July 13, 2022
The following article is from Welcome to the Jungle
College has traditionally been a springboard to better-paying jobs and financial security, but a confluence of economic factors has more students choosing to jump straight into the labor pool instead.
Those factors include higher wages and a stronger job market: employers added nearly 400,000 jobs in May, and wages are up more than 5%, according to the Department of Labor. Meanwhile, rising tuition and increasing interest rates (which make student loans more expensive) are pushing up the cost of college even as many schools haven’t been able to return to a pre-Covid experience. “After a semester or two of virtual learning, people were feeling pretty let down, especially at higher-cost institutions,” says Jeffrey Strohl, research professor and director of research at the Georgetown University Center on Education and the Workforce.
Such trends are incentivizing more young people to opt out of college.
More than one in five undergrads who started school in 2018 said they may not return in fall 2022, according to a survey by Intelligent.com. Among all students, 17% said they didn’t plan to return next year and 19% were unsure. Overall college enrollment declined 3.1% from 2020 to 2021, according to the National Student Clearinghouse Research Center, and has fallen 6.6% since 2019. In 46 states, college enrollment dropped last year. “This started prior to the pandemic,” says Jeremy Wheaton, president and CEO of ECMC Group*, a nonprofit aimed at helping students find success. “But, like a lot of things, the pandemic really accelerated the move away from the traditional four-year path.”
An impact on future earnings
Taking advantage of the current job market was one of the top reasons cited in the Intelligent.com survey for quitting school. Economists and career experts, however, say that while joining the job market full-time may be a financial boon to students now, they could be sacrificing significant earnings over the course of their careers.
Male workers with a bachelor’s degree earn about $900,000 more over the course of their career than their counterparts without a diploma, according to the Social Security Administration. For women, the lifetime earnings gap is $630,000.
Wheaton points out that such statistics compare all college grads to all of those who don’t have a degree, missing the nuances of the advantages that some skilled workers, such as plumbers or nurses, might have in the job market.
Still, while the labor market is tight right now, there are signs that the economy may be tilting toward a recession — which could mean that many of the young workers snagging high-paying jobs now could find themselves on the receiving end of a layoff in the future. Historically, workers without a college degree are among the first to lose their jobs and take longer to find new work than those who do have one.
“Lower educated workers are the shock absorber in our economy,” Strohl says. “If you have a decline in economic activity, they’re the first to be fired.”
That said, experts also acknowledge the difficulties many students face when it comes to paying for college, particularly for low-income or first-generation college attendees. The net price of college (the cost after scholarships, grants, and other financial aid) was $14,200 per year at public schools and more than $28,000 at private schools, according to the National Center for Education Statistics.
While that’s significantly less than the sticker price of school, it’s still a hefty price tag for young adults to bear on their own, and one that can be difficult to justify against the prospect of earning wages immediately. A 2021 study of high schoolers by ECMC Group found that six in ten worry about how they will pay for college and nearly 30% said the pandemic’s financial impact makes it less likely that they will go to a four-year college.
Alternative paths to the right career
Wheaton suggests that getting training for skilled jobs or trades where the labor supply is low may provide an important path toward economic security for such students. “There are shortages in careers like nursing, truck-driving, manufacturing, even pilots,” he adds. “The pandemic exacerbated the shortages, but we also need to remove or lessen the stigma that the only way to achieve the American Dream is to pursue a four-year degree.”
While a four-year degree may not be the right path for everyone, from an economic perspective, starting college and then dropping out can be a step in the wrong direction. That’s because college dropouts may miss out on a year (or more) of work and find themselves saddled with debt without the wage boost of their diploma, putting them even further behind their peers. “They get all of the debt and none of the benefits of going to college,” Strohl says.
The need for professional guidance early on
A better approach, experts say, is for young people to be thoughtful and intentional about their post-high school plans and their economic impact over the long term. For some students that might mean looking for a less pricey school or one that provides more financial support to lower-income students.
For others, it may mean considering other educational paths, including obtaining a shorter, skills-based certification or degree that allows them to start earning money more quickly while also making them more employable. “For people coming out of high school, they definitely need more professional career guidance to help them know the risk they’re taking,” Strohl says. “There are many good pathways for people without a B.A. degree, but they’re a little harder to find.”
The important thing to know is that alternative solutions do exist, and seeking guidance from career counselors or workshops in school or college will give students a better overview of the different pathways to success that are out there.