Outside of the welcoming arms of orientation leaders and the four-year bubble that follows, most of the country is freaking out about higher education.
The degree you will be handed as you walk across the stage will be worth less than the one your mom and dad earned 30 years ago. It will be worth less than the one your cool older brother earned four years ago.
At this point, it’s still worth it.
The average USF degree costs about $78,000, and a graduate can expect to earn about $556,300 more than a person without a college degree over 30 years, according to a study by salary-tracking website Payscale and Bloomberg Businessweek. The Hamilton Project of the Brookings Institute projects similar benefits. Researchers there found a college degree can yield more than a 15-percent return, more than twice the stock market rate for the last 60 years.
But the return on your educational investment is shrinking every day.
Much of the decrease can be attributed to the upfront cost of education. Tuition and fees rose over 440 percent between 1982 and 2007, according to a new book by University of Tennessee law professor Glenn Reynolds. During that period, the cost of living increased by a little over 100 percent.
Parents and students have made up much of that difference through federal and private loans, feeding further into the $1 trillion in outstanding debts that college graduates carry. Many of those debts will go unpaid — Reynolds’ book says payments are being made on only 38 percent of balances, down from 45 percent half a decade ago.
Reynolds posits that as friends and relatives see these graduates — broke and jobless, serving them coffee at the local Starbucks — fewer people will choose to pursue those degrees, or just opt out of college.
The effects of this are already showing in the legal education field, where applications to American Bar Association-accredited schools is down 20 percent from a year earlier, which was 14 percent lower than the year before. Law schools must decide whether to shrink their class sizes and, therefore, their income, or loosen standards to allow less-qualified applicants. This process expands the bubble and decreases the value of a degree even further, Reynolds said.
Politicians have scrambled to keep the bubble from popping. Rates for federally subsidized Stafford loans are at about 3.4 percent, but are set to double over the summer. Republican senators have sought to tie the rate to the yield of 10-year treasury notes, plus 3 percent — a plan that would increase the current rate by over 1 percent.
Another proposal calls for new options for student loan repayments while capping minimum monthly payments at 10 percent of discretionary income.
The best way for current students to limit long-term debt is to accept only the loans they’ll need for the semester. Getting involved on campus and through internships increases the value of a degree and the likelihood of getting a job after graduation.
Choosing a state school like USF St. Petersburg is also a great way to keep costs low — though all but 10 of the top 50 schools with the best return on investment were private.
