Pomp and Circumstance

It’s graduation season and the job market certainly looks challenging for the college class of 2012. In fact, our labor market, still limping along, unable to fully recover from the recession, already has left half of young college graduates either jobless or underemployed in positions that do not utilize their college degrees and knowledge. Think about how often you meet a young job seeker in a restaurant or behind a coffee counter.

Having half of our young college graduates under- or unemployed certainly sounds alarming, particularly for parents who may have invested close to a quarter million dollars in their child’s education. However, dig a little deeper into the story and you’ll discover that in 2000, 41 percent of new college grads were either under- or unemployed. So, the dot-com bubble and the recession have combined to swallow just about 10% of the jobs generally held by young college graduates. Spun that way, job-hunting looks a little brighter for today’s graduates, right?

Yes, job prospects for graduates with bachelor's degrees are at their lowest level in more than a decade. However, studies continue to show that, on average, college graduates earn more money over their working careers than those who did not attend college. And, today, many parents are helping their young graduates to get that all important first job by welcoming them back home to conduct their job searches.

Interestingly, I recently read that, according to government projections released in March, that only three of the 30 occupations with the largest projected number of job openings by 2020 will require a bachelor's degree or higher. What are these jobs? Teachers, college professors and accountants. I find it ironic that two of these professions are in the education field. That is, can we really believe positions for college professors will increase even as a college degree becomes less valuable in the job market? You have to wonder if the folks spewing forth these statistics ever stop to consider if they make sense. That notion informs my advice to college graduates – You are much more than a number. As you meet with potential employers, look for work you are passionate about so you can make your contribution.

Does Your College Aid Package Include a Loan?

According to Finaid.org, more than $100 billion in federal education loans and $10 billion in private student loans are originated each year. Of course, the terms of various loans can vary greatly.

• Stafford Loans are federal loans that come in two varieties: Subsidized (based on financial need) or unsubsidized. Subsidized Stafford loans have a lower interest rate than the unsubsidized loans and interest doesn’t start accruing until after graduation. Unsubsidized Stafford loans start accruing while the student is in school, but payment can be deferred until after graduation.
• PLUS Loans are designed for parents and interest rates are usually higher than other types of federal loans.
• Perkins Loans are made through the schools and interest does not begin to accrue until after graduation.

To compare various loans’ terms, you can use the Loan Comparison Calculator at Finaid.org. And remember that if your aid package includes a loan with a very high interest rate, you can decline that part of the package.

Inevitably, evaluating financing options prompts the question: How much college debt is too much college debt? Getting a sense of national averages may help you to answer that question. Using data from the 2007-2008 National Postsecondary Student Aid Study (NPSAS) conducted by the National Center for Education Statistics at the US Department of Education, Finaid.org offers the following table showing the percentage of students borrowing and the average cumulative debt per borrower (excluding Parent PLUS Loans) at graduation according to type of educational institution.

Is College Worth It?

Here’s a statistic that recently gave me pause:  45 percent of college students demonstrate no significant improvement in a range of skills, including critical thinking, complex reasoning, and writing during their first two years of college. The findings come from an analysis of more than 2,300 undergraduates at twenty-four institutions and are shared in Academically Adrift, a book written by Richard Arum and Josipa Roksa. The author’s research draws on survey responses, transcript data, and results from the Collegiate Learning Assessment, a standardized test administered to students in their first semester and again at the end of their sophomore year.

For parents struggling to pay soaring tuition costs, many from savings they’ve been contributing to since their children were born, this statistic will be alarming. Many will no doubt counter the findings shared in Academically Adrift with the bevy of statistics about how much more college graduates earn over their lifetime, or how, as a recent College Board study “Education Pays 2010” finds, they have been less negatively impacted by the recession than those with just a high school diploma. Turning the tables, in Academically Adrift, the authors offer their analysis of who profits from college and, most importantly, how colleges must transform themselves to respond to the changing needs of today’s students is illuminating and instructive.

If you’re wrestling with college costs, you’ll be interested in an article on my web site, “Give College Funding the Old College Try.”