Every year, I remain hopeful that the outlook for college graduates will improve, but so far that hasn’t been happening. Things were pretty bad for the classes of 2014 and 2013. And for people graduating this year, the outlook remains pretty grim. The Economic Policy Institute recently came out with some sobering statistics:
High Rates of Unemployment and Underemployment
A college degree simply does not guarantee gainful employment anymore. While the unemployment rate for recent college graduates is down compared to the worst period of the Great Recession, unemployment and underemployment rates still far exceed historic norms. The current unemployment rate for recent college grads is 7.2% (compared to 5.4% for the general population), and the underemployment rate is nearly 15%. That’s a combined unemployed/underemployed rate of over 22%. In other words, nearly one in four recent college grads cannot obtain gainful employment.
An additional 22.6% of recent college grads are employed but working in fields that do not require a college degree (think retail and food service). When you combine that with the above figures, nearly 45% of recent college graduates may not be working in gainful employment.
Increasing College Costs
College tuition continues to increase at astronomical rates. Between 1984 and 2014, the cost of private universities increased by over 125%. The cost of public universities increased by nearly 130% during the same period. Tuition has thus more than doubled for four-year colleges and universities across the board, but wages and purchasing power have not kept up with these increases.
Increasing Student Loan Debt
As a result, student loan debt levels continues to soar. Last year’s graduating class had an average undergraduate student loan burden of $33,000, up 10% from the prior year. According to the Economic Policy Institute, average student loan balances have grown by 74% in just the past 10 years alone. Nearly three in four college students will graduate with student loans, compared to less than half of graduates in 1993. Estimated total student loan debt across the country now stands at approximately $1.3 trillion.
What Does This All Mean?
These numbers are scary, but sadly unsurprising given the ongoing trends in higher education and student debt. Our debt-for-degree system is obviously not working.
If there’s any good news that can come out of this, it’s that during the past few years student loans have risen to become a top policy issue for the public and for government. There is broad, bi-partisan agreement that something needs to be done to help make college more affordable and ease the burden on debt-ridden, under-employed graduates. The big unknown, of course, is what kind of reforms will be passed, and when. The creation of the REPAYE payment plan is a start, but students and their families need much, much more.
