MICHIGAN, May 8, 2012 - Just as the Federal Reserve’s printing of large sums of money has devalued the dollar, so too has the increase in printing and distribution of diplomas from degree-granting institutions devalued the worth of a college degree.
We have nearly 4,500 degree-granting institutions; approximately 2,700 4-year colleges, and 1,700 2-year colleges (primarily community colleges). This equates to roughly 100 degree-granting institutions in each of the 50-states.
But we also have approximately 2,000 non-degree granting institutions, better known as vocational or trade schools. These institutions provide job-specific training leading to certificates and career diplomas in specialized fields. Some popular vocational trades include medical assistant, dental assistant, auto repair technician, and cosmetology. The biggest advantage that these programs have is that some can be completed in as little as six months, and the costs associated with attending these programs dwarf in comparison to that of the costs of obtaining a college education.
In sum, when accounting for vocational and trade schools, there are over 6,000 postsecondary institutions. This is more than the population of at least 80 cities, towns, and villages in the State of
Because of the government’s willingness to subsidize education at these postsecondary institutions at the drop of a hat, people naturally feel enticed to take up the offer. It could be that they want a career change, or just want to develop or build upon a skill set, or have been hammered with the notion that a college education is important for success. Sometimes, the reason isn’t as admirable, and they go back to school so they can eschew having to work, just to delay the inevitable.
There are different reasons and motivations for furthering one’s education, and while largely this is a noble pursuit, one would be hard pressed to say that the market can actually sustain the influx of new graduates that emanates from the government’s “generosity” in subsiding education.
In 2010, 20.3 million students, or nearly 6% of the population, were enrolled at degree-granting institutions. Approximately 500,000 students were enrolled in non-degree institutions (vocational or trade schools).
But the most worrisome aspect about all of this is not the total number enrolled, but rather the trends in enrollment. For example, the total enrollment of students in degree-granting institutions increased only 9% from 1989-1999. From 2000-2009, however, there was about a four-fold increase in the rate of enrollment; the number of students enrolled in 2000 was 14-million, which increased to 20-million in 2009, resulting in a 38% increase in enrollment in that decade.
When looking at the demographics by age group, those 25 and older have had a significantly greater percentage increase in enrollment than those under the age of 25 from 2000-2009. The enrollment of students under age 25 increased by 27%, while there was a 43% increase in enrollment for students 25 and older. Total enrollment at undergraduate programs (4-year colleges and universities) has risen 39% from 1999 to 2009.
Another consideration is that the vast majority of those who are pursuing higher education are going back as full-time students. In fact, between the years of 2000-2009, there was a 45% increase in full-time students enrolling in degree-granting institutions, and only a 28% increase in part-time students enrolling in degree-granting institutions. The danger associated with this is that most full-time students do not work. Thus, they will be burdened with higher amounts of debt, less savings, and a thinner resume in terms of practical job experience.
Degree Choices Incompatible with Economic Needs
There is also a discord between chosen degrees and the needs of the economy. According to a survey conducted by the National Association of Colleges and Employers (NACE), the college degrees that are most in demand are those of business, engineering, and computer science. Of the approximately 1.6 million bachelor’s degrees awarded in 2009, the most popular majors were business (348,000 degrees conferred), social sciences and history (169,000 degrees conferred), and health sciences (120,000 degrees conferred). When looking at the aggregate, 590,678, or 36.9% of degrees were awarded in one or another of the liberal arts.
Aside from the high rate of business majors, the other degrees are not considered to be in utmost demand (as indicated by the NACE survey). Furthermore, none of the most popular degrees are technically oriented degrees, which involve skills that are desperately needed here, and which pay lucrative salaries. For example, those with computer and mathematics related degrees have a median starting salary of $46,000 and those majoring in engineering $55,000.
Compare that to the median starting salary for students majoring in social sciences, which is only $37,000. The unemployment rate is also generally higher for non-technical majors, such as the arts (11.1 percent), humanities and liberal arts (9.4 percent), and social sciences (8.9 percent).
Many graduates with non-technical degrees may be compelled out of necessity to get a graduate degree or attend professional schools to become employable. Presently, nearly 40% of those majoring in liberal arts are returning to school for an advanced degree shortly after graduation. If the proportion of these graduates pursuing advanced degrees increases steadily, and if students earning other types of degrees such as arts and humanities also begin toying with the idea of advancing their education for similar reasons, we will then see a surfeit of professional degrees in the market. This will further devalue college degrees and lead to inflation of professional degrees, all the meantime exacerbating the student loan crisis.
Because technically oriented degrees are not popular, this has led to a scarcity of engineers in the
So what if you decide not to go to college and pursue a skill that doesn’t require a bachelor’s degree? Are your future prospects hindered by this decision?
Enter the Bureau Labor of Statistics (BLS). The BLS has ranked the occupations that will experience the most growth in the coming decade. Only seven of the jobs they ranked in the top 20 for greatest growth required a college education, including teachers, accountants, and physicians.
Most of the other jobs required just a high-school diploma or less, with a few requiring an Associate’s degree. Medical secretaries, medical assistants, truck drivers, security guards, office clerks, home health aides, and receptionists were all in the top tier of fastest growing jobs. Most of these jobs are anticipated to grow at least 20% over the next 8 years.
While you will not be living lavishly or eating 5-course meals from the salaries provided by these positions, they seem to be stable and secure options for those who can’t afford college, or otherwise don’t want to accrue massive amounts of debt in an uncertain job market. Most of these positions pay in the range of $25,000-$30,000 per year. This is right in the vicinity of the median starting salary for those with a college degree-$27,000. Go figure.
All of this political bickering in Washington about interest rates on subsidized loans is merely a distraction from the real systematic issues. The issue of importance lies in whether the current economy can indeed support the amount of loans that are being disbursed. The government needs to become more selective as to whom they subsidize and how much they subsidize based on a student’s major; this will bring down tuition costs, and deter some from investing in degrees that are not highly in demand. Persuading students to major in technical degrees through scholarships, etc. will provide the intellectual capital needed to grow the economy and compete with countries like China.
There also needs to be a revived thinking, and people need to set aside the stigma associated with not attending college, and begin embracing vocational and trade schools. In this rapidly changing 21st century economy, it seems that a “master of a trade” will have first dibs at a job then a “jack of all trades”. Somehow this glorification of college seems counterproductive in light of the fact that a plethora of recent college graduates are unemployed or working low-wage jobs that require no particular skills.
The government must overhaul the student loan industry or there will be an education bubble much like the housing bubble that led to the financial collapse. There are simply too many degree-granting institutions which accommodate too many students. Therefore, it would be completely irresponsible to be acting as an enabler, instead of taking steps to revamp the lending process so students don’t go bankrupt, and our country doesn’t go bankrupt.
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