College: Is it Worth it?

This past month, many news reports have focused on higher education’s cost. With college tuition rising and students graduating into a precarious labor market, conversations are taking place around the dinner table about whether college is a wise investment towards economic success. The Wall Street Journal ran a series, “Generation Jobless,” exploring the difficulties this generation faces in finding employment. A recent article, titled “What Hedge Funds Can Teach College Students?” noted that a college degree in 2011 is a bad investment.

By that arithmetic, technical colleges come out on top, Mr. Ades said. “We’re in a skills based economy and what we need is more computer programmers, more [nurses],” he said. “It’s less glamorous but it’s what we need.”

Law school, on the other hand, can end up a sucker’s bet in periods of high unemployment, experts in student loan-backed bonds say.

While college students often enroll in professional programs to wait out economic soft patches, the U.S. has far more law schools than other professional schools, resulting in an excess supply of lawyers, argue investors and analysts.

In recessions, law school graduates have a harder time finding work than other graduates from professional programs and are more likely to default on their student loans.

Law school is considered a bad decision by some. In a piece by Sara Morrison, profiling a freelancer applying to law school, the lead character plans to forgo her current jobs for the a professional degree, hoping for higher returns. According to the data above, it might not be a good investment.

 Selecting an employable college major is important to find a good starting salary. Petroleum engineering is found to have the largest earnings.

 In another article, USA Today notes student loans topped $100 billion this year, second behind credit card debt. Overall, loan debt exceeds $1 trillion:

Students are borrowing twice what they did a decade ago after adjusting for inflation, the College Board reports. Total outstanding debt has doubled in the past five years — a sharp contrast to consumers reducing what’s owed on home loans and credit cards.

Taxpayers and other lenders have little risk of losing money on the loans, unlike mortgages made during the real estate bubble. Congress has given the lenders, the government included, broad collection powers, far greater than those of mortgage or credit card lenders. The debt can’t be shed in bankruptcy.

This has contributed to a widening gap in wealth between older and younger generations. The AP reports the burgeoning inequality that exists across generational lines, and questions an American tenet that each generation does better than previous one.

The 47-to-1 gap in net worth between old and young is believed by demographers to be the highest ever, even predating government records.

In all, 37 percent of younger-age households have a net worth of zero or less, nearly double the share in 1984. But among households headed by a person 65 or older, the percentage in that category has been largely unchanged at 8 percent.

 By Joshua Peguero

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