College attendance and university degrees have long been defended on the basis of higher earnings prospects. But what was a great deal in the 1950s and 1960s, and still made some degree of sense in the 1970s, 1980s, and 1990s. But for the average college student in the United States, a university degree can no longer be justified on economic grounds.
When it comes to wages, fortunes flipped last year for college and high-school graduates.
In 2022, median annual pay was $52,000 for Americans with a bachelor’s degree, according to data released by the New York Federal Reserve Friday. That’s a 7.4% decline in inflation-adjusted terms — the steepest plunge since 2004, erasing nearly all of the pandemic-era gains. It was sharpest for those earning the most.
Meanwhile, wages accelerated 6% in real terms to $34,320 for those with only a high-school diploma — the biggest gain in more than two decades.
While secondary-degree holders are still paid more, those who didn’t attend college are catching up. Americans with only a high school diploma made 93% of what recent graduates with a bachelor’s degree in the bottom quarter of wages made.
While average degree-holder wages are still higher, the wage comparisons are meaningless when they fail to take into account a) the cost of college debt and debt service as well as b) the opportunity cost of not working for five years.
The cost of college debt service is the real killer. According to the Federal Reserve Bank of New York, only “37% of all borrowers saw their student loan balance shrink” as a result of making their payments in 2022.
So with an average student loan debt of $39,351, plus an estimated average $7,870 in lifetime debt service costs, plus an average $205,920 in lost wages, the college student pursuing a university degree in 2023 is $253,141 in the hole versus the high-school diploma holder from the start of his professional career.
Which means, if he is one of the fortunate 59 percent that manages to finish his degree in six years, it will take him 14 years just to reach economic parity with the less-educated members of his high school graduating class, just in time for their 20th high school reunion. And that is the positive outcome; don’t forget there is a forty-percent chance that all of that time and expense will be wasted by a failure to obtain a degree.
The fact is that college in the United States only made sense as a means of elevating members of the lower and working classes for a few decades. Now, it has become something more akin to what it historically was, which is a means of establishing class norms for the administers of empire. This is not to say that no young American should waste his time and money on university, only that he should sit down with his parents, and if necessary, a trusted friend who understands mathematics and statistics, and seriously consider the question of whether going to college is likely to prove advantageous to him or not.
Because it can no longer be reasonably assumed that, on average, it is.