Despite a dismal job market for recent college graduates, a record number of Americans are completing bachelor degrees.
According to research by the Pew Research Center, a third of Americans between 25 and 29 have college degrees and the lure of better lifetime opportunity is attracting more students to college from virtually every demographic group.
“College completion is now at record levels for men and women, blacks, whites and Hispanics and foreign-born and native-born Americans,” Pew researchers Richard Fry and Kim Parker said in a recent study.
That’s an achievement that cuts two ways: For the nation, increasing brainpower enriches society and on average leads to higher pay for the educated workforce. But as more students complete college in a stagnant job market, competition among graduates is also intense. And the financial stakes are great. Government data suggest that about half of the students who have finished college lately are either unemployed or underemployed – working in restaurants, stores or other jobs that don’t use their education. With more than $26,600 in student loans held on average by those who borrowed for college, a low-level job after college is a harsh reality.
“They’re living at home and are shocked,” said Lindsey Pollak, author of “Getting From College to Career.”
At seminars for new college graduates, she sees students who excelled at top colleges yet are frustrated by long, unsuccessful job searches. Pew researchers attribute some of the increase in college attendance and graduation to the sluggish jobs recovery. During strong economies, would-be students often go straight to jobs from high school, or leave college before graduation to work.
In 1978, Pew found Americans were widely divided over whether a college education was necessary to get ahead in life. Yet in 2009, 73 percent of American adults said college was a necessity. A Gallup Poll in 2010 found similar results – 75 percent thought college was necessary.
Yet, with the high underemployment rate among recent college graduates, there is increasing second-guessing. Some students are asking whether they are taking on too many student loans, given the prospects of employment ahead.
The questions are worthwhile but need to be refined, said Anthony Carnevale, research director for the Georgetown Center on Education and the Workforce. College degrees on average do lead to higher lifetime pay than high school degrees, and about 60 percent of jobs in the U.S. now require college degrees, he noted. But students, thinking about jobs and earnings after college, need to think beyond simply earning a bachelor’s degree.
“You have to watch what you are taking,” he said.
Majors differ dramatically, and in a competitive jobs environment, with college costs soaring, students can’t afford to be naive about outcomes.
Carnevale found that petroleum engineers average $120,000 in pay, while psychology majors make $29,000. Students who complete one year of technical training to be heating, ventilation and air conditioning technicians earn more on average than 25 percent of college graduates. Starting pay with the heating certificate might be $40,000 and climb to $60,000 or $70,000 later, Carnevale said.
About 30 percent of people with associate degrees make more than college graduates with bachelor degrees, he added. To compare pay and college degrees, see cew.georgetown.edu/whatsitworth/.
Many colleges prefer to emphasize intellectual endeavors versus career outcomes. Job opportunity is a touchy issue, Carnevale said, because colleges might want to protect funding while legislatures might want to make cuts in a time of scarce dollars. In addition, students, armed with jobs data, might go elsewhere.
But in an era of $26,600 in student loans, let the buyer beware.
Gail MarksJarvis is a personal finance columnist for the Chicago Tribune and author of “Saving for Retirement Without Living Like a Pauper or Winning the Lottery.” Readers may send her email at gmarksjarvis@tribune.com.
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