Companies, politicians and schools in the United States have begun placing importance on higher education, something President Barack Obama has emphasized throughout his term.
“In a global economy, putting a college education within reach for every American has never been more important,” Obama said in a White House news release.
Unemployment rates decrease and median salaries increase with each level of educational attainment, and the undergraduate enrollment rate increased by 39 percent from 1999 to 2009, according to the National Center for Education Statistics.
Colleges’ increasing enrollment numbers, allowing more students to attend college, are partly due to what economics professor Michael Podgursky referred to as large economies of scale in the production of higher education.
“Once you build a campus and bring in a bunch of faculty and build a lot of dorms and classrooms, the marginal costs are very low of adding additional students,” Podgursky said. “That’s what you have at the leading research universities…at minimum, we should be 40,000 (students) and not 20,000.”
The number of students going back to school has increased in recent years due to the economic downturn, Office for Financial Success director Ryan Law said.
“A lot of people have lost their jobs, and so they think, well, I’m going to go back to school, because if I go back to school, (I’ll have) better job opportunities,” Law said. “And in some cases, that is true.”
But others wonder if too many students are going to college. An article in GOOD Magazine cites the example of South Korea, where 82 percent of high school graduates attend college. President Lee Myung-bak is beginning to discourage students to pursue higher education because many degree-holders are unable to find decent jobs.
Attending college also puts a financial strain on students. Student loan debts now total more than $1 trillion, with 2010 graduates having an average of $25,000 in loans, according to the Consumer Financial Protection Bureau.
When deciding whether or not to pursue higher education, Law said potential income, job qualifications and the opportunity cost of time should also be considered.
“Some people get the idea that if they go back to school and get a master’s degree, they are automatically going to make more money, but that’s not always true,” he said. “Getting an advanced degree has got to serve your goals. If you don’t really need it for your field, then there’s not always a great reason to get one.”
**ECONOMIC COSTS AND BENEFITS**
Decreases in state revenues in the past several years have led to government funding cuts for higher education, but the cost of higher education isn’t decreasing with the cuts, Law said.
“Cuts in funding are naturally going to turn onto students,” Law said. “If the state government cuts funding by 10 percent, then tuition’s going to have to go up to make up for that.”
Increases in tuition have led to increases in both federal and private student loans, Law also said. Having student loans are not necessarily bad in moderation, but they can become a problem when the amount of debt gets out of hand.
“That’s a scary situation, when a senior comes in here and they’ve got $75,000 in student loans,” he said. “They’ve got first payments going to be due in six months, and they’ve got no job lined up. This is not a situation people want to be in.”
To aid these debts, Obama announced his “Pay As You Earn” student loan initiative Oct. 25, 2011. The proposal, which will begin in 2012, will decrease student loan payments from 15 percent to 10 percent of discretionary income and forgive all debts of current college student after 20 years, according to the news release.
Though the monetary cost of attending college is high initially, studies show earning a college degree is worth the investment in the long run. Investing in a four-year college degree has a 15.2 percent return investment per year, and by age 50, a college graduate earns an average of $46,500 more per year than a high school graduate, according to a study conducted by Michael Greenstone and Adam Looney of The Hamilton Project.
This widening distribution of income is related to the cognitive skills and one’s human capital, Podgursky said.
“The rate of return to education has increased over time, and that means inequalities, like the top of the cognitive elite do better than less-skilled individuals,” Podgursky said. “And that’s a fact.”
**PERSONAL COSTS AND BENEFITS**
Record student loan debt has taken a toll on other aspects of students’ lives.
A Generation Opportunity poll found 77 percent of millennials were postponing steps of their lives, such as moving out of their parents’ houses, because they don’t have the finances to adequately support themselves, according to an article in The Washington Post.
Though a study conducted by IHS Global Insight does not confirm students are postponing marriage because of increased college loans, it shows a correlation between increases in average student loan debts and average age of first marriages, according to Bloomberg Businessweek.
“They’re uncertain about their own future and their own career for the future,” Law said. “They’re uncertain about the housing market.”
For the marginal student, costs and benefits of receiving higher education are the same, and those with a benefit-cost ratio of less than one will not benefit from a four-year college education, Podgursky said. But if one’s benefit-cost ratio is more than one, earning a college degree will increase personal welfare, which includes happiness.
“You appreciate art, you learn about the world, you learn about travel, you learn languages, you learn about humanity,” Podgursky said. “You become a more educated person in humanities, arts and so on. Eating a meal now makes you happier because you understand what’s in the meal.”
Democratic societies rely on decisions made by educated individuals, Podgursky said.
“You have to understand evidence in a jury when you’re called for jury duty,” he said. “You vote, and so on. You have to make intelligent decisions as a citizen, so that’s important.”
**LIFE AFTER COLLEGE**
Partaking in higher education is important to gain a general set of literacy and communication skills for entering the workforce, Podgursky said.
“(You learn) a core set of skills that then, when you go on the market, in a sense, it’s partly a signal to employers: You’re trainable, you can learn,” he said.
Most employers want and do expect a bachelor’s degree, but realistically, candidates will often exceed the position’s minimum requirements, said Amanda Nell, Online Career Services and Student Employment coordinator.
“I have a colleague right now hiring for a position in her office,” Nell said. “It said bachelor’s required, master’s preferred. Well, they’re interviewing all master’s candidates because that’s who’s applied.”
But being overqualified for a position does not always result in getting the job. Nicholas Rastenis graduated from Yale University with a master’s degree in fine arts in 2008 and has had difficulty finding jobs since graduating, according to an article in The Washington Times. He is currently working in a drugstore’s photography lab for less than $10 an hour, a job for which he was hired after leaving his master’s degree off his resume.
Economists primarily measure underemployment by looking at the number of part-time workers who would like to work full-time, which increases during recessions and decreases during recoveries, Podgursky said. Cases like Rastenis’, where workers take jobs beneath their training, are more difficult to measure.
Job openings in general are scarce. Economic uncertainty, partly stemming from decisions made by Congress and the government administration, has made firms reluctant to hire, affecting college graduates’ fates, Podgursky said. These decisions include the passing of the Dodd Frank Act, Obamacare and tax cuts made under the Bush administration, in Podgursky’s opinion.
“As it now stands, all of the Bush-era tax cuts are set to expire at the end of this year, Dec. 31, and they all would jump,” Podgursky said. “Now, any businessman making plans is saying, you don’t know what things are going to be like next year. So there’s so much uncertainty that’s been created because of these massive regulatory intrusions that’s made firms reluctant to hire, and unquestionably, this is one of the worst recoveries we’ve ever had from a recession.”
Offering internships to potential employees has become more common in certain industries so they do not have to lay off employees, Nell said.
“We’re finding more and more companies will use either staffing agencies, or they’ll hire people on a temporary basis with the idea of hopefully transitioning them on, but they’re not having to later on fire or put someone in layoff status,” Nell said. “It’s a smart thing that they’re doing.”
**THE SILVER LINING**
Education might be expensive, but alternate ways to pay back loans can ease students’ transitions into their next steps in life.
Though lenders might not advertise different loan payment plans, many offer extended, graduated and income-based payment plans, Law said.
“As you go into these additional years, you’re going to pay more interest, ultimately, but it’s a good tool to use, especially right off the bat,” Law said. “Because sometimes, it takes a couple of years to get yourself established in a job, and maybe after a couple of years, you’re going to get a promotion and hopefully a raise after that time.”
Many recruiters view MU as a destination university due to its intensive research, good regional and national reputation, student talent and large alumni base, Nell said. Graduating students and alumni alike are welcome to utilize MU’s employment website HireMizzouTigers.
“We have alumni from, kid you not, 1970 who have signed up,” Nell said. “Yes, experienced people in the workforce utilize that resource.”
HireMizzou Tigers had its fewest job postings two years ago, and job opportunities have been looking better since then, Nell said. The number of on-campus interviews has remained constant in the past few years, but the number of Skype and online interviews has increased, and career fair attendance increased this year.
The MU Career Center encourages students to network both online and in person so they don’t have to entirely rely on job postings, Nell also said.
“We really try and preach about the importance of finding out about those opportunities and hitting the pavement, if you will, or the keyboard, as it is, to email and talk to people, do informational interviews, learn about organizations and use the power of social media to create job opportunities for yourself,” she said.
Students should be optimistic about finding employment even if they are initially unsuccessful, Podgursky said.
“You’re going to do fine in the long run,” he said. “Just go get a job, work hard, be a good, reliable employee and then just keep looking. Most of the job search occurs not while you’re unemployed – it’s while you’re employed at one job and are looking for the next job. That’s an important thing to keep in mind.”