choice of major (when I was finally forced to choose one, which is another story).
I decided during my senior year to get a student loan to supplement my GI Bill (which was a lot better then than it is now), so that I could quit my part-time job and just concentrate on getting my GPA boosted. I easily paid that off over the next 7 years ($2000 loan at 2% interest, so there was no incentive to pay it off early), since I was highly employable with a relatively rare (at that time) degree in Computer Science with minors in EE, Physics, and Chemistry.
As for that last bit, I had some initial feedback (see my vanity blog entry at http://howardleeharkness.com/2013/05/when-it-rains-it-pours/ on that topic) that led me to believe I would have to file for unemployment (based on my Navy service). Or worse, go back into the Navy… But things turns out much better than that.
It’s too bad you didn’t get those offers coming in sooner so you could compare and maybe even get a better salary.
With that being said, it sounds like you were happy with what you got, and seems that you’ve turned out okay. 🙂
BTW, I believe the absolute best strategy for most folks who want a regular college degree is to spend your first two years in your local community college. Living with mommy and daddy if possible, although I realize that there is an inherent biological urge to cut the family cord as soon as you can legally do so (been there, done that — joined the Navy so that I would not have to live with my parents; not the brightest thing I ever did, but it turned out ok).
As for the online learning, that’s great. I have made some good use of that myself. But it requires either internal discipline (possessed by roughly 2% of the population, which gives me an enormous advantage over the 98%) or some externally-applied pressure.
Wow.. great post. You really tied somethings together for me.
I am usually very aware of the weight of demographics on societal problems. But, It never really occurred to me that one of the biggest reasons so many of our college grads are un-or-under-employed is that we have simply trained too many for the market.
I knew boomers aren’t retiring and opening up space like earlier generations. I knew we are in a frustratingly stagnant jobless recovery. I knew the colleges were over-crowded and that the millennials are the largest generation since AND EXCEDE the boomers. And I am very much a believer in not-everyone-is-college-material. (And I don’t mean that as the put-down everyone seems to think it implies. We need more entrepreneurs. And there is nothing wrong-with or demeaning about being a janitor or a plumber.)
When the facts are placed like breadcrumbs I can see the story. Like many epiphanies, now, I feel dumb for not seeing it before.
Good job and thanks.
I’m glad I could piece this together for you Frank.
To be honest, I don’t think many people have seen these numbers and know just how much worse this is getting.
You know what the easiest solution to the unemployment problem is? Pay more to the people who already have jobs. If more families could survive on one income, we wouldn’t need as many jobs. Wages haven’t kept pace with work productivity over the last half century.
I think we all want higher pay, but I’m not sure how to make that happen aside from people, on an individual basis, asking for a raise or marketing themselves and their skills to other companies, or starting their own business.
I certainly don’t believe raising the minimum wage is going to help anything. Doing that prices low wage workers out of the market, sends more jobs overseas and prompts a rise in automation that eliminates low wage jobs.
This doesn’t convince me that people who would likely succeed in college shouldn’t go to college. While these statistics are predicting bigger nominal job growth for jobs that require “high school or less” (12.8m jobs) versus “some college or more” (7.6m jobs), the growth rate is higher for “some college or more” (17.42% growth vs. 12.92%). Menial jobs have more security — we’ll always need janitors, and they can’t be outsourced.
But having “some college” on your resume still makes you more attractive to an employer, even for jobs that don’t require a college degree, than “no college” on your resume. There are other variables, and maybe the four years of experience in a job that doesn’t require a degree will offset the four years of college education, but that depends on the job and the education.
College graduates earn more than people with no more than a high school diploma, and that’s a trend that’s sure to increase in differentiation, just as the wealth divide grows between the wealthy and the middle class. Even people with just some college experience earn significantly more than people with no education beyond high school. Why is this fact forgotten?
You write that the government is encouraging low-income to settle for the middle-class income that a traditional career can provide rather than encouraging the entrepreneurial spirit, or the modern American Dream (the original American Dream was about living on the frontier, “life, liberty, and the pursuit of happiness,” and land ownership — all still government propaganda, from a government that was significantly wealthier and more educated than the general populace). The reality of entrepreneurship is that it is a lot riskier than settling in a middle-class career. And the idea that someone who is likely to fail in college is more likely to succeed as an entrepreneur is baseless. Bill Gates didn’t fail out of college — had he stayed, he probably would have graduated magna cum laude.
Now, the economy could use more entrepreneurs and fewer college graduates among those who aren’t suited towards higher education. That I agree with. And those who are good at being entrepreneurs at an early age should probably skip college and get down to building their start-up, acquiring funding, etc. Or just starting a plumbing business, or carrying on the family business. But for the rest of the world who will be competing with educated people for jobs that do and don’t “require” college degrees, you better be the most prepared you can be to compete.
I think doctors have the right idea; more and more, the doctors I see have their degrees from other developed countries, whose programs are (perhaps? some are?) just as excellent as American schools but cost much less.
Student debt is a big money-maker for the government. I agree. And the government wants as many people to go to college — and borrow money — as possible.
Is it a problem that many people are over-educated for their current jobs? Yes. Does it mean education is wasted money? Maybe some of it. But those same over-educated people may not have gotten even those menial jobs if they weren’t over-educated — at least some of them. If you want to wait tables, all that matters is experience, but waiting tables doesn’t even make minimum wage without including tips. For the most part, employers still prefer people with some college experience over people without, all other things being equal, whether they’re right to do so or not. And even budding entrepreneurs getting their businesses off the ground before they’re earning money need real jobs to pay the bills when their parents kick them out of the house.
I think we agree on most points. As I said before, if someone knows they want to be a doctor or an engineer, then it certainly makes sense to go to college and even take out a substantial amount of loans if necessary.
What I hate to see is people ending up with $30k or $50k or $100k of student loan debt and, for whatever reason, the only job they can find is one that requires no more than a high school diploma. This situation is good for the college that made money off the kid, the government who is making money off the loans, and is bad for everyone else (including the broader economy)
It’s certainly true that employers are willing to pay for a degree, even if the degree is irrelevant to the job, but I don’t think the employer is actually paying for the degree. The smartest students typically go to college because they are supposed to, so employers know that if they want someone smart they should get someone with a degree.
If the smart kids start realizing that a degree is too expensive and not worth the loans, then all of a sudden employers can’t just assume someone without a degree is less bright than someone with a degree; he just assumes the person had less wealthy parents to fund a college education. If we reach this point, a degree will actually be detrimental because employers will prefer the people without degrees because they are just as bright and demand a lower salary (because they don’t have loans to pay for).
Anyway, I appreciate your feedback and I do think we mostly agree on the topic. Thanks for chiming in.
You know, I agree with a lot of this — but at the same time I think it’s important that we expand access to college to people who you might think “shouldn’t” be there. I was a bit of a slow starter. I went to college and got an arts degree. I’m now a 30-year old making six figures thanks to that college degree. Sure, I’m doing something unrelated to my actual degree title, but having the degree enabled me to get any of the jobs I’ve had so far. If I wasn’t born into an upper middle class household, I never would have had this opportunity. I wasn’t perfect enough in school to get scholarships. Maybe I would have worked harder if I knew this was the only way to college, but I’m not sure I would have had access to the same level of education.
What I think is important is that college should not be thought of as something separate from one’s career. It’s possible to major in something like the arts (which I find highly valuable) while also gaining actual relevant work experience. College can sometimes be too theoretical and not practical enough. This is when we run into problems because kids graduate with heaping amounts of debt and no ability to land a job. It took me about a year to get my first gig out of college thanks to having pursued journalism as a side interest. In any case, I am very lucky I got to go to college. I think people who want to go should have the opportunity (it should not be so crazy expensive) but we also should explain to people that a college degree is not a ticket to a middle class life and in fact there are many technical jobs where you can make more money without a college degree than a job you can get with one.
I agree with a lot of what you said, but there is a reason college is so expensive: the government gives out free money (via loans) to anyone who wants it. When you have easy money in a sector, prices go up (see home prices in the 1990s and 2000s when Clinton and Bush both passed laws to ease lending standards).
I think it’s irresponsible to tell a child from a low income family to go to college even if it means taking out tens of thousands in student loans. If that kid can’t get a good paying job (which is a likely scenario based on the numbers I presented) then his family is still poor, and now he’s not only poor but also on the hook for these student loans that will follow him all the way until he pays them off or starts collecting social security.
I would love if we promoted technical schools more often. It’s too bad we don’t.
Really interesting read, thanks Kevin. I agree that students shouldn’t go to college as a ‘I don’t know what I want to do with my life so I’m gonna go to college’. It just ends up in plenty of debt, and even more indecision at the end of it! And as you said there’s just not enough jobs for college grads. Obviously there are jobs where you need to and should go to college for, or if you’ve always wanted to go then go. It’ll be interesting to see whether there is a rise in college applications!
I’m sure applications will continue to rise in the next few years, but hopefully as a society we start realizing sending all these kids to college is doing a lot of harm to a lot of them. My hope is that in a few years we see enrollment go down so kids aren’t wasting money.
Now I understand it completely why American students have too much debt early in their lives. I hope something would change, so that every college graduate can be protected and have a better future.
I agree that going to college just for the sake of going to college doesn’t make sense. Life is all about knowing what you want and going for it, which is difficult when you’re a teenager. It makes more sense to work or travel first, then go to college if necessary once you’ve figured things out.
Things would be a lot better if the student loan system in the U.S. were better. In Australia, for example, you don’t have to start making loan payments until you reach a certain minimum salary (something like $40,000+ if I’m not mistaken).
Amen! I agree this is one of your best posts (if not the best). I’ve been saying this for the longest time – not everyone needs to go to college! Not only is it doing an injustice to those who unnecessarily go by leaving them burdened with debt and likely underemployed, it is also an injustice to those who actually need to go for their profession. It is undervaluing a bachelor’s degree and now making that the norm – it is quickly becoming the case that bachelor’s degree is expected and master’s degree is now the real higher education. It is education inflation!
We need to get away from the mantra in this country that you NEED TO or SHOULD go to college to be a successful person. That is not the path, nor should it be, for every person. It is not shameful to not go to college.
Great article. Being 46 and having a MBA, I have a few thoughts from my age group. First, college traditinallly was always a good choice when I graduated from high school. This was based on a few factors. First, a 4 year degree was a general requirement for good most jobs in business. Since most jobs were in big companies, this was something you needed just to get in the door. In most positions, you never actually used the actual classwork(at least that has been my experience).
College was a good place for networking, personal growth, learning responsibility,etc. Its a worthwhile experience. I have many friends even now from that time – it was great fun.
However, the past is not always a good indicator of the future. Employers today want specific skills, not just checking the box for a degree. There are so many online and subpar programs now that its watered down the perceived value of the 4 year degree anyway. Also, the new jobs may be with smaller startups, self-employment, etc – and these types of jobs will be based on specific skills.
The traditional degree, containing years of American history, English, literature, sports, electives, etc seems pretty outdated.
So, if my kids decide to attend college it would be fine, but if they can present an alternative that is a better path to career success that would be ok too.
I do agree that there are times when college is not for someone but still I strongly believe everyone deserves the opportunity. I guess I would save proper financial planning is essential if you want to pursue college. Parents should start a saving plan or a college fund if going to college matters to them.
I agree with almost all of what you say. I had a client who owned a plumbing business and spent over $2500 advertising trying to hire someone, he had more business than he knew what to do with couldn’t hire help and was getting close to retirement age. While I do think college can do a lot for you, it teaches you how to think among other skills I think career wise the trades are being ignored. There is also a complete lack of entrepreneurial skills being taught to students.