Show us the money
Not long ago, the measure of a college education was supposed to be to develop well-rounded individuals. A bachelor's degree would get the new grad several steps above the ground floor in that hunt for the first job. Then, those steps gradually disappeared, and the bachelor's degree in many ways became the ground floor for jobs for which it had previously not been required.
As the value of the degree deflated – at least in perception – the cost of a degree has inflated. Instead of becoming a commodity with a lowered price accessible to more people, the opposite happened. As has been widely reported, the cost of a college education has risen faster than inflation – not only today's languid inflation rate, but in some cases more than the rampant inflation of the late 1970s.
Conservatives in government blame the cost increases on too much government money flooding the system. But in addition, private lenders jumped in to the game of helping folks get ahead – but often at a pretty stiff price.
Now, comes a dose of reality. A federal scorecard on the website of the U.S. Department of Education, titled The College Scorecard Report, shows graduates' earnings, their student loan to debt burden, and their ability to pay back those loans.
According to the report, the overall three-year repayment rate for all undergraduate institutions, weighted by the number of students borrowing at each school, was 63 percent in the combined 2010 and 2011 repayment cohorts. Thirty-seven percent of students were thus not meeting the repayment metric—either they were in default or were making monthly payments that were not reducing their loan balance. As a point of comparison, the three-year CDR was 13 percent for all students in the 2011 repayment cohort.
According to a recent report in The Boston Globe, Massachusetts schools at the lower end of the ranking are protesting their standing, saying it prioritizes career fields in which graduates enter the job market right after graduation, over careers which require graduate school or which can take a long time to develop – for example, careers in the arts.
At the top of the Massachusetts earnings list is – surprise, it's not Harvard – is MCPHS University, formerly the Massachusetts College of Pharmacy and Health Sciences, which has a substantial presence in downtown Worcester. Its graduates had a median annual income of $116,400 ten years after enrollment, according to the federal scorecard. They are followed on the oncome list by MIT, Harvard, Babson College and the Massachusetts Maritime Academy.
The DOE report, available at https://collegescorecard.ed.gov/data/, has comprehensive, real-time information on what really happens once the bills start coming in.
The topic of graduate earnings has long been a hot-button issue with higher education. It's not just the plight of the liberal arts major grad who don't have a specialization that makes the job pursuit a straightforward process– it's also become an issue in the professions. During the recession, law schools came under scrutiny for their reporting of graduates' earnings, at a time when there were more graduates than entry level jobs. In the most recent year for which data is available, law schools attracted fewer applicants than they had in three decades. Also, applications to financial programs dropped during that time. In previous recessions, it was engineers who navigated the boom and bust cycle.
While The College Scorecard Report examines only the students who took federal loans and/or grants, it provides valuable data on how school and choice or concentration of study can affect earnings. Financial literacy and the ability to solve financial problems related to the financing of an education go hand in hand. A recent article in The Wall Street Journal noted that parents should factor in the impact of meeting college costs on their own plans to retire, and students are encouraged to evaluate the relative benefits of attending a costly, prestigious school in the early years, when they could have gotten the basics of an undergraduate education at a more economical four-year or even two-year school – particularly in their early college years -- and saved a lot of money. Numbers and statistics can be bent in a thousand directions to support or refute an argument, and the large dump of data that the College Scorecard provides must be sifted through with great care. However, it does provide useful insights, and allows consumers more accessible information to consider as they map out their higher education strategy. Clearly the direction is heading towards a more engaged, informed consumer in the education arena – which can only be a good thing.
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