No Recession for College Graduates
By Jim Wang, Bargaineering.com
I’ve been fortunate that most of my local friends have not been affected by the economic downturn. I’m especially fortunate because I have not been affected by the economic downturn. While the companies we work at have downsized, for the most part, we’ve all escaped unscathed in what’s clearly the worse economic decline in our lifetime. It’s difficult to explain why we were so fortunate, many of my friends work in defense which is practically hallowed ground in times of war, but I saw a chart last week that might explain it:
The unemployment rate for people with a bachelor’s degree or high is only 4.5% (the vast majority, if not all of them, of my local friends have at least a bachelor’s degree), which is around where economists believe structural unemployment should be.
The specific numbers for unemployment rate (based on July 2010 BLS data) are:
• Less than a high school diploma: 13.8%
I’ve argued in favor of college and against going to college, but I’ve always stuck to one point: going to college is a very safe decision if you can afford it. You aren’t guaranteed riches but you’re almost guaranteed not to become insolvent, despite the rising costs of a college education.
On the flip side, look at the employment-population ratio:
• Less than a high school diploma: 40.8%
It’s dangerous to read too much into these figures because education is just one factor among many as to why someone could be unemployed. However, I think it’s fair to assume that, all other characteristics being equal, the more education the better.
Putting College Costs Into Perspective
If you have any high school kids, you probably have paid particular attention to news articles that talk about the rapidly increasing price of college these past few years. At many private schools, the price of a single year of college is over $30,000, which puts a four year degree at around $120,000 per child. Those are scary, scary numbers for anyone who ever plans on having kids who will want to go to college but the College Board, a not-for-profit membership association that tries to connect students with colleges, puts these into perspective – which will probably take a heavy weight off some people’s backs and something I thought worth writing about because the big boys won’t (it’s not as exciting to dispel myths as it is to perpetuate them).
College Is Too Expensive – The average lifetime earn of a college graduate is a million bucks more than someone who is just a high school grad and the statistic doesn’t take into account whether you went to a public or a private school. The average yearly cost of a 4-year public school is only $5,836. Six grand is a lot more palatable than thirty and within the reach of more folks than thirty.
Not Enough Financial Aid Around – Over $134 billion was handed out in financial aid and while the amount in grants (free money) may have decreased, but its been replaced with low-interest loans, college grants, and other grants. Personally, I received about $10k a year in grants from the school and an extra $8k in Stafford Loans.
If I Apply for a Loan, I Have to Take It – This is actually a misconception a lot of people have about any loan, just because you apply for a loan doesn’t mean you have to accept it! Most people who apply for a loan will accept it but sometimes you just want to see what sort of rate you’ll get and that rate plays an important role in your decision. So if you get a rate that’s not favorable, you can always walk away. If I wanted to lend you $10, you don’t have to take it. (But if you had to take it, then they could just say you have a loan for 20398420398423% interest…)
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