Is a college degree really worth the expense? A recent study, authored by Richard Vedder, Jonathan Robe, and Christopher Denhart, “used employment data from the U.S. Bureau of Labor Statistics to calculate that the number of college graduates is growing at a rate disproportionate to the number of jobs requiring a college degree,” reports the Chronicle of Higher Education. “They question whether America spends too much on higher education, and ask whether society can afford to subsidize higher education for graduates who end up in jobs they could have landed without going to college.”
“The study, from the Center for College Affordability and Productivity, says that nearly half of all American college graduates in 2010—some three years after the recession began—were underemployed, holding relatively low-paying and low-skilled jobs,” writes Allie Bidwell for the Chronicle. You can read the report, issued by the Center for College Affordability and Productivity, here (pdf).
This misalignment between graduates and their employers is not limited only to undergraduates. A more dramatic example can be found at law schools, whose students are burdened with, on average, $125,000 in debt, according to figures cited by Brian Tamanaha, professor at Washington University Law School and author of Failing Law Schools.
“Now, 90% of law students finance their education through debt,” said Tamanaha at a recent Cato Institute event. “This because they’ve already spent a lot of money going to undergraduate institutions, and the rise in tuition has been reflected in a remarkable rise in debt.”
“So if you want to get an accurate picture of the real debt situation carried by recent graduates, we’re talking $150,000 and up,” said Tamanaha. He explained that that someone with a debt of $150,000 has a $1,800 monthly payment, and those with a debt of $125,000–the average–have a $1,400 monthly payment. These figures are astronomical and most law graduates can’t pay them.
Tamanaha noted that “As a consequence of this, thousands of law students will be on IBR, income-based repayment. It’s a government program that reduces your monthly loan payments according to a formula related to your income.” This program adds additional burdens to the taxpayer; under IBR, the remainder of your debt is forgiven after 20 years.
To further the moral hazard, law schools are now counseling students that their debt can be financed under IBR and will be forgiven eventually, said Tamanaha. Why not take out $150,000 in debt, then? (This includes undergraduate debt and compiled interest, according to the author’s figures.)
“I think law schools are sort of the ‘canary in the coal mine,’ in this regard, right?,” said Paul Campos, Professor at Law at the University of Colorado at Boulder, at the event. Campos is the author of Don’t Go to Law School (Unless). “We’re sort of the worst.”
Indeed, law students are not exempt from the underemployment described by Vedder and his co-authors in their recent study. Tamanaha said that some law schools are advertising a 90-100% employment rates. However, he noted that the Bureau of Labor Statistics is predicting 22,000 openings annually–with law schools graduating between 40,000 and 45,000 students.