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Is the cost of college education stealing the American dream from Millennials?
Millennials are moving back with their parents in droves, and in last week’s post we discussed how this trend benefits their careers. A lot of readers responded that while this living situation may help their professional life, it wasn’t their motivation for moving home. Turns out, student debt is a huge driving factor behind this cultural shift.
One specific comment caught my attention:
“Millennials are living at home because most have student loans that are hard to pay off. So instead of getting a mortgage, they’re paying off $100k+ in student loans.”
Most people know college isn’t free, but when we hear of tuition increases year after year, it should give everyone pause. The increasing costs of higher education simply aren’t sustainable for the majority of students. And as this reader points out, it’s making the American dream unattainable for an entire generation.
Some economists fear an education bubble is bound to pop in the near future. Couple skyrocketing student debt with a market in which graduates outpace the demand for labor and you get disaster. Of course you’re going to move in with your parents if you can’t find a decent-paying job and you are stuck with $37,000 of student debt — the average amount for the graduating class of 2016.
Some people argue that students are being oversold on what a college degree means in the modern world. A diploma today does not automatically equal high pay and job security, and most students do not have an offer waiting when they graduate. In fact, when they get that diploma, the real work is just about to begin.
Students today must make tough decisions because college does not make sense for everyone. For an 18-year-old with minimal financial literacy, it’s difficult to understand the long-term ramifications of paying back a large student loan. The standard repayment plan is 10 years for federal student loans, but research shows it takes an average of 21 years to pay off a bachelor’s degree. That means if a student graduates from college at 22, they’ll finally pay off those darn student loans when they’re 43 years old.
This leads to the next important consideration: Which degree will most likely result in a well-paying job? Of course students should study something that interests them, but that shouldn’t be the only factor in their decision. The Bureau of Labor Statistics website outlines what students can expect to make throughout a chosen career. It notes growth projections and cautions, too. Students can also talk with current professionals in the industry and ask questions. Is a four-year degree necessary or will a two-year do the job? Will the student have to move to a new city to find a job or is there demand in their current location?
The choice to attend college is an individual one, and like a smart business, if the ROI doesn’t make sense it’s time to look at different options. If costs continue to increase, I predict more young people will look at alternatives to the traditional university experience, such as trade schools, in-house apprenticeships or self-education followed by freelancing.