More debt, lower salaries await many college graduates
Sunday, May 02, 2010
By Sean F. Driscoll
May 02, 2010 @ 09:42 PM
ROCKFORD — Christian Druce Jones was fairly certain he wanted to attend North Central College in Naperville to study psychology until his mother brought the College of the Ozarks to his attention.
Druce Jones, a 16-year-old junior at Rockford’s Academic Career Education High School, didn’t have a particular desire to live in Point Lookout, Mo., until he learned of the college’s unique tuition option: Students enroll in a private work-study program that pays their tuition and fees each semester.
He has not decided on his college plans yet, but College of the Ozarks is suddenly high on his list. Tuition-free sounds even better since he knows a job won’t necessarily be waiting for him after graduation.
"I don’t want to have to be in mounds of debt when I graduate from college,” he said.
Druce Jones realizes what many other high school and college students are learning: A bachelor’s degree, once viewed as the gateway to a comfortable middle-class lifestyle, is becoming less of a sure bet in the face of rising college costs and a postgraduation job market under siege by the Great Recession.
The most recent student debt report from the Institute for College Access and Success notes about two-thirds of the Class of 2008 had debt upon graduation, averaging $23,300 per student. In 1996, only 58 percent of students graduated with debt, averaging $13,200 per student."
Students and families are becoming more savvy consumers about how they get their degrees, where they go to school and how they pay for it. I think that is long overdue,” said Edie Irons, the institute’s communications director. "It used to be that a college degree seemed like a ticket to ride, but there are no guarantees anymore that once you get that degree, you’re going to get a great job and do really well financially.”
Salaries down, jobs scarce
Although the 2009 median salary for someone with a bachelor’s degree was 64 percent higher than that of a high school graduate, salary growth has not kept up with the times.
The average salary for bachelor’s degree holders in 2009 was $53,300, down 0.5 percent from 2000 after the figures are adjusted for inflation, according to U.S. Bureau of Labor Statistics data. The median 2009 salary for someone with an advanced degree was a bit more than $69,000, a 4.1 percent increase from 2000 when adjusted for inflation.
Many college graduates are starting out with lower salaries than their predecessors. The average starting salary for this year’s bachelor’s degree recipients is $47,673, down 1.7 percent from spring 2009, according to the National Association of Colleges and Employers’ latest quarterly survey. Finance and accounting majors saw the biggest increases, while liberal arts majors saw an 8.9 percent decrease.
That’s if the grads can find a job in the first place. The unemployment rate for college graduates ages 20 to 24 was 10.6 percent in the third quarter of 2009, the highest on record, according to the Institute for College Access and Success.
NACE’s 2010 hiring outlook is rosier: Employers expect to hire 5.3 percent more new college graduates in 2009-10 than they did in 2008-09.
For those who find work, lower salaries may haunt college grads throughout their careers, Irons said.
"There’s been research that has shown students graduating in a recession earn lower incomes throughout their lifetimes than those graduating in a boon,” she said. "It is a real concern, and we think graduates need good information about how to manage their debt.”
Not scared off college
The discouraging job market isn’t scaring many students off post-high school education, however.
"We’re not seeing people question if they should attend college,” said Jennifer Nordstrom, associate vice president for undergraduate admissions at Rockford College. "I think people know as the jobs become more scarce, that means increased competition. The education and experience of college is going to be necessary.
”What the job market and increased debt have done is make some students think twice about their path to a degree.
ACE High School junior Ashley Nelson has her sights set on the University of Illinois Chicago with the ultimate goal of going to medical school. But she’s wondering if first becoming an emergency medical technician or a nurse might be more prudent.
"That way I could have some money coming in while I work toward going on to med school,” she said. "It’s going to take a long time to pay back all that debt. If I don’t succeed, it’s going to be really hard to pay it back.”
Brandon Lagana, director of admissions at Northern Illinois University, said students are being more fluid in their approach to college. Some chose a more affordable university, others start at a two-year institution then finish at a four-year school, and some wait a few years before starting any schooling.
"We’re certainly seeing students using more options to a degree than they ever did before,” he said.
Financial need increases
Even as incoming students get more flexible with their options, finances are putting a strain on both new students and those midway through their studies.
Inali Saghu, NIU’s associate director of student financial aid, said more than a third of NIU’s undergraduates, or 6,273 students, received a federal Pell Grant in the 2009-2010 school year. The federal program that provides financial aid to low-income students saw a 23 percent increase in eligibility from the previous year.
Financial aid staff have noticed a marked increase in unemployment insurance recorded on family tax returns, which are submitted each year with financial aid applications. NIU staff are also getting more requests to do midyear financial evaluations when a student’s financial need changes.
"These are real eye-openers,” Saghu said. "It’s just amazing to see the shift in the economic situation of our families here and those who are coming.”
For Nelson, whether she goes straight to college or heads down a different path, debt is a necessary, unavoidable part of her future.
"I just want to get the best education I can,” she said. "My parents said they’ll help as much as they can, but they own their own business, so it’s going to be hard.”
This story appeared at http://www.businessrockford.com/biznews/x826102792/More-debt-lower-salaries-await-many-college-graduates on May 2, 2010.