Is It Worth It?

Our son has been home from college the last month or so on Christmas break. The Spring semester starts on Monday. He's leaving Friday "to get a head start on the new semester" (read: to party all weekend before going back to class).

His grades for his first college semester were a little disappointing. He was an A/B student in high school. He had the infuriating habit of doing just enough to make the minimum grade cut-off level; his A's were all 89.5s, his B's 79.5s. If he had spent as much time studying as he did figuring out how to get by with the minimum effort he would have been the valedictorian.

Youth ... sigh...

Anyway, his college grades were all one level lower - B's and C's instead of A's and B's. We had a little come-to-Jesus meeting about them. He now understands that if there is not significant improvement this semester his future options include living at home while going to the local community college, joining the military, or moving out and getting a job.

With that as background, I ran across this article.

New year, same bad news for recent college grads

If you’re getting ready to send junior back for his spring semester of college (or preparing to start your own), you may want to avoid the latest edition of the New York Fed’s Issues in Economics and Finance. In it, three Fed economists ask “Are Recent College Graduates Finding Good Jobs,” and the news is sure to fuel talk of a “higher education bubble.” In just seven short pages, the paper lands a series of body blows on the college value proposition.

Among the findings:

1. Underemployment for recent college graduates is high and has steadily increased since 2001.

During the first decade of the 2000s, the underemployment rate rose somewhat sharply after both the 2001 and 2007-09 recessions, and in each case, only partially retreated, resulting in an increase to roughly 44 percent by 2012. Thus, it appears that the underemployment rate has, in fact, been rising for recent college graduates since 2001.

2. Underemployed college graduates are increasingly working lower quality jobs.

The proportion of recent graduates holding “good non-college jobs” (those earning $45,000 or more per year in 2012) has plummeted since 2001, while the percentage holding “low-wage jobs” (those with average salaries below $25,000) jumped during that period.

3. Not all college majors are created equal.

Among recent grads who majored in business, 50% were underemployed and 6% were unemployed; in communications, 54%, 6 %; in liberal arts, 52% and 8%; and in leisure and hospitality, 63% and 7%. At the other end of the spectrum, engineering majors fared particularly well (20% underemployed, 5% unemployed), as did those who studied health (22%, 3%). Education majors also did well (22%, 4%), an indication of how the public schools fared when compared to the rest of the economy.

Supplementing the above, a Hamilton Project report has found that nearly half of families in the U.S. fall into the "lower-middle class" category, defined as those with income between 100 and 250 percent of the federal poverty level (that is, between roughly $15,000 and $60,000, depending on family size and composition). Almost half of those families are headed by individuals who have attended college, with 14% of them holding a bachelor's degree or higher.

In other words, a college degree is not a ticket to the middle class (or above).

Just what parents want to hear as their kids get ready for a new semester...