Ignorance is Bleak

One Downer of a Commencement Speech

Congratulations, high school graduates. You have now exhibited some level of state-mandated proficiency in the core subjects. We exposed you to electives in business, agriculture, theater, psych, theology, sociology and economics. You may have even made some fond memories and lifelong friendships while you were at it. Celebrate this event, smug in your understanding that we will never again expect you to formulate another trigonometric equation, ask you to tell us the capital of Bolivia*, or present a book report complete with dioramas.

Too bad you don’t know squat about the first thing you’ll face upon your leaving the roost: financial decision making. In spite of this, 85% of y’all will go to college, where every move you make will impact your financial health, for better or for worse, for years to come. It’s a make-or-break ordeal that requires navigation through a constant barrage of heady choices with large price tags. This is a recipe for failure, but go, knowing we all wish you well in your new ventures.

As you journey forth from this hallowed gym…

*Either Sucre or La Paz, depending on whom you ask. You’re welcome.

The Cost of Normalcy
Once upon a time, in a land far, far away, a high school graduate could wander onto the college campus of her choice and sign whatever form the administration put before her, assured that after four years of effort she could walk away with the golden ticket to a bright future. Once upon a time.

Today, on the other hand, increasing numbers of thinkers and pundits on the scene question college’s overall value to the population at large. Their pieces bear such headlines as “Overinvesting in Higher Ed,” “…the Great College Education Scam,” and “Is a College Degree Worthless?”

Crazy talk or grounded conclusions? Consider the following food for thought:

  • State school tuitions now average between $9803 per year for residents and $24015 per year for out-of-state students. A middle-of-the-road private school will bill you nearly $40,000 annually. These figures do not include dorm fees and meal plans. (chart)
  • The wages graduates earn have not kept up with these rises in tuition. Annual median household income has actually fallen by $400 over the past 20 years when adjusted for inflation, while in-state public school tuition has increased 130 percent over that same period. College continues to require a greater and greater percentage of household income as a result (chart).
  • Only 39.4 percent of current students graduate in four years… and only 60 percent graduate in six years.
  • Despite steady tuition hikes, starting salary offers and overall incomes of graduates have slipped in recent years.
  • The unemployment rate for college graduates under the age of 25 is more than 7 percent, and the underemployment rate closer to 15 percent. (chart)
  • Of the 30 occupations expected to grow the fastest in the near term, only half require a bachelor’s degree.
  • While average college graduates make more than their counterparts, after factoring in a delayed career and the cost of attendance, it now takes 14 years of work to achieve net pay parity with those who only graduated from high school. In simpler terms, someone who graduated at 22 will typically be about 36 years old before he or she has pocketed more money than the friend who started work right out of high school.
  • About 70% of all college students graduate with loans. The amount of these loans averages $33,000, a number that has risen each year at a steady clip, at a rate far exceeding wage growth. (source)
  • Student loan debt now totals well over $1.38 trillion… and counting.
  • About 18% percent of all student loans are in default. Multiples more are “on hold” in relief status due to proven financial hardship as defined in the loan documents. Students who began repayment eight or nine years ago actually default at a higher rate than the general average. Apparently, most students’ ability to pay loans diminishes over time.
  • As of recent years, about 44% of college graduates work in a job that does not require a degree.  Nearly 73% percent of all college graduates do not work in the field in which they majored.
  • Perhaps scariest of all, according to a recent survey, 85 percent of college seniors plan to move back home with their parents after graduation. That survey’s results have since been called into question, but the fact remains that over 40% of all graduates under age 34 do, in fact, still live with parents.

In summary, average college students face largely negative consequences in return for their efforts. On the whole, they regularly fail to graduate on time, pay hefty (and growing) bills, face a job market that increasingly marginalizes their diplomas, and quite likely can expect to sleep in their old bedrooms again.

Who Will Fix This Mess? 

This problem will not go away on its own, at least from the looks of it, by the time anyone old enough to read this leaves high school. Colleges themselves lack motivation to keep costs reasonable. If this is a problem, it’s not their problem. After all, as enrollment rates continue to rise in spite of the tuition hikes, why bother?

Rather than finding ways to lower expenses, the government responds to higher tuitions by increasing the scope and level of grant, loan and subsidy programs. This then sets in motion a cycle which makes the problem worse.

As government programs like Sallie Mae incentivize students with “easy” cash, this in turn provides colleges the ability to raise rates to levels a more limited market couldn’t sustain. Colleges thus predictably raise their rates, and the government in turn responds with higher loan limits…

How discouraging…if you choose to be normal. So look here, weirdo. While the general state of affairs looks bleak for the population at large, you do not have to accept the situation at face value. Armed with information and a few key principles, any student with an eighth grade understanding of math can devise a personalized and proactive course of action designed to assure success from the outset.

What do I mean by “success”?

I mean paying for and graduating from college without accumulating so much debt it takes you years to unbury yourself. I mean beginning your adult life with the tools you need to live independently, pay your bills and meet your own needs – long into the future.

I mean achieving college affordability. Read on, my friend, to learn more.