At the last minute, just before a July 1, 2012, deadline when the interest rate for new federal student loans was scheduled to double, President Barack Obama signed into law a bill that maintains current loan rates. For the next year at least, college students are assured that federal subsidized loan interest rates will stay at 3.4 percent.
With many college graduates already struggling with student loan debt at a time when the unemployment rate is hovering above 8 percent, the possibility that college would become even more expensive was cause for consternation among students and their parents. Even without the threat of higher college loan interest rates, in today's economy, many students are eying the cost of higher education and asking themselves: Is college worth it?
The short answer is "Yes." College is definitely worth it, and it will become increasingly more important in the next few decades.
Just a generation or two ago, a person could establish himself in a career and climb the corporate ladder without a college degree. Today, however, things are very different. We have moved away from our grandparents' high school-based economy, where a high school diploma was a fair promise of economic opportunity. In the global economy of the 21st century, we are competing not just with our fellow Americans for jobs, but also with job-seekers from all over the world. As recently as the 1980s, the United States led the world in the number of young adults with a college degree. Today our country ranks 16th among industrialized nations in college-completion rates. More worrisome is the fact that -- given demographic and educational trends -- the United States is on track to fall to last place among industrialized nations by 2025. This growing gap between the United States and other countries threatens to weaken American economic competitiveness.
A study conducted by the Georgetown Center on Education and the Workforce estimates that the economy will create nearly 47 million jobs by 2018, including 14 million new jobs and 33 million jobs replacing workers who leave or retire. Approximately 33 percent of those jobs will require a bachelor's degree. Another 30 percent will necessitate an associate degree or at least some college training. Only about a third of those jobs will be available to people with a high school diploma or less. Those jobs are expected to be confined to three low-wage job categories: food and personal services, sales and office support, and manufacturing and construction.
The economic gaps between those with a college degree and those with just a high school diploma are getting larger as well. When it comes to employment figures, the numbers show that education pays: Unemployment rates decline as workers become more educated. In 2011, the unemployment rate for those with high school diplomas was 9.4 percent; for those with a college degree, the rate was just 4.9 percent. Pew Research Center surveys also show that 86 percent of college graduates say that higher education has been a good investment for them personally. According to Forbes, a typical college graduate earns about $55,000 annually, whereas high school graduates earn, on average, $23,000 per year. The stark reality of the gap between those with a college degree and those without: It is estimated that a college graduate earns an additional $1 million more in lifetime earnings than a high school graduate. College graduates are also more likely to be in jobs that offer better benefits and working conditions.
In addition, job patterns -- the ways in which we work -- have changed dramatically over the past generation. Instead of starting a job in one industry and slowly advancing over an entire career with that same company or organization, most people now work in specific occupations (such as a financial analyst or an engineer) and switch jobs frequently, often from one industry to another. On average, American workers change jobs 10 times in their lifetimes. Education gives you choices, and it gives you flexibility to move from one sector to the next.
In a time of economic uncertainty, and with tuition costs climbing, it's tempting to try to convince ourselves that college isn't a necessary expense. However, the United States faces great challenges in the decades ahead, and I know of no challenge that is served by having less educated people work on it.