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With grads earning less and tuition rising, it pays to weigh debt against earnings
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CHICAGO – Kelly Stevens is suffering from buyer’s remorse.
The 29-year-old from Fargo, N.D., took out more than $60,000 in loans to pay for a bachelor’s degree in fashion marketing from the Illinois Institute of Art. She was convinced it would allow her to open her own store or work for a major fashion company – basically, to make more money.
But nearly a year after graduating, she is waiting tables at a comedy club. Every week, she gets rejected from half a dozen marketing jobs. She can no longer make payments on some of her loans. She can barely scrape by.
“I can’t open my own store in this economy,” Stevens said. “Marketing jobs are among those that have been hardest hit. Sometimes it feels like I should never have gotten that degree.”
Money is only one of the reasons to go to college, of course. But with college costs skyrocketing and the economy worsening, the question of whether higher education is a worthy financial investment is no longer a no-brainer.
For decades, the earnings gap between college graduates and high school graduates grew and grew. Get a bachelor’s degree, and you were almost guaranteed to be a lot better off.
But the gap in income has started to shrink in recent years. U.S. Census data show that in 2007 people with a bachelor’s degree earned 90 percent more than high school graduates, down from a 96 percent gap seven years earlier. Meanwhile, more students are taking on debt. The debt levels are growing. And some graduates are unable to land jobs that allow them to pay back their loans.
Most experts insist that going to college is generally worth it. College graduates still earn substantially more than high school graduates on average: $59,365 annually compared with $33,609.
But they caution that some college choices are no longer a wise investment. Students destined for low-paying careers, they say, simply cannot manage certain debt levels. Loans can surpass $100,000 depending on the school and the borrower.
“If you’re going to be a nursery school teacher your whole life, you should not be taking out a lot of loans,” said Sandy Baum, senior policy analyst for the College Board and an economics professor at Skidmore College. “That’s the problem. It’s an investment people make without knowing how they will pay it off.”
People in business jobs can manage $46,000, according to calculations the Chicago Tribune made with a formula created by Baum. So for Stevens, paying back nearly $65,000 in loans was almost certain to be a struggle. Now that she is stuck in a low-paying service job, it’s become impossible.
Meanwhile, about one-third of college students drop out – dashing any return on their investment.
MEGAN TWOHEY
Chicago Tribune
