Under attack: Will higher ed prevail?
Higher education in the United States has long bridged the gap for high school students and a successful, long-term career. And it’s clear that many Americans recognize that value.
According to recent Bureau of Labor Statistics numbers, 66.7 percent of 2017 high school graduates aged 18 to 24 were enrolled in a college or university by October 2017. The number of college graduates has increased by about 6.7 million students since 2000, about a 28 percent rise.
While enrollment has leveled off and declined in recent years—mostly attributed to lowered birth rates, decreasing high school graduate numbers, and decreasing unemployment—there are 14.8 million students in public universities and 5.13 million in private colleges in 2018, according to Statistica.
There are stories from many schools, including UNIBusiness, of how higher education has helped them forge a path to a successful career.
But despite the benefits of higher education, four-year institutions have been under increased scrutiny in recent years. Higher costs have led some to question whether higher education is really worth the investment.
An investment in the future
After graduating from UNIBusiness in 1993 with a business management degree, emphasis in human resources, Deanna Dunn felt she was more than ready for the workforce. She started working at the staffing and management firm Adecco right out of college as a recruiting and on-site manager.
About 25 years later, Dunn still works for Adecco. She’s now a senior branch manager. Beyond the bachelor’s degree she earned at UNIBusiness, Dunn hasn’t had any other formal education.
“My education extent is the bachelor’s degree, but I’ve always been a lifelong learner,” Dunn said. “From an education standpoint, there’s the area of professional development and training that your company provides.”
Like many across the country, Dunn says higher education was one of the building blocks for her success. In her role at a staffing firm and with her human resources background, Dunn sees some of the benefits higher education can provide.
A four-year degree stands out to employers because of the commitment and dedication it takes to achieve it. Students learn critical thinking and problem-solving skills, which apply to any industry.
“We know what kind of work goes into getting that degree,” Dunn said. “It’s not just the coursework, it’s the projects you work through to get the degree. Working through the completion of tasks and managing four to five different classes at once is not that different from the working world.”
Over the past decade, higher education, and four-year institutions especially, have come under fire. Costs of higher education have more than doubled since the 1980s. Student debt has dramatically risen and has reached more than $1 trillion nationwide.
But while the costs have increased, so have the benefits. Lifetime earnings for a college graduate have grown by 75 percent in the last 30 years, according to the Hamilton Project, an economic policy initiative at the Brookings Institution.
It comes down to the investment component for college students—how much they spend on a degree versus how much they expect to earn.
“The short answer is yes, higher education is worth it, but I think you want to be very career-minded,” Dunn said. “If you are pursuing a degree, be mindful of your investment and seek a career that will give you a quality return on your investment.”
While return on investment is a common term in business classes, it may not be for families of high schoolers looking at colleges. A college degree is usually a ticket to higher earnings—those with bachelor’s degrees earn on average $300 per week more than those with an associate’s degree or lower, according to the Bureau of Labor Statistics—but students have to mindful of what school they attend and the costs.
For example, the cost of tuition and fees at Ivy League schools are around $50,000 per school year. And the average cost at a private college is $34,740, according to the College Board, a nonprofit higher education organization. This is compared to the average cost at public universities, which are $25,620 for out-of-state students and $9,970 for in-state students.
Despite the large disparity in tuition costs, the lifetime wage earnings between the elite colleges and public universities aren’t that much different. Stacy Dale, mathematician at Mathematica Policy Research, and Alan Krueger, an economist at Princeton University, studied a group of students who attended college in the 1970s and another from the early 1990s.
They analyzed whether graduates from the most elite colleges earned more money in their 30s, 40s and 50s than students who were rejected from those colleges despite similar SAT scores.
The study concluded that the earnings between students from different colleges, “are generally indistinguishable from zero.”
Going to a less restrictive school such as a public university, which admits applicants at a higher rate, may be a good way to save up front while still enjoying the benefits of a four-year degree.
A college degree provides the opportunity for a stable, long-term career. According to the Bureau of Labor Statistics, only 2.5 percent of college graduates are unemployed, which equates to about 1 in 40 people. That is about half the unemployment rate for those with high school degrees and one-third the rate for those without a high school degree.
The unemployment rate holds during economic downturns, like during the 2008-09 financial crisis. Joshua Dahle (Economics and Human Resources ’13), a compensation analyst at UnityPoint Health in Des Moines, regularly studies the labor market. From his time studying economics at UNIBusiness during the recession, Dahle remembers a number that has stuck with him all these years.
“In the height of the recession, the unemployment rate reached a high of about 10 percent,” Dahle said. “If you dig a little deeper into the data, the highest unemployment rate for those with a bachelor’s degree was 4.9 percent. That’s less than half of the national rate.
“I think that’s still true today, even though unemployment is significantly lower and even lower for those with higher education. It acts as an insurance for a bad economy.”
In terms of earnings, graduates with a college education see benefits, even when saddled with student debt. According to 2016 research by the Pew Research Center, graduates between the ages of 25 and 39 with a bachelor’s degree and some outstanding student debt have higher family incomes than those lacking a bachelor’s degree.
While the aforementioned statistics provide insight into the many benefits higher education can provide, students can get an even higher return on investment by studying in areas that lead to opportunities in higher-paying industries.
It’s important to find a passion, but being mindful of the earning potential is key.
“If I choose as career that makes $35,000 right out college, hopefully I’m not borrowing $70,000 to get there,” said Tim Bakula, director of financial aid at UNI. “If you graduate from college, that’s great. But if you do so for a career that’s not going to allow you pay off the debt that you have, that’s going to leave a bad taste in your mouth.”
Combating the problem
The importance of understanding higher education as an investment comes from the rising level of student debt. In 2016, the Pew Research Center found the median student debt for graduates with a bachelor’s degree was $25,000, and other research organizations found that number to be even higher.
As the debt continues to rise, it’s becoming more important for schools to help students understand the importance of their education and loan choices.
UNI set out to combat the rising student loan problem through two means: educating students and their families about student loans and offering a quality education at an affordable cost.
In 2008, UNI students took out $15.3 million in private loans. That number has been dramatically reduced to just $4.6 million in 2017. The shift can be partially attributed to the school’s private loan counseling program, which started during the 2007-08 school year. If students a take out private education loans, they are required to meet one-on-one with a financial aid counselor.
“We say that we need to meet and talk about whether the amount of loans you’re taking out is necessary,” Bakula said. “When you start to hear the horror stories that the media portrays—$100,000 in debt, no job, can’t make payments—those are virtually nonexistent here. Those are really aberrations for most colleges, but it’s what grabs headlines. We didn’t want to be a part of those statistics.”
UNI also offers a three-week, non-credit course called “Live Like a Student.” The course teaches students about responsible financial decisions while attending college. Students can learn about budgeting and student loans, receive one-on-one counseling and gain other financial tips through the various lessons. At the end of the course, three students are randomly selected to win $500 scholarships.
Transfer students, a group that is sometimes lost in the shuffle at universities, have the option to take Transfer Financial Success Counseling. In the 2016-17 school year, nearly 80 percent of transfer students completed the counseling.
“We want to give the students a reset on their financial aid, no matter where they’ve been,” Bakula said. “So often students will borrow for a year or a semester at any school, then forget about it or they never paid attention to begin with. We want to help those students understand: here’s where you are at so far, let’s get a reset on it, and what does the remainder of your time at UNI look like?”
Creating an affordable four-year option gives students a better chance of improving their return on investment. UNI is one of the most affordable four-year institutions in the state, with tuition and fees for in-state students at $7,665 per school year and $18,207 for out-of-state students.
The level of debt of UNI’s graduates has decreased by 13.1 percent decrease since 2010 and is currently at $22,373.
“That may seem like a lot to some people, and it is. It’s nothing to think lightly of, but in terms of national averages and where we see other students, that average is actually very good and below the national average,” Bakula said. “We’re doing all we can to decrease the debt and keep UNI as affordable as possible, but we still want to be better.”