As we've pointed out time and time again, the notion that going to college guarantees a higher paying job and a better standard of living is a myth ('millennial Congresswoman' Alexandria Ocasio-Cortez effectively embodies this myth; she worked as a bartender before launching her upset primary campaign, despite graduating with a degree in economics from Boston University, and has spoken about feeling directionless after graduating with a mountain of student debt).
Generally speaking, data suggests that college graduates earn higher incomes, face lower unemployment and happier and healthier than their peers who don't have a degree. But these general figures mask the fact that millions of degree holders are defaulting on their student loans (one study published in August said 30% of student loans are in their default, or in arrears) and also struggling with underemployment or being stuck working jobs that don't require a college degree. One million Americans default on their student loans every year. And if defaults continue at their current pace, roughly 40% of borrowers will have defaulted by 2023.
With so many flashing red warning signs, the fact that the risks posed by this teetering pile of $1.4 trillion in debt have received only glancing coverage in the financial press is astounding. Coverage of the rising cost of higher education always carefully asserts the old conventional wisdom - that, even with the debt, the underemployment and their resulting stressors (reams of data suggest that American millennials are delaying marriage, family formation and buying a home, largely because of their student loan debt), young Americans are still better off with a degree than without one.
Which is why it was almost refreshing to see the Wall Street Journal publish a story deconstructing these myths. A story that acknowledged - in its opening paragraphs, no less - that "college graduates can end up worse off than people who haven't gone to college at all."
In fact, 32% of college grads (a group that, we imagine, includes a large number of gender studies majors) end up with jobs that don't require a degree 10 years after graduation.
But students who start college, but never finish, are worse off than their peers who earn their degrees (regardless of how long it took to finish). But how many students end up in this predicament? A surprising number, as it turns out. For every 100 students who enroll in university, 40 will never finish. Of these 40, 32 will still need to pay off student loans. Roughly 10 of these 32 - roughly 30% - will eventually default. That's compared with 5 out of 42 graduates who carry loans.
As the chart below shows, students with "some college" struggle with unemployment rates that are nearly as high as students with only a high school degree.
Their earnings potential is also far closer to those with only a high school diploma than students who finish college.
The average student loan burden for Americans has nearly doubled over the past 20 years.
To sum up, while a college degree can bestow higher earning capabilities, students shouldn't enroll without a clear plan for how they're going to make a living post-grad.
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