In the debate over higher-education financing, most fall in one camp or the other. In the one are those who cite the upward trend in costs, the high delinquency rate, and the increasing difficulty of recent graduates to start their careers as evidence of a boom-and-bust cycle. In the other are those who deny the existence of a crisis, labeling claims to the contrary as “fear-mongering” and political gamesmanship. Is the return on investment in a college education holding up? Some key metrics tell the tale and point to “normalcy bias” as the motivation for defenders of the higher-education status quo.
Like the run-up to the housing crisis, when new home loans were granted with little regard for applicants’ ability to repay, student loans are given without regard to future employment and earnings prospects. With 53.6 percent of recent college graduates either unemployed or underemployed, and only 47 percent of all employed adults enjoying full-time employment, these student loans – approximately 44 percent of which are unpaid – are a blade waiting to fall on the economy.
A weak economy is a contributing factor to the underemployment problem, but how do student loans factor in? Student- loan debt is a problem precisely because there is such un- and underemployment among recent college graduates, and the reason for this affliction can be traced in large part back the education received.
Students and families are paying more each year to finance a higher education that is returning less and less where it counts – in the job market. Taking out $100K to finance an education would be one thing if there were a reasonable return on investment. Such is no longer the case, as demonstrated by the high un- and underemployment numbers.
If a strong economy relies on an educated workforce, then why, with more students attending college than ever, is our economy languishing and our workforce underemployed? Recent college graduates are underemployed precisely because we are sending more students to college. Simply put, the economy into which these young people graduate is not capable of generating jobs in keeping with the labor supply. There are jobs out there, to be sure, but many jobs go unfilled because recent college graduates do not possess the skills necessary to fill them.
How do we know that students are not being taught the skills necessary to succeed where actual work is concerned? One survey of employers regarding disqualifications of job-seeking recent graduates showed 54 percent rejected applicants for errors in spelling and grammar on cover letters and resumes.
Adding insult to injury is the price tag attached to this lackluster system. Between 1980 and 2012, the average cost of a single year at a four-year American public university increased by an annualized 5.09 percent, nearly four times the rate of general inflation. According to the National Center for Education Statistics, the average cost for a single year at a four-year public university in 2011-12 was $15,918. The average cost for the previous school year (2010-11) was $15,014, and up from $14,262 the year before (2009-10).
Students are paying more to receive less. Going forward, we must either fix the product or find an alternative. The statistics presented above illustrate both the complex and systemic problems with higher education. It is a system crying out for help. Some acknowledge the need for reform, while others react by pretending no such problem exists. In psychology the latter is known as “normalcy bias.”
We must work past this case of political Normalcy Bias, lest we condemn future generations to a crisis worse than the one we presently face. If no such crisis exists, then the onus falls on those who claim no such problem exists to present a compelling case. As it stands, no such case has yet been made.