College ‘degree premium’ goes flat
Is a college degree the new high school diploma? asks Jeffrey Selingo in the Washington Post.
The “degree premium” — the earnings gap between high school and college graduates — grew rapidly in the 1980s, slowed in ’90s and has plateaued since 2000, according to a new study by Robert G. Valletta of the Federal Reserve Bank of San Francisco.
Technology investments in the ’80s and ’90s increased the demand for college graduates, displacing lower-level workers, writes Selingo. After 2000, “the money started to flow to automation and artificial intelligence,” supplanting workers with four-year degrees.
Workers with a bachelor’s degree are forced into lower-skill jobs with lower wages. In other words, the bachelor’s degree is becoming the new high school diploma. Rather than a ticket to a high-paying, managerial job, the four-year degree is now the minimum ticket to get in the door to any job.
Overall, higher education leads to higher lifetime earnings, stresses Valletta. However, young people should remember that not all colleges or majors have equal value in the workplace. The degree premium numbers may be affected by the growing number of for-profit college graduates who often see little or no increase in earnings. (Here’s more on the degree premium.)
Cosmetology students have the most trouble repaying student loans.
The U.S. Education Department’s new “gainful employment” report targets career programs at for-profit colleges. These colleges cost a lot more than community colleges for the same training, the report concluded.
Overall, about a quarter of programs failed — or nearly failed — the debt-to-earnings test.
A string of art institutes produced graduates who didn’t earn enough to pay off their loans, the report found.
Some majors, such as cosmetology and culinary arts, led graduates to poorly paid occupations.
Sixty-one percent of cosmetology graduates who received federal aid graduated from low-value programs, notes the Center for American Progress. “These results suggest the need for serious reconsideration of licensing rules that may be forcing students to attend and borrow money at programs that are tied to occupations that will never pay enough to justify the price.”
Criminal justice graduates also did poorly in the workforce. It’s likely they hoped to be hired as police officers and ended up as security guards.
The Trump administration should expand “gainful employment” rules to all college programs whose students use federal loans and grants, not just those that are explicitly vocational, writes New America’s Kim Dancy. Students should know before they borrow, she argues.