Do You Need A College Degree Anymore?
by Kate Brunotts
In an age on the brink of a recession, managing your money wisely is more important than ever. Meanwhile, we continue to spend more and more repaying student loans— A 2019 study by TD Bank found that student debt holders spend on average 20% of their take-home pay on student loans.
This is quite the percentage, considering the general recommendation for rent is 30% of our annual income. Although to be fair, Americans generally end up spending 37% on housing alone.
Unlike other loans, you cannot file for bankruptcy on student debts if worst comes to worst. Is a college degree worth the endless financial burden anymore?
The True Cost of College
College degrees weren’t always so astronomically expensive. In fact, in the past decade alone, the average price of private college tuition and fees has risen about $7000, which outpaces inflation rates by 3 points.
Though the rate at which college prices are increasing seems to be slowing down (Between 2019-2020 the increase rate was about 2.3% compared to the 5% average of the past two decades), this still remains a large expense many families just can’t afford.
To add to the issue, most students come in with somewhat unrealistic expectations about how long they will be in school, and hence the total price tag of their college degree.
About 86% of Freshmen students sampled in a study by UCLA believed they were going to graduate within 4 years with a Bachelor’s degree. In actuality, only about 41% of students will graduate within 4 years, and only 59% within 6.
There’s clearly a huge disconnect between the degree itself and our aspirational and financial aspirations behind it. While there’s a heavy emphasis on college preparation and getting into “premiere” schools, resources for recently graduated students are largely unavailable.
Partly as a result of the rising costs of education, traditional adulthood milestones have since been delayed. In 2005, the percentage of young adults (categorized as 18 to 34-year-olds) living at home was at 26% which rose to an average of 34% in 2015.
While moving out is not necessarily a marker of financial success, it objectively speaks to the way that college continues to largely affect our lives outside of the time that we’re actually there.
Anecdotally, 1 in 8 divorcees cite outstanding student loans as a specific cause to the end of their marriage. While financial problems have caused relationship issues historically, it’s no surprise that with a culminated $1.5 trillion dollars in student loan debt for America alone, college debt is significant in more ways than one.
The Value of A Degree
It’s true that employers still use college degrees as an easy marker of qualifications. So why is it that about 1 in 3 college graduates work in jobs that don’t require a college degree?
One popular theory comes down to degree inflation— Since a degree is almost expected in the workforce, the playing field has to get more competitive. A degree on its own is not enough to score you a well-paying job anymore.
It’s harder than ever to get hired, which is perhaps why more than 40% of college graduates’ first job out of school doesn’t require a degree in the first place. The same study finds that a decade later, 3/4ths of graduates who took non-degree demanding jobs will continue to work outside of what they studied.
Another contributing factor is the rise in the gig economy. As of 2018, more than 1 in 3 of working Americans did some type of freelance work, and that number is only on the rise. Employers have great incentive to hire freelancers since they don’t have to offer traditional benefits that can be costly on their end.
You don’t need a degree to be a freelancer either— According to a study by FreelancerMap, less than half of workers surveyed had completed a college degree.
The Future Of Work and Education
It stands to reason that more and more workers are finding avenues of success without a college degree. After all, the internet makes information and resources more available than ever to subsets of people who may not have access to a traditional degree, especially with the rising costs of college.
There’s no denying that the educational landscape is changing, and with it, America’s workforce. While a degree can be helpful for needed educational training and job preparation, it certainly comes at a much higher cost than what is normally discussed.