As Incomes Lag, How Will Americans Afford College?

In 1976, Newsweek ran a cover story asking “Who Needs College?” with a picture of two college graduates in their caps and gowns on a construction site with a jackhammer and a shovel, suggesting that as much as “27 percent of the nation’s work force may now be made up of people who are ‘overeducated’ for the jobs they hold.”

The problem of underemployed college graduates remains a problem, even today. The Federal Reserve has estimated in recent years that nearly 50 percent of recent college graduates are in jobs that don’t require a degree (although a recent study found that few of them are working low-skill jobs as baristas at Starbucks).

Just because we have college graduates not using their degrees doesn’t mean teenagers shouldn’t get further education after high school. Sure, not everyone needs to follow the one narrow path to four-year colleges three months after high-school graduation. We need to encourage—and in some cases build—new pathways to careers through community colleges, apprenticeships, and gap years.

In a global, information economy, some kind of post-high school education is absolutely necessary. Just a high-school diploma no longer cuts it in this economy. Today, the wage premium for a college degree—how much more the typical bachelor’s degree recipient earns compared with a high school graduate—has surpassed 80 percent. As recently as the 1970s, when factory work accounted for 25 percent of jobs nationwide, that degree premium was closer to 40 percent. No wonder why in past three decades the economic spoils have largely gone to people who have education credentials beyond a high-school diploma.

That's the primary reason we are witnessing such an education divide right now among the electorate in the presidential campaign. Those without a college degree favor Donald Trump; those with a four-year degree back Hillary Clinton. According to polls, Trump is on his way to being the first Republication nominee in more than a half century to lose among white, college-educated voters.

In a global, information economy, some kind of post-high school education is absolutely necessary.

Now Trump claims we can bring back those manufacturing jobs from the 1970s, and by doing so narrow the earnings gap along education lines. But the problem is that blue-collar jobs today require more than just a high-school education.

Over the last two years, while reporting my new book on how young adults can better launch into careers, I visited factories and training programs at community colleges around the country. During every visit I heard the same plea: we need workers (or students) who can do advanced math, solve problems, and have good oral and written communications skills. Modern factories are hiring employees who have at least a two-year associate's degree.

But even as parents realize their kids need more than just a high-school diploma in this 21st century economy, the price of that degree is getting further and further out of the financial reach of many families. As David Leonhardt reported in his debut column for the New York Times this week, “the typical household, amazingly, has a net worth 14 percent lower than the typical one did in 1984.”

Even as colleges discount their tuition more and more each year, family incomes are not keeping pace. Today, 1 out of every 5 families in the U.S. pays 100 percent or more of their annual income to cover the net price of college (the price after financial aid is figured in). Because even that discounted tuition rate outstrips their ability to pay, those families need to borrow or use savings to cover tuition bills. The situation is even worse for worse for students at the bottom of the income scale. Among those families, half pay 100 percent or more of their annual income to cover the net price of college.

This matters because whether you get a college degree is totally dependent on how much money your family earns. About a quarter of college freshmen born into the bottom half of the income distribution will manage to earn a bachelor’s degree by age 24, while almost 90 percent of freshmen born into families in the top income quartile will go on to finish their degree. And the students leaving high school in the decade ahead will be poorer than their counterparts of the past decade, especially in the South

More than a century ago, the Industrial Revolution ushered in the universal high-school movement as workers moved from the farms to the factories. Today, the global information economy demands education beyond high school.

The question we now face as a nation is how can we build more post-secondary education opportunities for all students, not just the wealthy, and make them more affordable to even middle-class families.

And that’s what we should be talking about for the remaining weeks of the presidential campaign.

Jeffrey Selingo is author of the new book, There Is Life After College. You can follow his writing here, on Twitter @jselingo, on Facebook, and sign up for free newsletters about the future of higher education at jeffselingo.com.

He is a regular contributor to the Washington Post’s Grade Point blog, a professor of practice at Arizona State University, and a visiting scholar at Georgia Tech's Center for 21st Century Universities.