Is a College Degree Worth It?
Statistics have shown that by 2023, nearly 40% of borrowers are expected to default on their student loans. Thus, begging the question, are college degrees even worth it? Does the increase in wages college degrees justify the exorbitant price of a college degree?
In short - yes. As society progresses, the demand for a higher level education has transcended more than ever. Nevertheless, there’s a shortage of supply in the labor market. For example, in America, 35% of job openings require at least a bachelor’s degree, while but only 33% of the workforce has one. This reflects the excess demand for employees with bachelor degrees, thus exemplifying their massive wage increase.
In estimation, a full-time worker with a college degree earns an average $59,124 per year. On the contrary, the average salary of someone with no degree is $38,376. The discrepancies on the annual incomes depict a clear 35% margin. Another benefit derived from possessing a bachelor's degree consists of the exposure experienced from having a better job. A bachelor's degree provides more job options associated with job satisfaction. Ultimately, leading to a healthier and happier life.
So why are so many student loan borrowers defaulting on their loan? With an average loan of $32,731 from the Class of 2017, it could take years to pay it off. Any interference in one’s career could impact the ability to pay the loan back, especially it has been shown that the average American has less than $5,200 in savings. Secondly, rising interest rates are increasing the cost of student loans. For the past decade, low-interest rates on government bonds have allowed borrowers to take out federal student loans at a lower cost. However, the increase in interest rates means that direct unsubsidized student loans under the standard 10-year repayment plan could rise from 3.76% up to 5.05%, an increase of $19 per month. This number may seem insignificant, but many with pre-existing loan borrowers may have to rebudget their expenses, and failure to do so may increase the likelihood of default.
Thirdly, many college graduates are unemployed, even though there is evidence above to suggest that college degrees are in high demand. One reason is that the requirements for job openings extend to more than just a degree. It appears that in addition to a college degree, job openings also require soft skills, such as the ability to work with others, oral communication skills, social intelligence, and leadership skills. These are skills that college graduates lack. Employers are now more focused on interpersonal skills rather than GPA, according to the 2018 Bloomberg Next Study. The college degree or GPA may get you the interview, but it is not representative of one’s ability to perform at a job, just like ACT/ SATs scores and college essays.
Another reason for undergraduate employment consists of one’s choice of major. For example, STEM field majors not only earn more postgraduate but is also much less likely to be unemployed at a rate of 3.0%. On the other hand, majors in liberal arts and humanities have an average unemployment rate of 5.6%. This should not come as a surprise in the modern technology age, with an ever-increasing demand for computer science and engineering majors.
All in all, college degrees are definitely worth it. But if you want to avoid defaulting on your loan, it has been shown that soft skills are considered more highly than your GPA, so instead of working towards the 4.0 GPA, consider joining more clubs on campus and improving your social ability.
Edited by Naomi Santiago.
Sources:
https://www.census.gov/content/dam/Census/library/publications/2016/demo/p20-578.pdf
https://smartasset.com/retirement/the-average-salary-by-education-level
