Wage stagnation while college costs and student loan debt are skyrocketing
By Joe Messinger, CFP®
April 27, 2017
Going to college is an investment. If you are going to spend upwards of $100,000 on something, it better be worth the money, and just like any other investment you must make the most of it.
Unfortunately, a new study showed that millennials are graduating with more advanced degrees than their boomer parents BUT are earning less. “Boomers had higher incomes, owned more homes, and had twice the net assets that millennials have today.”
In addition according to the Georgetown University Center on Education and the Workforce in Washington, “wages for college graduates across many majors have fallen.” For example, business grads between the ages of 22 and 26 saw their wages drop from $44,000 in 2009/2010 to $40,000 in 2014/2015. While some degrees like petroleum engineering have escaped this trend, many careers have been impacted by automation and technology.
Finally, consider this: “Almost two thirds of student loan borrowers over the age of 35 are still paying off their debt.” We hear lots of stories about people who have never put a dent in their student loan balance even after making years’ worth of the minimum payments. The rise in loans coupled with the relative stagnation of wages has left many wondering if college is still worth it.
The short answer is “yes,” but simply attending college and getting good grades is not enough anymore. When asked, grade point average is low on a future employer’s list of things they are looking for. Employers are looking for those soft and technological skills and experiences to set an applicant apart. 44% of executives think Americans lack soft skills like communication, creativity, collaboration, critical thinking, etc.
What things do families and students need to think about to win this war?
Choice of college major and career is key. How does the student’s choice fit who they are and who they want to be and the lifestyle they want to live? Students need to consider the future prospects of their chosen career and if those prospects fit their picture of the future. Career exploration is important to their understanding. (By the way, if you have a student struggling with the career/college major choices or career exploration? Reach out to Beth Probst and At The Core™.)
The choice of college will impact not only the bottom line cost and potential student loan debt (starting salary vs. debt load); but also, the college’s experiential learning opportunities lead to those experiences and skills employers are looking for. What are the college’s co-op, internship, and study abroad opportunities? How are students gaining skills and experiences outside of college?
The networking potential of these outside experiences can be pivotal, but don’t mistake networking potential with the choice of an “exclusive”, brand-name college. More and more employers like Google are disregarding the college name in their applicant search. They are more concerned with the experiences a student had at whatever college they chose and not the name of the college on a piece of paper.
Google’s Laszlo Bock who is in charge of hiring summed it up well. “The first and most important thing is to be explicit and willful in making decisions about what you want to get out of this investment in your education.” We couldn’t have said it better ourselves!
July 25, 2017