There is one clear take away from the Biden Student Loan Debt Relief Plan. Critics have taken this long awaited moment to drag student loan borrowers through the mud and depict them as bad consumers of higher education who bit off more than they could chew. Some critics have rekindled the ‘college isn’t for everyone’ campaign. Even worse, others suggest that student debt could be avoided, if while attending college, students just worked more hours in a job market that often fails to deliver living wages or benefits.
These attempts to diminish the ROI of a bachelor’s degree for those who cannot afford to pay for it outright only serve to discourage students from low and working class backgrounds from attaining and sustaining economic mobility. As an avid supporter of community colleges, I am convinced that associate’s degrees can be pathways to better job opportunities, but they also are a path to a bachelor’s degree allowing for greater lifetime earnings, 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 US colleges and universities based on their ROI and confirmed that a community college degree and many certificate programs had the highest returns in the short term, but ten years after enrollment, bachelor’s degrees overtake returns of most two-year credentials. Transferring to a four-year degree from a community college may incur some student loan debt, but it also expands earning potential.
According to the US Bureau of labor Statistics, educational level continues to be the strongest predictor of employability and earnings. While some employers responded to the pandemic by reducing degree requirements, and moving to skilled-based hiring, the value of a bachelor’s degree is confirmed. During the COVID-19 pandemic, the US Bureau of Labor Statistics reports that workers with a high school diploma reached 17.6 percent while college graduates fared better with a 8.4 percent unemployment rate. 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 the jobs created required at least some college education. In 2021, a bachelor’s degree holder had median weekly earnings of $1,334 and an unemployment rate of 3.5 percent. This is considerably higher than a high school diploma holder at $809 per week, and an unemployment rate of 6.2 percent. As of August, the unemployment rate for individuals with only high school diplomas is 4.2 percent, more than twice that of bachelor’s degree holders at 1.9 percent.
When a student takes out a loan to pay for college, they are making an investment in the companies that will employ them. Their act of faith is one dictated by a market economy that is unforgiving in how it scales its profit demands against the educational needs of its employees. Job seekers are guided by employers, who unapologetically post educational requirements and display in very ambiguous and protective HR jargon, “compensation commensurate with education and experience.” When a student chooses, or in many instances has no choice but to borrow to afford a college education, they are agreeing to take on the costs associated with gaining a set of skills they will use in their profession and in service of whoever hires them. They are responsible for the interest, and upon earning the credentials must enter into a job market that demands the highest levels of education, even higher levels of time commitment, and no promise that they will earn enough to pay back said debt.
However, the ROI of a college degree benefits employers as much as it does student borrowers who could not afford a college education without a student loan. In 2020, McKinsey reported since its initial 2015 business case for diversity “the relationship between diversity on executive teams and the likelihood of financial outperformance has strengthened over time.” Without viable, affordable pathways to bachelor’s degree attainment, the American workforce will fail to reach a critical mass of diverse talent, especially those ready to enter management-track positions. Furthermore, a college education has benefits beyond higher wages. Higher educational attainment also correlates with increased civic participation, community engagement, better health, longevity. Some may argue that a high school student is not necessarily thinking about retirement when choosing a college or accepting a student loan, but a college education, especially for first-generation, and working class students, is an exercise in social mobility that can mean breaking the cycle of poverty and propelling a household towards upward mobility, generational wealth, and becoming second, third generation college graduates.
Unfortunately, the costs of a college education or even skilled training remains out of reach for many Americans, and that needs to be fixed. However, making loan forgiveness the problem and suggesting that more people should be restricted to certain types of postsecondary education assumes that we have somehow saturated the job market with degrees. These criticisms are all aimed at the borrower, and exonerate the employers, who continue to push for the immediate return from a labor force that saw the lowest skilled employees become responsible for the very survival of the economy during the pandemic.
COVID-19 led to a reduced and shifting workforce where employers have started to reduce job requirements. The rumblings and tales of shortcuts to consistent employment served employers as they pitched higher wages that lacked the resiliency of credentialed positions. The so called on-the-job training was more of a sign of employer desperation than long-term commitment to consistent employment or renewed appreciation for the labor that sustained gains. This proposed superhighway to employment has many detours which include postponing postsecondary education. While you can get to a job fast these days, many of these opportunities distract those from the lower-income brackets from a college education or training that provides skills and credentials that would provide a stronger shield against stagnant wages or unemployment.
Financing four years of education, especially for low-income students, is harder than ever. Pell grants used to cover 80 percent of educational costs to a public four-year college. Today, they only cover about 32 percent. This raises the question of how we can assure a pathway for those in the lower-income brackets to meaningful work, increase their tax-paying potential, expanding their longevity in the job market, and provide a means for them to retire with dignity. Biden’s Student Loan Debt Forgiveness plan is a start in that direction. For all the concerns that can be raised about it, one thing is for sure, divestment from education is a solution for no one. Everyone needs postsecondary education.
