Ed Dept: Degree Debt Exceeds Degree Earnings

By Professor Doom



     It’s been known for a decade or two that we have a real problem with the cost of a college degree relative to the financial boon of having one, but at long last our government is catching on as well:



… the U.S. Department of Education released data on first-year earnings for thousands of different college programs. The data are both limited and flawed in some ways, but they are also some of the most accurate outcomes information currently available about different academic programs and majors.



     Our “leaders” in higher education have been screaming about how invaluable the degrees they sell are for a very long time. Perhaps so, but cost to acquire the degree needs to be a part of the consideration. Gold is valuable too, around $1550 an ounce today…but just because it’s valuable doesn’t mean you should pay $3,000 an ounce for it, and the same is true for degrees (if you’re getting one for the money, anyway).


      So what kind of results do we officially have?


At for-profits, over half of bachelor’s programs resulted in higher debt than earnings. For bachelor's degrees at nonprofit institutions, that number was only 17 percent, but rose to 71 percent for doctoral degrees.



     There are only two sentences in the above, but several points bear highlighting. The first two points are easy. First, for-profits are already widely considered scams, and every way you measure this, you get the same result; the above is no surprise, but realize that only about 3% of Federal student loan money goes to these places. Second, debt is much higher when it comes to graduate programs. The remaining points are more subtle.


      The reason graduate programs have more debt is because accreditation indirectly allows this, by specifying graduate courses “should be” more challenging. Greater challenge somehow justifies grossly greater expense, even if the program involves, say, reading PDF copies of ancient texts instead of building a miniature atom smasher. Even though the former costs nothing for the school to produce and the latter would cost millions…both cost the same tuition. It’s why “art schools” and “education schools” offering useless graduate degrees little our educational landscape.


       And what of state schools, the greatest culprits of the student loan scam?


Public institutions fared relatively well under this metric. The data show that 15 percent of associate degree programs, 9 percent of bachelor's degrees and 13 percent of master's degrees resulted in higher debt than earnings.




     I smell foul here. The above sounds good, but you can pick up a two year associate’s degree for less than $5,000…I think it sounds pretty awful that 15% of people with such degrees still can’t manage to pull down $5,000 of yearly income. We still see the graduate degrees coming out on top for debt, but it’s not at all clear why doctoral degrees don’t get mentioned here.

Professional programs, such as medical or law degrees, appear to have relatively high debt burdens. Eighty-two percent of those degrees resulted in debt greater than earnings.

However, because of the common extended pathways to earnings in those fields (such as medical residencies), that may not be cause for concern for all programs.

     Again we have a bit of spin here. Yes, doctors might well make the money eventually, but what’s going with our law schools is downright criminal (metaphorically, of course), even if burying people in debt for useless law degrees is perfectly legal. It’s been a while since I’ve written about this, but most people should already know.



“Oftentimes, the heaviest debt produces the highest earnings,” said Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce, referring to medical and dentistry programs.




     Spin, spin, spin…dentists are going broke, because they have basically priced themselves out of the market trying to make enough money to cover the debt. Granted, dubious “dental insurance” and other factors are part of the problem…but don’t buy the “heaviest debt produces the highest earnings” line. The biggest debt is usually held by art students, making nothing.


      The article I’m quoting from does have a bit of criticism:


“There are a lot of programs at the graduate level where you have to wonder how a school could in good conscience hand out the debt they’re handing out to people,” he said, pointing to a master’s degree in social work from the University of Southern California that he said was “immorally priced.” The program's debt levels drew criticism when the feds released those data earlier this year. Median earnings for the USC master's in social work were about $50,000, but median debt reached over $115,000.




   Now, sure, theoretically you could just give up 2 years’ pay to pay off that debt, but the reality is you have bills to pay. And taxes to pay on the income. You also have to service that debt, and no, you don’t get to deduct those payments from your tax burden. Most student loan payments are structured so that the payments strictly address interest, it’s why commonly you find people who have made their payments for years, but still owe just as much (if not more) than when they graduated.


     Another great criticism:


Michael Itzkowitz, a senior fellow of higher education at the think tank Third Way, said certificate programs showed some of the most troubling earnings results. “The average high school graduate makes around $28,000 a year,” he said. “Most certificate programs show students earning less than that.”




     “Go to community college, we’re cheap!” is the cry, but getting those job training certificates still don’t pay as much as nothing at all. We really need to reconsider what we’re doing in our community and technical college system, because it shouldn’t be this obvious that things are very wrong here.



Among public university bachelor's programs, the communications bachelor's degree at Grambling State University and the social work bachelor's at Mississippi Valley State University, both historically black colleges, took worst honors, with debt outweighing earnings by over $20,000 in both programs. Neither university responded to a request for comment.




      You know, our social justice warriors, if they honestly felt the way they do, would speak up about this. They don’t, of course, even though, again, it’s long been known how our student loan system has been targeting minorities for optimal exploitation.


     Now let’s talk about the stuff that really matters: the degrees and schools which make sense:



On the opposite end of the spectrum -- public and nonprofit bachelor’s programs where earnings exceeded debt by the greatest magnitude -- the list contains many computer science and engineering programs at highly selective institutions, such as Brown University, Carnegie Mellon University and the University of Pennsylvania.




      Note the word “selective” in the above. This has always been what made higher education valuable: the scarcity created via selective admissions. Any parents reading this, please only consider sending your kids to schools which have entrance exams or otherwise restrict who gets to come on campus.


      What about professional programs, what works there?


However, many nursing or health programs at smaller public or less selective nonprofit private institutions also rise to the top of that category. The bachelor’s program in nursing at Sonoma State University, for example, features a median debt of $12,500 and $110,300 in earnings.




       While medical training for doctors is ridiculously pricey, nursing programs so far haven’t been exploited. The reason here is much like before: not everyone is cut out to be a nurse. Having spent so much time on my back in hospital beds this last year, I’m speaking from experience.


At the associate level, Kelchen's analysis found that the lowest-earning fields included criminal justice, health administration and teacher education.




       Many reasons for the above, but no, “low teacher pay” isn’t an issue. Education programs are notoriously wide open for admissions (as is criminal justice, I have no input on “health administration” beyond my suspicions), and so the market is flooded with people with teaching degrees.


At the graduate level, educational administration broke the top five in earnings, mostly, Kelchen said, because school superintendents tend to do quite well.




       Now wait just one second here. I’m quoting from a higher education-specific site. They know full well how ridiculously outrageous the pay is for administrators in higher education. Yes, “school superintendents” tend to do well, but let’s not forget the legions of deanlings on campus here, shall we?


       Getting back to those good professional degree programs, one thing not well measured here is how many people flunk out of those programs. Yes, engineers and nurses get good pay relative to debt, but a good overall consideration would account for the wide swaths of students who enroll in those programs and then drop out…ending up in those poor yielding other programs.


      Still, at least our government is finally noticing what most people knew a generation or so ago.




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