The writer is a contributing columnist, based in Chicago
As my soon-to-graduate children drained the dregs of our $350,000 college savings war chest last week, I reflected with them and the eldest’s 23-year-old friend Miguel, on whether this vast investment could have been worth it. Miguel graduated from Loyola University Chicago in January with over $100,000 in college debt.
Millions of people in the US spend their whole lives burdened by debt they took on before they were old enough even to drink alcohol legally. Society told them university would guarantee life-long prosperity, but many are now questioning whether it truly is the yellow brick road to advancement.
For two years, there has been a pandemic moratorium on US college debt repayments for 41m people, but now most of them are facing a May 1 deadline to start paying again. The freeze may well be extended (the US Department of Education won’t comment) but even that would only delay the inevitable.
According to four decades worth of data analysed by Georgetown University’s Center on Education and the Workforce, 60 per cent of college students earn more than a high school graduate after 10 years — but that means 40 per cent do not. And at a third of those institutions, more than half of students earn less than high school graduates after a decade.
Total US student loan debt at the end of last year was $1.58tn and 30 per cent of US adults incurred some debt for their education. Millions face repayments into later life, according to AARP, the retirement experts.
“The dominant culture embraces the notion that a college education is the minimum credential for access to social and economic prestige; if you haven’t gone to college, maybe you were raised by wolves,” says Jack Schneider, education expert at the University of Massachusetts Lowell. Or, as former president Bill Clinton once said, “what you earn depends on what you learn”. Schneider argues that the Democratic party has lost working class voters partly because this implied bargain has not paid off for them. President Joe Biden campaigned on a promise to forgive at least $10,000 in student loans per person, but so far he has failed to do so, fuelling the ire of progressives who complain he hasn’t done enough to push their agenda.
I started to become dubious about the earn-what-you-learn equation when I noticed that the driveways of my high-school classmates (only a tiny proportion of whom went to college) were filling up with boats, trucks, snowmobiles and other leisure toys, while I didn’t even have a driveway. When my eldest graduated from secondary school, I tried to persuade her to invest her share of our college savings in starting a business. She demurred.
Now, as my kids and their friends prepare to enter the workforce, I asked them if they thought the financial gamble was worth it. My 22-year-old pointed out that since I had paid every penny, she didn’t actually run any risk. Maybe that’s what I was paying for: to teach her that investing someone else’s money is safer than risking your own.
Miguel, on the other hand, worked his way through college and got a hefty merit scholarship, but says he can’t hope to repay his debt. “I didn’t really think about the price going into it,” he told me on his lunch break from a job at a local clothing store. Miguel, who is from Houston, now wonders if he should have gone to a local college where fees are lower and he could have lived at home.
The Georgetown data is revealing: after a decade, the median University of Houston graduate earns over twice as much, net of college costs, as a Loyola Chicago student. Even over a lifetime, University of Houston has a better return on investment. Miguel says he may have to take a federal job, perhaps in the US prisons service, because they offer loan forgiveness after 10 years of repayment.
“For many people, it’s an emotional decision,” says Martin Van Der Werf of the Georgetown CEW. “I don’t think a lot of people are thinking about return on investment at the outset — I know people who chose a college because they went to a basketball game there.” That’s the kind of decision-making that cost me $350,000 — and that doesn’t even cover my girls’ graduation tassels.
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