Indeed that was the message delivered in a recent New York Times op ed essay. Jonathan Cowan and Jim Kessler, executives of Third Way, a so-called "centrist" policy organization, argued that the problem of stalled wages and growing income equality in the U.S. is being solved because more people are going to college.
But reams of studies and reports cast doubt on this Pollyannaish notion. Earlier this month, the National Center for Education Statistics (NCES) released a report indicating that the economic
Just go to college and
everything will work out fine.
- The percentage of college graduates who borrowed for their undergraduate education went up from 49 percent among people who graduated in 1992-1993 to 66 percent for people who graduated in 2007-2008.
- Among college graduates, the average amount borrowed went up from $15,000 for the 1992-1993 cohort to $24,700 for people who graduated in 2007-2008
- Among people who graduated from for-profit institutions in 2007-2008, 90 percent had taken out student loans.
- In 2001, about two-thirds of college graduates were making payments on their loans one year after graduating. In 2009, that figure had dropped to 60 percent. The other 40 percent had either obtained a forbearance or were in default.
- Among college graduates who were employed, average annual salaries went down from $39,300 in 2001 to $34,400 in 2009 (measured in 2009 dollars).
Unfortunately, the data analyzed in Ms. Woo's NCES report are old. She was reporting on the financial situation of people who graduated five years ago. But there is no indication that the financial outlook for college graduates has gotten better in the last five years. On the contrary, the student-loan default rate has gone up substantially in that time period.
Does this trend have a happy ending? I don't think so. I don't have a sure-fire formula for getting college costs under control or for reducing the amount of money college students need to borrow. Nevertheless, we could brighten this dreary picture if we shut down the for-profit colleges and encouraged low-income students to attend low-cost community colleges and state institutions. And we could ease the burden on overstressed student-loan debtors if we allowed them reasonable access to the bankruptcy courts.
But almost no one is talking about serious reforms in higher education. Instead, we just keep telling ourselves that a college degree is a good investment--no matter what it costs.
Jonathan Cowan & Jim Kessler. "The Middle Class Gets Wise." New York Times, October 20, 2013. Sunday Review Section, p. 4.
Jennie H. Woo. Degrees of Debt: Student Borrowing and Loan Repayment of Bachelor's Degree Recipients 1 Year After Graduating: 1994, 2001, and 2009. Washington, DC: National Center for Education Statistics, October 2013. Accessible at: http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2014011