Thursday, September 4, 2014

The Majority of "Students" Who Enroll in College Shouldn't Bother ... For Them It's a Waste of Both Time and Money

About one half of high school graduates are unprepared to do college level work when they enroll, and they have to take remedial courses before earning credits toward graduation.

And about 40% of those who do enroll in college drop out before graduating.

And if that's not bad enough, about 25% of the 60% who do eventually graduate end up in jobs that don't require a college degree and therefor earn about the same money as a high school graduate earns.

And, of course, most college enrollees end up with big debts which have to be repaid over the subsequent years --- with interest.

And those indebted former students have trouble getting loans for such things as home mortgages and auto purchases as a result of their outstanding student loans.

And finally, most students take more than four years to graduate, thus reducing their lifetime earnings over what they would have been had they skipped college and just started working upon graduating from high school.

For Some Graduates, College Isn't Worth the Debt has the gruesome and thought provoking details:

"Roughly a quarter of college graduates with jobs are earning barely more than those with only a high-school diploma . . . .

The new research (by the Federal Reserve Bank of New York) . . . shows that, overall, a college degree significantly boosts income. The median wage of an American with a bachelor's degree was $48,000 last year, far higher than the $25,052 earned by those with only a high-school diploma. But the lowest-earning quarter of college graduates make $27,000 or less.

Accompanying research by the New York Fed also shows that many Americans with college degrees are still finding jobs that require only high-school-level education.
Reports of diverging returns on investment for a four-year degree come as the economy has begun churning out more jobs for those without college degrees than for college graduates . . . . The result is that huge swaths of recent graduates are taking jobs that don't require a college education. That in turn is boosting recent college graduates' underemployment rate . . . to 46%. . . .

The Fed report comes as the price of college continues to rise along with student debt. More than 70% of college students now graduate with loans, and the average debt is more than $33,000. Two decades ago, less than 50% of students borrowed around an average of about half of that amount. A recent survey by Gallup and Purdue University has found that debt in excess of $25,000 has a significant impact on financial, physical and social well-being even decades after graduation.

Nationally, student debt now exceeds $1.1 trillion, and one in 10 borrowers is 90 days late on payments. That debt burden has made many Americans rethink the cost of a college degree even as the value for those who study subjects that are aligned with the job market is near an all-time high.

The value of a four-year degree is just shy of $300,000, and it will take someone who earned a bachelor's degree in 2013 10 years to recoup the entire cost, according to the New York Fed. College graduates in 1983 needed 23 years to do so.

But the ROI of a four-year degree is predicated on actually finishing school in four years—a feat managed by fewer than 40% of the students who enter college each year. The New York Fed economists found that taking two additional years to complete school can end up costing well over $122,000 when factoring in the cost of tuition, fees and lost wages and raises.

The broader picture painted by the Fed data is cautionary, said Richard Vedder, an economist and the director of the Center for College Affordability and Productivity. "Out of every 100 kids who enter college, 40 don't graduate, and for the 60 who do, 15 are in the bottom quartile and don't make any more money than if they hadn't gone to college," Mr. Vedder said. "What that tells me is that college is a pretty risky investment . . . ."

Summing Up

Far too many K-12 leaders don't concern themselves with the lack of preparedness of far too many high school graduates to do satisfactory college level work.

Unfortunately, far too many college officials aren't concerned about these things either. They just want lots of butts in the seats for revenue enhancing purposes. More butts means more money, in other words.

And far too many government officials and lenders aren't concerned about these things either. They make available to anybody who wishes to enroll in college, prepared or not, the opportunity to take out government sponsored loans. This "ubiquitous money tree for all" approach provides more revenues for the colleges, and they're happy to take it. College administrators cost lots of money, you see.

So who are the unhappy campers? The majority of students, parents and taxpayers, that's who.

That's because more than 50% of the students --- far too many  --- end up unhappy and indebted student campers who didn't get their "borrowed money's worth." And for that matter, too many unhappy and indebted parents end up as losers as well. And finally, don't forget those unhappy taxpayers who in the end will get the unpaid bills if and when many of the loans default.

So parents, listen up, please. If Junior is going or already has gone off to college this autumn, please tell him to study hard and get good grades in a major that will enhance his employment opportunities. Also, tell him to do what's necessary to graduate on time.

And tell him that if he does those simple things, he will have a great chance to get a good job upon graduation. And that's because more than 50% of his fellow "students" won't do those simple things.

And please also consider telling him that if he's not willing to do those simple things, that he should just skip the whole "college thing" and try hard to get a job.

That's because college won't be worth the trouble. Neither will it be worth the time and cost to him, to you or to your fellow taxpayers.

That's my take.

Thanks. Bob.

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