How Recession Will Change University Financing
http://www.bloomberg.com/news/2012-07-24/how-recession-will-change-university-financing.html
The latest recession will probably be seen as a turning point for college and university financing.
Indeed, the initial reaction by many youths to soaring unemployment was to stay in or return to college to wait out the bad times and get better prepared to face a tough job market.
Also, those now leaving college are finding few jobs. Only 54 percent of those age 18 to 24 are employed, the lowest share since data began to be collected in 1948, and the unemployment- rate gap between this demographic group and all working-age adults is the widest on record. Only 49 percent of graduates from the classes of 2009 to 2011 found jobs within their first year out of school, compared with 73 percent of those who graduated three years earlier. About 54 percent of bachelor’s- degree holders under 25, or about 1.5 million people, were jobless or underemployed last year.
The College Board calculates that using 2008 data, a student entering college in 2010 at age 18 who borrows his way to a degree earns enough by age 33 to make up the cost, including wages forgone and loan interest. That’s a 5 percent to 6 percent return on investment - -- meaningful but not huge. These results partly reflect the 184 percent increase in real tuition costs in the past 20 years, which has occurred as the real pay of college graduates has risen only 9 percent.
With few job prospects and high levels of student loans -- 55 percent of the 2010 graduates of four-year public institutions left school with debt averaging $22,000 -- many young people are disillusioned. The average real debt for new graduates rose 24 percent from 2000 through 2010. And about a third of those who are employed take jobs that don’t require a four-year degree.
Most thought that a bachelor’s degree was the ticket to a well-paid job, and that the heavy student loans were worth it and manageable. And many thought that majors such as social science, education, criminal justice or humanities would still get them jobs. They didn’t realize that the jobs that could be obtained with such credentials were the nice-to-have but nonessential positions of the boom years that would disappear when times got tough and businesses slashed costs.
Some of those recent graduates probably didn’t want to do, or were intellectually incapable of doing, the hard work required to major in
science and engineering. After all, afternoon labs cut into athletic pursuits and social time.
Yet that’s where the jobs are now. Many U.S.-based companies are
moving their research-and-development operations offshore because of the lack of scientists and engineers in this country, either native or foreign-born.
For 34- to 49-year-olds, student debt has leaped 40 percent in the past three years, more than for any other age group. Many of those debtors were unemployed and succumbed to for-profit school ads that promised high-paying jobs for graduates. But those jobs seldom materialized, while the student debt remained.
Moreover, many college graduates are ill-prepared for almost any job. A study by the Pew Charitable Trusts examined the abilities of U.S. college graduates in three areas: analyzing news stories, understanding documents and possessing the math proficiency to handle tasks such as balancing a checkbook or tipping in a restaurant.
The results were deplorable.
Half the graduates of four- year colleges and three-quarters of those from two-year institutions lacked the skills to understand credit-card offers. They also couldn’t interpret tables relating exercise to blood pressure or understand newspaper-editorial arguments.
And what’s expected of students at all levels has been
dumbed down tremendously in recent decades. Perfect scores on SATs used to be unheard of. Now they’re routine.
Yet American 15-year- olds rank in the middle of the pack in math, reading and science scores, and their high-school graduation rates are below international averages.
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The article goes on but it is a sad read about our education system and what is coming out it that passes for educated people. The money spent on college degrees is wasted.
