Tag Archives: student loans

What Is the Value of Higher Education?

In the first half of June, online material discussing the value of higher education has been dramatically contradictory.This post will discuss some reasons behind this and some basic suggestions on how to understand the articles. I’ll take them in chronological order.

Article 1

On June 3, an opinion piece in Inside Higher Ed called “Higher Education’s Big Lie” by Ann Larson, a writing fellow at Hunter College with a Ph.D. in English, argues that a) its debatable whether college degrees will be required by the majority of future jobs; b) many students who begin a college degree will not complete it, while many still do not have access to college; c) the investment in a college education may not pay off.

Larson exemplifies the third point with the story of a student who wracked up $60,000 in student loans and whose degree—from a private nonprofit college—did not give her access to the type of job that would allow her to repay the loan. She claims that academia is silent about the issue of unpayable college debt that many students face, although, she says, another writer for the same publication in which her article appears has documented it.

Her goal is to have everyone rethink the idea that higher education can “facilitate social mobility,” and sites a study from 2008 to support this, and in her conclusion, she claims, again, that “these are all factors unacknowledged in the push to convince people” to invest in higher education.

Article 2

On June 14, a brief note by Jacques Steinberg, a reporter who focuses on education, called “More Employers to Require Some College, Report Says” in the New York Times ‘Education’ section gives a summary of the “Help Wanted” report, released on June 14 by the Center on Education and the Workforce (CEW), Georgetown University.

This article emphasizes the growing need of workers with at least an associate’s degree (a two-year degree, largely available at community colleges). Although the article quotes the study’s main author, Anthony P. Carnevale, as saying that “the demand for workers with postsecondary degree continues to surge,”—that is, not only associate’s degrees, Steinberg says nothing about any need for bachelor’s degrees.

Article 3

On June 15, Charles Wallace, a financial writer, contributed “Two-Thirds of All Future Jobs Will Require a College Education“—another summary of the CEW report—in AOL’s Daily Finance. This article shares statistical data from the report and quotes another author of the report, Jeff Strohl, several times.

Wallace reports that of the 47 million jobs created by the year 2018—a combination of new jobs and replacing workers who move on—some college training and/or an associate’s degree will be required for about 30 percent, and a bachelor’s degree will be required for about 33 percent. He adds that the study anticipates demand for workers with college degrees exceeding supply by 3 million by 2018, and that a Ph.D. is still worth more than a bachelor’s degree, with is worth nearly twice as much in lifetime earnings as a high school diploma.

Parsing the Articles

Article 1 is by a non-specialist, and it’s an opinion piece. It suffers from being published before important new information about the state of education and the job market was available, as well as from the use of old sources. Larson’s claim that nobody’s paying attention to students left with unpayable loans flies in the face of the large amount of attention being paid this year to this very problem in looking at for-profit schools, and undercuts her position.

Article 2 by Steinberg is simply too brief a summary that—both for brevity and by means of a slanted headline—casts the report in quite a different light than it appears when the data on bachelor’s degrees is taken into account.

In article 3, it appears that Wallace gave the report a closer read and a fairer shake, and—by using up-to-date information, discussing it at some length, and concentrating on data rather than anecdotes—appears to be the most useful take on the value of higher education of the three.

The study itself, “Help Wanted: Projections of Jobs and Education Requirements Through 2018,” is available here. The Executive Summary states:

“America is slowly coming out of the Recession of 2007—only to find itself on a collision course with the future: not enough Americans are completing college . . . By 2018, we will need 22 million new workers with college degrees—but will fall short of that number by at least 3 million post-secondary degrees . . . At a time when every job is precious, this shortfall will mean lost economic opportunity for millions of American workers.”

Who Profits from For-Profit Schools?

In May, I wrote about for-profit schools, and over the Memorial Day weekend, I found a valuable source. The PBS program “Frontline” ran a special in May called “College Inc.” On this special, they explored the for-profit education industry. The program features interviews with school personnel, students, supporters, and critics.

Widely-publicized issues with for-profit schools—that students receive degrees for which they are not prepared because, for example, they have no practical experience in the field; that students come out with enormous amounts of debt and no job prospects; that students enroll in schools that are not accredited, not realizing that their degree will not have the value they expect—are explored on the program.

The University of Phoenix, currently the largest college in the United States, is explored, as is the for-profit education business from the point of view of the investor.

The possible reshaping of how Federal financial aid to hold the for-profits to a higher measure is also explored. Nearly half of the students who defaulted on student loans within three years of graduation calls into question the value of a for-profit degree to boost a student’s earnings.

And those in charge of accreditation of universities are also looking more closely at how the accreditation process works with for-profit schools.

To view the program, which is available online, go to this special section of the PBS website. While you’re there, you may also want to look at the responses from the colleges, and check out the 1053 viewer comments.

And, because one of the most striking stories in the special is that of a student who ended up with $200,000 in student debt and unable to get the job she trained for because the school did not have the proper accreditation, you may wish to read our article on “Financial Aid Options for College.”

Graduate School

In many places, Mother’s Day is not only marked by tributes to mothers, but also signals the start of the college graduation season.

And fittingly, this week in the “Your Money” column in the New York Times, Ron Lieber writes about “The New Money Rules for Recent Graduates.” In this article he touches on some of the main financial concerns that face the college graduates, and points out that these are mostly issues that students don’t have background or training in dealing with. The topics he focuses on are:

• Health Insurance

• Banking and Debit Cards

Credit Cards

• Student Loans

The column also points out that new financial legislation and regulation have changed the scene over the last year, and these are area that even people with some prior knowledge would benefit by taking a second look at. It’s well worth reading for both about-to-be-graduates and parents.

There are, however, some students for whom certain of these concerns—repaying student loans and finding health insurance, anyway—may not yet come into play, and that is those students who are going to attend graduate school. Since they will still be in school, their student loans will not come due, and they will have an opportunity to subscribe to the schoolwide health insurance offered on the campus where they will do their graduate work.

Even for those on the brink of graduation who have not yet applied, graduate school may still be worth consideration. For some fields, it’s a necessity: there are some things you just can’t do without the master’s degree or doctorate, and certainly without an M.D., or other more specialized degrees some occupations are closed. Additionally, a professional degree has been shown to provide a major income boost. To learn more, check out our article “Why Go to Graduate School.”