CHAPTER 2

The State of the College Major

For all of the personal and economic struggles individuals confront, a 4-year degree has probably never been more valuable from an economic, employment, and professional development perspective. The unemployment rate for all U.S. workers with bachelor’s degrees or higher is just 3.2 percent, compared with a national average of 6.1 percent.¹⁷ “Earnings disparity between high school and college graduates has widened for successive generations of workers ages 25 to 32. Full-time workers with a college degree earn about $17,500 more annually than those with just those with only a high school diploma.¹⁸ The pay gap between college graduates and everyone else reached a record high last year based on an analysis of Labor Department statistics by the Economic Policy Institute. Individuals with 4-year college degrees made 98 percent more an hour on average in 2013 than those without a degree. That’s up from 89 percent 5 years earlier, 85 percent a decade earlier, and 64 percent in the early 1980s.¹⁹

The research strongly suggests that graduates with a 4-year bachelor’s degree earn more over their lifetime than individuals with a high school diploma and those with an associate’s degree (Tables 2.1 and 2.2).²⁰ “The median 2013 salary for young millennials with at least a bachelor’s degree was $45,500, while their peers who only went to high school were making just $28,000 a year. A two-year degree increased their earnings but only to $30,000.”²¹ One of America’s famous college dropouts even declares that higher education is indeed worth the investment of time, work, and money. Echoing the benefits of earning a college diploma, Bill Gates wrote on his personal blog that “getting a degree is a much surer path to success as college graduates are more likely to find a rewarding job, earn higher income, and live healthier lives.”²² New research supports Gates’ observation and “found that education usually pays off for individuals and society in today’s technologically complex, globalized economy.”²³ With this in mind, however, it behooves me to state that since this publication debunks the fallacies associated with college major and lifetime earnings potential, let me suggest that a college degree alone is no guarantee of higher income. Many factors contribute to long-term earnings potential. A college degree is just one of them. Despite the struggles of graduates in the postglobal recession era of 2008 to the present, investing in a college degree is still relevant, smart, and practical. Those who choose not to pursue a 4-year degree are often in danger of falling further behind in employment opportunities and income potential. Unfortunately, the recent enrollment trends across the nation suggest that the future could witness a potential shortfall of college-educated workers. “By 2020, 65 percent of all American jobs will require some form of postsecondary degree or credential, but the current rate at which colleges and universities are awarding them will fall short by roughly 5 million.”²⁴

Table 2.1 Education Level and Earnings

Table 2.2 Education Level

Despite the higher salaries and employment opportunities associated with a bachelor’s degree, 930,000 fewer Americans were enrolled in college between 2011 and 2013. “The drop-off in total college enrollment during 2011 to 2013 follows a period of expansion. Between 2006 and 2011, college enrollment grew by 3.2 million. This level of growth exceeded the total enrollment increase of the previous 10 years combined (2.0 million from 1996 to 2006).”²⁷ The National Student Clearinghouse Research Center reported that in the fall 2014, overall postsecondary enrollments decreased 1.3 percent from the previous fall from 19.9 million to 19.6 million.²⁸ Although an estimated 3 million more people are projected to enroll in American colleges and universities between 2012 and 2022, this still represents a significant slowdown in enrollment growth compared with the previous decade.²⁹

Degree completion rates are also slow and further contribute to the lack of college-educated workers. For students entering community college, the graduation statistics are bleak with just over one-third (39%) of individuals graduating within 6 years.³⁰ For those pursuing a bachelor’s degree, it is a slight improvement with 59 percent of students graduating within 6 years.³¹ As a result of these low graduation rates, the United States ranks 12th in developed countries among citizens between the ages of 25 and 34 with a college degree.³² In referring to this loss of educational status Gaston Caperton, president of the College Board, said, “When I was in school, we were No. 1 in the world in college graduations. When I was governor, we were third, and I was surprised by that drop. Now we’re 12th at a time when a good education is critically important to getting a decent job.”³³ Coupled with this precipitous drop in college attainment ranking is also the harsh realization that the United States is one of the few developed countries where a less educated generation is replacing an older, more educated generation.³⁴

However, exactly why are undergraduates taking so long to graduate from either a 2-year or 4-year higher education institution? To shed some light on this issue, Public Agenda published a report for the Bill and Melinda Gates Foundation entitled With Their Lives Ahead of Them: Myths and Realities About Why So Many Students Fail to Finish College. The report concluded: “While many Americans still envision the typical undergraduate as 18 to 22 year-olds…living in college dorms, going to school full-time, attending ball games and fraternity parties, maybe working a few hours a week or in the summer to bring in a little spare cash…the facts show quite a different picture.”³⁵ According to the report:

   •   45 percent of students attending 4-year schools work more than 20 hours a week.

   •   60 percent of students attending community colleges work over 20 hours a week.

   •   25 percent of students attend a residential college many people often envision.

   •   23 percent of college students have dependent children.³⁶

Other reasons students may need additional time include choosing to double major, pursuing cooperative education experiences, or because they need to take developmental courses at the onset of their first semester. In short, the vision of a typical undergraduate is changing. So too is their ability to complete a 2-year or 4-year college degree. Research by the National Student Clearinghouse tracked 2.4 million first-time college students who enrolled in fall 2007 and concluded that 72.9 percent of students who started at 4-year, private, nonprofit schools, and 39.9 percent of those who started at 2-year public institutions graduated in 6 years or less.³⁷ One of the great ironies in higher education is that “students and families spend a tremendous amount of time and effort in selecting a college, but too many students fail to engage in the process that follows: getting ready for their first year and figuring out what they want to get out of the entire college experience.” As a result, some 400,000 students drop out of college each year and one-third of students transfer at least once before earning a degree.³⁸ With a projected two-thirds of all jobs in the United States requiring education beyond high school by 2025 this enrollment slowdown could further exacerbate the growing need for college-educated workers. The rise in college tuition is one contributing factor to this slowdown.

Between 1978 and 2012, the cost of a college education rose 1,120 percent—substantially above the rate of inflation.³⁹ Since 1985, the overall consumer price index has risen 115 percent, whereas the college education inflation rate has risen nearly 500 percent. “If the cost of college tuition was $10,000 in 1986, it would now cost the same student over $21,500 if education had increased as much as the average inflation rate but instead education is $59,800 or over 2½ times the inflation rate.”⁴⁰ From fiscal years 2003 through 2012, state funding for all public colleges decreased while tuition rose. Specifically, state funding decreased by 12 percent overall, while median tuition rose 55 percent across all public colleges. After the 2008 global economic crisis, higher education institutions received less of their funding from states and increased their reliance on tuition revenue from 17 to 25 percent. Correspondingly, average net tuition, which is the estimated tuition after grant aid is deducted, also increased by 19 percent. These increases have contributed to the decline in college affordability as students and their families are bearing the cost of college as a larger portion of their total family budgets (Table 2.3).⁴¹

Average published tuition and fees at private, nonprofit 4-year colleges and universities increased 14 percent between 2008 to 2009 and 2013 to 2014 beyond the rate of inflation.⁴² Between 2008 and 2011, the United States was one of only six countries, out of the 34 member Organization for Economic Cooperation and Development (OECD) that cut public spending for education.⁴³ When the increasing tuition costs are coupled with the cut in funding, it’s no surprise to learn that recent research illustrates that finances are weighing on practically every aspect of applying to college. As the majority of American families continue to struggle in today’s challenging economy, the amount of money parents can contribute to their child’s education has dropped during the last few years. Parents’ income and savings cover less than a third of the cost of college, compared with 37 percent in 2010.⁴⁴ These three factors—the rising cost of tuition, the decrease in government funding, and the drop in the amount of parent’s contribution—have shifted the conversation about college on to employment opportunities following graduation.

Table 2.3 Payment Method for College

In one survey, two-thirds of first-year students reported that current economic conditions significantly affected their choice of college. Students are increasingly placing a premium on the job-related benefits of going to college. “The portion of incoming freshmen that cited ‘to be able to get a better job’ as a very important reason for attending college reached an all-time high of 87.9 percent in 2012, an increase from 85.9 percent in 2011 and considerably higher than the low of 67.8 percent in 1976.”⁴⁶ Job prospects have also become part of the conversation much earlier as families worry about how college graduates will be able to pay off their debt. This focus on employment prospects has shifted the focus of higher education from “education to education’s sake” to “what type of job and career will I have?” To answer that question, many students believe the answer lies within the declaration of their academic major.