What do 317,000 waiters, 141,476 receptionists, 107,457 janitors and 18,749 parking lot attendants have in common? They’re among some 17 million college graduates who are working in fields that have traditionally not required a college degree.
Some might argue these statistics are a reflection of the depth of the current economic malaise. But Richard Vedder, a professor of economic history at Ohio State University, maintains that the data are a sign of creeping “credential inflation” that is fueled by misplaced national priorities.
Education Bubble?
Education policy, funded by trillions of federal financial aid dollars, is creating an education bubble by shoving millions of kids into costly degrees that they don’t need, he says. The fact that so many graduates are working in jobs that don’t require degrees shows that education spending doesn’t pass a remedial cost-benefit analysis – for both the government and the students involved.
“There is no doubt that education is important to both personal development and the national economy,” he said. “But for more and more students, that degree is leading to some form of disappointment. We are increasingly encouraging people to get college degrees that don’t pay off.”
As things stand, higher education is based on “seat time,” says Mark Schneider, vice president of the American Institutes of Research in Washington, D.C. Students who sit in the right classroom seats for a long enough time and get passing grades — even if those grades are poor — can earn a degree. He’s not alone in that view. Meanwhile, colleges and universities are paid for filling those seats – without regard to how many of their students graduate or how much they learn. “There should be better and cheaper ways to certify someone’s skill set than a four-year college degree,” he says.
Should Everyone Go to College When the Average Graduate is $24,000 in Debt?
To say that Vedder’s conclusion – that fewer kids should go to college – represents a minority opinion is an understatement. Some experts sardonically grouse that his take on the data is “interesting;” others call it “selective” or “elitist.” Economist Nicole Smith, whose colleagues at Georgetown University’s Center on Education and the Workforce have done a detailed analysis of the same BLS statistics, says that Vedder is using flawed data to support a flawed thesis.
“As college costs rise, it’s increasingly important to do
a careful cost-benefit analysis of a degree.”
Yet on one of Vedder’s points, many educators agree: As college costs rise, it’s increasingly important to do a careful cost-benefit analysis of a degree – and that analysis is difficult to do with the current system. “A lot of people are spending a lot of money without knowing how it will connect to wages later,” says Smith. “We owe it to individual students to know the value of this education.”
The need for cost-benefit analysis has soared because college costs have been growing at twice the rate of inflation for decades. And while federal financial aid has climbed to address the increasing demand for more college money, aid has shifted from predominantly grants and scholarships to loans. That’s left an increasing number of students buried in debt. Worse, many of these students never graduate. Only about half of the students who start college graduate within six years of starting, which can leave them indebted and years behind their high school graduate peers in getting paid work.
A Shifting Consensus
Merely entertaining the question of whether a college degree will pay off is a noteworthy shift in education industry consensus. Some years back, concerns about college costs and benefits were waived away with a simple reference to government data that reflected income by educational attainment. The summary version: College graduates earn roughly $1 million more over their lifetimes than someone with only a high school diploma.
The median income of a man with a four-year college degree was $61,280 in 2009 versus $30,303 for a high school graduate, for instance. That $31,000 annual difference in median income works out to $1.24 million over the course of a 40-year career.
But experts recently have begun to question whether the averages are misleading. Why? Few individuals mirror the average. Some college graduates earn way more than the average, but there also appear to be an increasing number of personal horror stories that reflect the sort of mismatch that Vedder cites in his research – as well as the crushing toll of debt that some students accept to get a degree.
Additionally, some question whether the purported income by educational statistics has fueled a “million-dollar misunderstanding” by potentially connecting unrelated bits of information. People with college degrees generally do earn more, but is that because of the degree? It could be that these individuals have other advantages such as raw intellect, a socio-economic edge or personal traits — such as curiosity and tenacity — that made them more likely to be successful and more likely to pursue a college degree.
“Kids whose parents have 200 books in their house do better than kids whose parents do not,” said Penelope Trunk, author of a blog called The Brazen Careerist. “But that’s not because they had books. It’s probably because they’re more affluent and their parents are more involved. The argument that you are going to earn more if you go to college is the same. We don’t have a cause and effect.”
In Defense of College
Smith says research done at the elite Georgetown University indicates a close correlation between college and economic advantage. Ironically, Georgetown examined the same Bureau of Labor Statistics data as Vedder, but looked at it differently. The reason? The BLS makes judgment calls about which job categories require college degrees and which don’t.
Smith contends that’s a flaw in the BLS data because these judgments are based on traditional and broad-brush standards. Who is to say, for example, that a bartender or a construction worker doesn’t need a bachelor’s degree—particularly if their ultimate goal is to own the bar or go into construction management? Vedder took BLS determinations as fact.
Georgetown didn’t look at whether the BLS said you needed college for the job you got, they simply classified the jobs as “elite,” “good” and “less skilled,” based on what you had to do and how much you got paid to do it. They then determined how many college graduates filled each type of position and what they earned. They discovered that college graduates are not only more likely to hold “elite” and “good” positions than high school graduates, they’re paid more than less educated counterparts — even when the less educated person holds the loftier title.
Specifically, those who earned bachelor’s degrees (or better) fill 65 percent of the elite jobs; 25 percent of good jobs; and just 11 percent of less skilled jobs, according to Georgetown. Elite jobs pay the most, but the average income of college graduates isn’t just higher because they snag the bulk of the “elite” positions. College graduates who had just “good” jobs earned 25 percent more than noncollege graduates who managed to get “elite” jobs, Smith said.
“On average, college graduates also are healthier
and live longer; they’re more likely to have health insurance;
and they report that they’re happier.”
“In a flexible economy, what’s valued is worker productivity,” said Smith. “The marketplace considers college graduates to be more productive than those who aren’t.” And the value of college doesn’t stop with money, says Terry Hartle, senior vice president with the American Council on Education. On average, college graduates also are healthier and live longer; they’re more likely to have health insurance; and they report that they’re happier.
The Transamerica Center for Retirement Studies also notes that college graduates are also more likely to have access to a company retirement plan and feel more confident that they’ll be economically sound when they’ve left the working world, too. “On every measurement tool that social demographers can devise, you see that you are better off going to college,” Hartle says.
That said, virtually everyone can cite a personal example of a highly educated friend or relative who is over-indebted and underemployed. And that’s got many asking whether the current system is providing enough bang for the buck.
An increasing number of colleges have started to offer three-year Bachelor’s degrees to help cut college costs. Others have pioneered different solutions, such as online learning. The fledgling Western Governor’s University has an even bolder model. The all-online college gives credit for skills you already have, allowing students to test through courses at a breakneck pace. The typical student at Western Governor’s is 36, with a job and family, going to school during his or her free time, says spokeswoman Joan Mitchell. And yet, the university’s typical student receives a bachelor’s degree in just two and a half years, at a total cost of less than $15,000.
Smith thinks the traditional model doesn’t need to be dismissed completely, but colleges should do a better job of measuring performance. She suggests that schools keep tabs on their graduates and hold themselves accountable for their successes and failures. She also thinks colleges should be working hand-in-hand with industry to ensure that they train students in the skills needed in the workforce.
“We are trying to increase the number of college graduates in this country,” Mitchell adds. “If we do it the same old way, we’re going to break the bank.”
