Matthew O’Brien explains the situation in Atlantic Online (May30):
This [chart] is not as bad as it looks, and it doesn’t mean what you might think.
Here are the three numbers that tell us why: 7.9, 7.6 and 4.0. Those are the unemployment rates among people 25 and older for high-school grads, for college dropouts, and for college graduates – all courtesy of the Bureau of Labor Statistics.
The chart isn’t a story about a college degree no longer paying off. It is a story about more people going to college, but not nearly as many more people finishing college. As my colleague Jordan Weissmann recently pointed out, only 56 percent of those who start on a bachelor’s degree finish within six years. Only 29 percent of those who start on a associate’s degree finish within three years. And consider that this is happening while college enrollment is at an all-time high. Too many students are getting the worst of both worlds: debt without a degree. Their finances get worse, but their job prospects don’t get much better. That’s how we get a world where most of the unemployed have attended at least some college.
But there’s something of a chicken-and-egg problem here. More students would finish school if they could afford it. That’s certainly not the only reason our college dropout rate is so high, but it’s certainly one of the reasons.
In other words, the high cost of college is disguising the payoff of college. There still aren’t many better long-term investments than a college degree. Graduates have lower unemployment. They earn more. And the gap between what college and high school graduates make is only growing. But you know what they say about the long-run. It can be awfully hard to get there when the short-run costs are so high. That’s why reining in college tuition is so critical. It will both help young graduates struggling with the terrible economy, but also help more people become young graduates.
Of course, it’s not obvious how we can do this. If we knew, we’d be doing it. But it’s worth remembering: That’s how you win the future.