Banks for You!

Most high school graduates in the U.S. still aren’t going on to get a college degree. That’s true despite the increasingly dim economic prospects for those who only have a high school diploma.

A lot has been written about students who take on crushing debt to go to college. I’ve written some of those stories. But the far bigger story is this huge population that doesn’t go into debt for school, and who wind up far worse off for it.

Here are the facts:

• The percentage of 25- to 34-year-olds in the U.S. with at least a two-year degree is just 40%, while only 30% have four-year degrees.
• The premium for a sheepskin has risen over the past few decades. In this age group, college graduates with at least a four-year degree earn 60% more than high school graduates. At the end of the 1970s, college grads earned just 25% more.
• Earning power for those without college degrees has dropped sharply in recent decades. A male with only a high school degree, for example, earns 31% less in inflation-adjusted terms than his counterpart two decades ago.
• Unemployment for those with a college education is about half that for those with just a high school degree. The disparity in unemployment rates grew wider during the recent recession.

So opting not to get a degree means substantially less income and greater job insecurity. And this penalty will just get worse in coming decades as more manufacturing jobs get shipped overseas. That’s why Pop over at Pop Economics recently wrote, “For the love of God, go to college,” the phrase I quote in my headline, in his post “2011’s job market: The separation of the haves and have nots.”

One of the factors in our low degree attainment rate is potential students’ concern about taking on debt.

But the median cumulative debt among graduating bachelor’s degree recipients at 4-year undergraduate schools was $19,999 in 2007-08, according to Mark Kantrowitz at FinAid.org, who analyzed the latest National Postsecondary Student Aid Study. Median means half had more debt, half had less. One quarter borrowed $30,526 or more, and one tenth borrowed $44,668 or more.

As the authors of the new book “Not Quite Adults” point out, the median debt load is about equivalent to what you’d borrow to buy a new car. Yet many—too many—balk at this investment.

I quoted the authors, who scoured a decade’s worth of recent longitudinal and panel studies of people in their 20s for the book, in a recent column “Is the Ivy League a waste of money,” and what they have to say is worth repeating:

“Debt is not the main reason young adults are failing to launch,” they wrote. “In fact, not taking on debt is sinking the futures of many young adults. Fearful of the burden of college loans, they are underinvesting in themselves at this critical time, letting their immediate worries compromise their long-term security. . . . Not taking on college debt in this knowledge economy is a costly decision.”

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