(MyBudget360) We don’t send our young into the wilderness for a vision quest as a rite of passage. There are few things in modern society that signify a transition into adulthood. Going to college is one of them. And in debt addicted America, it is no surprise that for many, college debt is the first debt they will take on.
Getting a college education is supposed to give someone a well rounded view of the world and a potential skill set. Some argue that college is not about vocational training. That to some degree is true but when students are going into $50,000 or $100,000 of student debt, then what is this modern day life quest really teaching and why is the price tag so incredibly high?
As college graduation season comes into full bloom, many are left with the prospect of having no job lined up. It is also startling to see how many recent college graduates are working in jobs that really don’t require a college degree (so clearly the vocational piece doesn’t matter here).
The chronically underemployed college graduate
There are over 5,300 colleges and universities across this country from Harvard to beauty schools. The market is enormous and students now carry $1.3 trillion in debt, the biggest debt sector only behind mortgage debt.
Many recent college graduates are severely underemployed and this is for the lucky group that actually finds work:
“(NY Fed) The underemployment rate is defined as the share of graduates working in jobs that typically do not require a college degree. A job is classified as a college job if 50 percent or more of the people working in that job indicate that at least a bachelor’s degree is necessary; otherwise, the job is classified as a non-college job. Rates are calculated as a twelve-month moving average. College graduates are those aged 22 to 65 with a bachelor’s degree or higher; recent college graduates are those aged 22 to 27 with a bachelor’s degree or higher. All figures exclude those currently enrolled in school. Shaded areas indicate periods designated recessions by the National Bureau of Economic Research.”
Nearly 50 percent of recent college graduates are working in jobs where a college education isn’t typically required. So that life quest was indeed an expensive one, more so than taking drugs and roaming around in the forest. And the bills are coming due since student loans normally start being sent to graduates six months after graduation.
In Michigan a strip club has angered residents by posting this:
When strip clubs realize that college degrees are ubiquitous and many will struggle to find jobs, we really have to question the price structure of college. And I would argue that there needs to be some vocational aspect of a college education when students are paying so much to attend. This ties into many larger issues like many younger Americans being unable to afford home purchases because they carry on so much college debt. 86% of Millennials through a Housing Pulse survey said that too much debt was an obstacle to owning a home. It is also the case that Millennials that did buy in many cases had help from family.
The underemployment rate is troubling because as the cost of a college education soars beyond the typical inflation rate, the yield in the marketplace isn’t very observable. College tuition is up 145% since 2000:
It should be obvious to anyone that this structure will not last.