There is one clear take-away from the Biden Student Loan Debt Relief Plan. Critics have taken this much-anticipated moment to drag student loan borrowers through the mud, portraying them as poor higher education consumers who bite off more than they could chew. Some critics have revived the “university isn’t for everyone” campaign. Worse, others suggest that student debt could be avoided if students simply worked longer hours during their studies in a labor market that often failed to provide a living wage or benefits.
These attempts to lower the ROI of a bachelor’s degree for those who can’t afford to pay it outright only serve to discourage low- and working-class students from achieving and sustaining economic mobility. As a staunch supporter of community colleges, I strongly believe that associate’s degrees can be a way to get better job opportunities, but they are also a path to a bachelor’s degree, providing greater lifelong income, lower unemployment rates, and social mobility for the student and their family. A study by Georgetown’s Center on Education and the Workforce ranked 4,500 U.S. colleges and universities based on their ROI and confirmed that a community college degree and many certificate programs had the highest short-term return, but ten years after enrollment, bachelor’s degrees top out. return on most two-year references. Transitioning to a four-year community college degree can come with student debt, but it also increases earning potential.
Education level remains the strongest predictor of employability and income, according to the US Bureau of Labor Statistics. While some employers have responded to the pandemic by reducing degree requirements and switching to skilled workers, the value of a bachelor’s degree is confirmed. During the COVID-19 pandemic, the US Bureau of Labor Statistics reports that high school graduates gained 17.6 percent, while college graduates fared better with an unemployment rate of 8.4 percent. Bachelor’s degree holders also fared better during the Great Recession, and as noted in the 2016 report, America’s Divided Recovery, 99 percent of jobs created required at least some college education. In 2021, a bachelor’s degree holder had an average weekly wage of $1,334 and an unemployment rate of 3.5 percent. This is significantly higher than a high school diploma holder with $809 a week and an unemployment rate of 6.2 percent. As of August, the unemployment rate for those with only high school diplomas is 4.2 percent, more than double that of bachelor’s degree holders at 1.9 percent.
When a student takes out a loan to pay for his studies, he invests in the companies that will employ him. Their act of faith is dictated by a market economy that is relentless in the way it balances its profit demands against the training needs of its employees. Job seekers are guided by employers, who unashamedly set educational requirements and, in highly ambiguous and protective HR jargon, spell out “compensation commensurate with education and experience.” When a student chooses, or in many cases has no choice but to borrow to pay for a college education, he agrees to assume the costs associated with acquiring a set of skills will use his profession and for the benefit of the hirer. They are responsible for the interest, and after getting the credentials, they have to enter a job market that requires the highest level of education, even more time commitment, and no promise that they will earn enough to repay that debt.
However, the ROI of a college degree benefits employers as much as it benefits student borrowers who couldn’t afford a college degree without a student loan. In 2020, McKinsey reported since his first business case for diversity in 2015 that “the relationship between diversity in executive teams and the potential for financial outperformance has strengthened over time”. Without viable, affordable pathways to earning a bachelor’s degree, the U.S. workforce will fail to reach a critical mass of diverse talent, especially those ready to enter management positions. Plus, a college education has benefits beyond higher pay. Higher educational attainment also correlates with greater civic participation, community involvement, better health and longer life. Some might argue that a high school student doesn’t necessarily think about retirement when choosing college or accepting a student loan, but a college degree, especially for first-generation and working-class students, is an exercise in social mobility that may mean breaking. the cycle of poverty and propelling a household towards upward mobility, generational wealth and becoming second, third generation graduates.
Unfortunately, the cost of a college degree or even a skilled education remains out of reach for many Americans, and that needs to be addressed. However, making the problem of loan forgiveness and suggesting that more people be restricted to certain types of post-secondary education assumes that we have somehow saturated the job market with degrees. This criticism is all aimed at the borrower and dismisses the employers, who continue to push for the immediate return of a workforce that saw the lowest-skilled workers become responsible for the survival of the economy during the pandemic.
COVID-19 has led to a reduced and shifting workforce where employers have begun to reduce job requirements. The rumblings and stories of shortcuts to consistent work served employers as they threw higher wages that lacked the resilience of recognized positions. The so-called on-the-job training was more a sign of employer desperation than a long-term commitment to consistent work or a newfound appreciation for the work that paid off. This proposed highway to work has many detours, including postponing post-secondary education. While you can get a job quickly these days, many of these opportunities distract those in the lower income brackets from a college degree or education that provides skills and credentials that would provide a stronger shield against stagnant wages or unemployment.
Funding four years of education, especially for low-income students, is harder than ever. Pell scholarships used to cover 80 percent of the education costs of a public four-year university. Today they only cover about 32 percent. This raises the question of how we can provide people in the lower income brackets with a path to meaningful work, increase their tax potential, extend their life in the labor market and provide them with a means to retire with dignity. Biden’s student loan debt forgiveness plan is a start in that direction. Despite all the concerns that can be expressed about this, one thing is certain: divestment from education is not a solution for anyone. Everyone needs post-secondary education.