44% of Young College Grads Are Underemployed (and That’s Good News), writes Jordan Weissmann in The Atlantic. In a weak economy, many new graduates have to take jobs that don’t require a college degree, argues Weissmann. It’s worse now “because the economy got fed through a wood chipper during the recession and we still haven’t picked up all the pieces,” not because a bachelor’s degree has lost value.
College graduates during the 80s and early 90s were as likely to be overqualified for their jobs as young graduates today, according to New York Fed President William Dudley. Most graduates then eventually found professional jobs.
The obvious difference between higher education today and in 1990 is the cost of a degree, and the amount of debt students take on to finance it. So while failing to land a college-level job straight out of school might have been tolerable in the past, today it might mean severe financial hardship, especially if students aren’t savvy about how to handle their student debt (three words: Income. Based. Repayment).
There’s evidence that young people who graduate into a recession and start lower on the job ladder never recover completely.
I’d like to see a good survey asking whether collegebound students understand their likely future earnings and loan payments. Do they know the risks? If they did, second- and third-tier private colleges would have to slash tuition or go out of business.
Be deeply suspicious of promises that a bachelor’s degree will raise earnings significantly, warns Tim Donovan on Salon. If the “higher interest rate convinces even a few 18-year-olds not to take on huge debt for that Musical Theater degree, maybe it’s not so bad,” he writes.