Today’s graduates face miserable job prospects, and experts say the student loan crisis could be worse than the credit card or housing bubbles.
By Sarah Jaffe/ AlterNet / June 1, 2011 |
It’s the beginning of summer: warmer weather, longer days, the end of the school year. And that means graduation for thousands of young people across the U.S.; graduation with more student debt than ever before, and into a job market that is anything but promising.
Young people between the ages of 16 and 24 face an unemployment rate nearly twice that of the rest of the population, according to data from the Economic Policy Institute. 2010’s 18.4 percent rate for youth was the worst in the 60 years that economists have collected such data. ColorLines notes that in 2010, 8.4 percent of white college graduates were unemployed, 13.8 percent of Latino graduates, and a dismal 19 percent of black graduates.
Those bright, shiny new degrees simply aren’t worth the paper they’re printed on all too often. The cost of a college degree is up some 3,400 percent since 1972, but as we all know too well, household incomes haven’t increased by anything close to that number — not for the bottom 99 percent of us, anyway.
Pell Grants for students have shrunk drastically in relation to the ballooning cost of a four-year college, and Paul Ryan wants to cut them even more, pushing some 1.4 million students into loans, more of which come each year from private lenders with little to no accountability.
New legislation, introduced last week in the House and Senate, would attempt to put a bit of control on those private lenders, restoring the bankruptcy rules so that private student loans may be discharged through bankruptcy. Currently, private as well as government-issued and guaranteed loans will stick with you even through bankruptcy proceedings, saddling far too many graduates with debt for life.
Still, bankruptcy reform is hardly a solution to the problems at hand. Imagine 18 percent of college graduates declaring bankruptcy when they can’t find a job, upon graduation, that allows them to make payments on their loans?
Small wonder that many are calling the student loan crisis a bubble possibly worse than the credit card or housing bubbles. Small wonder that when polled by the Pew Research Center and the Chronicle of Higher Education , 57 percent of Americans said higher education doesn’t provide a good value, and 75 percent said it is too expensive for most to afford. Yet the lucky graduates who do have jobs still make, on average, $20,000 a year more than those without degrees. It seems that higher education, as with so much else in this society, is turning into a way to keep those who already have money making more of it.
In other words, all of Obama’s declarations that we will “win the future” through education, notes Kai Wright and Stokely Baksh at ColorLines, mean little if there are no jobs for those graduates even with their sparkling credentials.
Even David Brooks at the New York Times this week has some sympathy for the latest crop of recession graduates, noting that their education hasn’t prepared them for the world they face. “No one would design a system of extreme supervision to prepare people for a decade of extreme openness,” he says, but then of course goes on to blame “baby boomer theology” for the struggle of today’s youth.
Paul Mason at the BBC calls them “the graduates with no future,” and he’s been following the role they’ve played in protests not only in Britain but across the Arab world, particularly in the revolutions in Egypt and Tunisia.
After all, what’s left for an educated generation, brought up on social networking tools, to do but apply those tools to organizing protests? We haven’t seen a student movement in the U.S. like the one in England yet, but we’ve seen the role of students in Wisconsin, Ohio, New Jersey and California.
Brooks would have us believe that “expressive individualism” is the problem with this downwardly mobile generation, but those same students he decries for their selfishness are busy using their skills to fight even more selfish governments, bent on cutting services for students, the poor and the elderly to give more money to those most selfish of all entities: corporations. Individualism is hardly the problem with the students — it is, instead, the problem with the societies.
One thing is sure: a rising tide of unemployed, debt-ridden youth is not simply going to go away without action. If the federal and state governments don’t do something soon, the “graduates with no future” may well bring the unrest here.
{ 8 comments… read them below or add one }
I wonder when these college grads will figure out, they are also on the hook for the $14 trillion in Federal debt.
If jobs are your goal, I would recommend studying engineering instead of ethnic studies, science instead of art history, business instead of public administration, and mathematics instead of leisure and recreation. If your degree has classes that other student take to get an easy A, you are not investing in a job and salary program.
That take is painfully out of touch. Some of the hardest hit industries right now are white collar professions like architecture and engineering.
It’s one thing to talk about the availability of jobs, quite another to declare that certain academic pursuits are nothing more than easy A’s. Really RB?
Your legitimate comment about job availability may be overly optimistic in terms of jobs for engineers and architects. “Most of the manual labor still being done in our economy seems to be of the kind that’s hard to automate. Notably, with production workers in manufacturing down to about 6 percent of U.S. employment, there aren’t many assembly-line jobs left to lose. Meanwhile, quite a lot of white-collar work currently carried out by well-educated, relatively well-paid workers may soon be computerized. Roombas are cute, but robot janitors are a long way off; computerized legal research and computer-aided medical diagnosis are already here. ” http://www.nytimes.com/2011/03/07/opinion/07krugman.html
Not mentioned in this article but a question in my head. With all the debt these recent graduates have, many will have trouble finding work even if things do pick up due to bad credit. If they apply for positions requiring a security clearance, forget it. Many of those who are willing to bite but bullet and step down for positions that don’t require a degree may get turned away for being “over qualified”. Are we going to have a new population of well educated homeless in the near future?
Today’s job report (unemployment increasing to a reported 9.1%) says yes. The current government strategy is not working. Growing government does not create private sector jobs, Mr Keynes.
Hey, a job is a job, even if it’s a government job. The government, federal, local and state, have legitimate programs and services just as much as private-sector, and the programs they have certainly need workers to get those benefits to the people. Their paychecks buy the same things you and I do which means they’re putting money into the economy which helps generate the non-govt. jobs.
Would you rather have the person get unemployment than take a govt. job?
BTW, what is the definition of “the current government strategy?”
The current government strategy is to flood the economy with money through the banking system and hope the economy expands and yields large increases in GDP (gross domestic product or everything we produce as a country). It is also hoped that as GDP expands, jobs will be created.
This has worked for small and short recessions in the past but is not working now because the banking system can make a large and risk free return by borrowing the cheap government money through the Fed, often at less than 1%, and investing this money in government bonds at 2-3%. In short, the banks can make 1-2% on every dollar borrowed without using their own money and without customers, regulators and risk. There is not a lot of motivation to make corporate or consumer loans unless the loan is very low risk.
As the Treasury prints money and the government issued bonds to promise to pay the money back, the Fed is buying as much as 70% of the bonds on the open market to keep demand strong and interest rates low (The Feds buying bonds is the program known as QE1 and QE2.) When the QE2 program ends this summer and assuming there is no QE3, money will need to be withdrawn from the banking system and private demand for US debt must replace the purchases by the Fed. The government is hoping that the economy will expand and create jobs on its own and that there will be no large increases in inflation. The Fed will not raise interest rates going into an election, will not raise interest rates until the unemployment rate comes down, and will not raise interest rates to protect the dollar from falling farther. The longer they wait to raise interest rates the greater the risk of inflation.
The only consistent results of this government strategy has been rising bank profits (making the system stronger than two years ago), a weak dollar (increase consumer inflation on energy, food, commodities and imported products), and a rapidly increasing US debt load.
Note; The way to profit from this governmental economic strategy as an individual or corporate investor is to buy commodities, buy companies with large sales overseas or to invest in foreign markets rather than in the US. As people invest in China, Brazil, and India, they create jobs in these countries.
Luckily most students can postpone repayment on tuition loans until they find work – but if they racked up credit card debt like many I know, they may still be screwed.
I don’t have a degree, but I’ve been getting the “overqualified” line on a handful of interviews lately – equally annoying is being turned away because I used to be paid twice what I’m willing to work for now.