More students are going to college than ever before – many of them taking out substantial student loans to pay the rapidly rising costs of education. In 2010, graduating college seniors owed an average of $25,250, a figure not including debt incurred by students at for-profit colleges of the ITT Tech variety (which are another can of worms entirely). Student debt recently overtook the nation’s credit card debt: American students now owe over one trillion dollars.
With the job market in dire straits the past few years, it is becoming harder for students to find a job upon graduation that will help repay their student loans. For my sister, a sophomore at a small private college in Southern California, the debt she is accumulating doesn’t seem worth it; she’s considering dropping out and enrolling in a local state school to save money. Many other students across the country face similar dilemmas and must decide whether to gamble their future financial solvency on the hope of being gainfully employed upon graduation.
National unemployment statistics can be misleading, particularly when it comes to unemployment by education level. Unemployment for adults with a bachelors degree is low and over 95% of college graduates are employed, claims an article in the International Business Times. At first glance, this seems cause to celebrate for those of us with college educations, particularly given that those with only high school educations have unemployment rates two or three times higher. Yet even though the Bureau of Labor Statistics reported an unemployment rate of 4.1% (December 2011) for those with a bachelors degree or above, this statistic is for Americans over the age of 25. This figure completely leaves out the majority of recent college graduates!
For recent college graduates, the employment situation is more grim. Not only are students graduating with more debt than ever before, they have much higher unemployment and underemployment rates than their college educated colleagues who are older and have more work experience. Economist Bart Hobijn presents unemployment data for college graduates age 25 and under, in a letter published in March 2011 by the Federal Reserve Bank of San Francisco. He found that recent college graduates had unemployment rates between 10 and 15%, higher than the national average (including all education brackets) which was hovering near 9% at the time of publication. These same graduates were also more likely to take part-time, lower paying jobs, Hobijn reports; the fraction of graduates accepting part-time employment increased by 5-10% from before the current recession.
Unemployment numbers for bachelor degree recipients were even more depressing at the height of the recession in 2009 – students graduating that year experienced unemployment rates over 20%, with a substantial fraction taking jobs where their degree was unnecessary. Though the situation has improved since 2009, median salaries during the recession have decreased (from $30k to $27k), in a time where students owe more money than ever.
A recent study shows that different college majors have varying entry salaries and employment prospects upon graduation (‘not all college majors are created equal,’ says Washington Post columnist Michelle Singletary). The report, published by Georgetown University’s Center on Education and the Workforce, breaks down unemployment by major, separating new college graduates, from experienced graduates, from those with graduate degrees. Architecture, fine arts, and humanities top the list with the highest unemployment rates for recent graduates (13.9, 11.1, and 9.4% respectively). Architecture majors are hardest hit due to the collapse of the housing bubble and a large portion of the construction industry, study author Anthony Carnevale posits. On the other hand, those who majored in health or education will find the most stable job markets (unemployment percentages only 5.4%), though starting salaries can be low. Engineering majors may find the best of both worlds with reasonably low unemployment figures and one of the highest starting salaries of any field (~$55,000).
The good news is that specialization helps and going back to school to get a graduate degree will likely get you a better job (or at least a job). Unemployment rates for graduate degree holders are low – mainly between 2-4%. However, pick your future career wisely. Those who hold graduate degrees in architecture currently have higher unemployment rates than students of any other major just leaving college with their bachelors! In addition, graduate school is expensive, so prospective students must evaluate the risk of taking out yet more student loans.
For those with large federal education loans, help is on the way. Obama’s plan to help alleviate the strain of student loans could go into effect as early as this year. The plan would decrease contributions graduates make from 15% of their monthly income to 10%, and the balance would be forgiven after 20 years of payments rather than 25 years. Unfortunately, students saddled with private rather than federal loans may be out of luck.