Student debt, continued

506649263_2035097dda_z-375There has been much written about the problem of student debt and, in this space, I, like many educators, have challenged the notion that it is a significant problem, despite the hyperventilating over the topic.  A quick review of the numbers:

1.  More than 25% of students graduate with no debt (that is closer to 33% for CSB and SJU)

2.  According to CIC (Council of Indepenent Colleges) data, the median private school graduate with debt owes less than $20,000 (for CSB and SJU that number is about $28,000)

3.  The lifetime return on investment for a bachelor’s degree is between $500,000 to over $1M depending on degree.

4.  A sober analysis by the Brookings Institute concludes: “The average growth in lifetime income among households with student loan debt easily exceeds the average growth in debt, suggesting that, all else equal, households with debt today are in a better financial position than households with debt were two decades ago..”

For the typical student, the evidence in favor of borrowing at these levels to earn a bachelor’s degree – based on ROI alone – is overwhelming.

There is an important caveat to this strong conclusion about the borrowing: the calculation gets much more complicated and nuanced for post-graduate education.  Graduate students currently make up about 14% of the total student population but owe 40% of the $1T+ student debt.  This is where the problem of student debt might be real.

Careful analysis is complicated by the fact that not all graduate degrees are created equally.  No tears need be shed for a physician who holds six figure student debt.  Even doctors at the lower end of physician pay scales (pediatricians and family practice doctors) will easily pay off those debts and earn a nice return on their investment in education.  On the other hand, earning a Ph.D. in the humanities* does not promise a highly paid job, in part because job prospects are so uncertain.

Unlike a bachelor’s degree which is typically not very specialized (especially in the liberal arts), there is the real chance that a student might finish a graduate degree and find no work in the specialized area their degree has prepared them for.  While any graduate degree will increase the skills and knowledge of its recipient, the marginal benefit from such a degree relative to a bachelor’s degree alone might well be small, even if they can find work in a their specialized field.  Again, as the evidence above indicates, that is not true for the typical bachelor’s degree holder as they compare their returns to a high school diploma.

For every student considering a graduate degree, the basic question is this:

Is my graduate program and the job market I am going into more like medicine or more like the humanities?

When I advise students about graduate school I tell them to think of graduate school like a vocational degree:

 1.  What jobs and career paths are available to me with a graduate degree that are not available without it?

2.  What does the job market look like for these career paths over the next 40 years?

3.  How much will it cost me in terms of money and time to earn this degree?  (Here the amount of financial aid matters–and humanities Ph.D. students will typically get more than a medical student.)

4.  How much more will I love my best possible graduate-degreed career path than my most attractive option with a bachelor’s degree?

None of this is to suggest that graduate school is a bad choice.  Nearly two-thirds of College of Saint Benedict and Saint John’s University will earn some kind of graduate degree, which is not unusual for liberal arts college graduates.  But the decision to earn a specialized graduate degree is a different one than to earn a broad and flexible bachelor’s degree.  And, for the most part, the student loan “crisis,” to the extent the term is accurate, is largely a function of individuals who did not examine that distinction carefully and are paying for it each month.

*  This example is certainly not to denigrate my many humanist friends (or my wife) or diminish the importance of the humanities, which are central to the liberal arts mission.  It is simply a clear-eyed look at the current job market in this field.

By |November 24th, 2014|Categories: Economics, Higher Education||0 Comments

Good News, the Undergraduate Perspective and Hope

Thefalloftheberlinwall1989-375One of the joys of working in higher education is the opportunity to interact on a daily basis with 17-24 year olds, with all the hope and possibilities that entails.  At the same time, for those of us who are in mid-life (or beyond) it can be hard to remember that with youth comes a truncated worldview.  Not always in terms of perspectives but certainly in terms of time.  A college “generation” is four years and the time spent on campus is a significant part of the average undergraduate’s life.  This perspective can over weight recent and current events in the lives of students, particularly news that affects our students.  A weak job market for a few years can seemingly threaten to last forever.  A political system that seems gridlocked can appear to freeze political life for decades to come.  Foreign policy challenges on multiple fronts can seem to promise endless threats and danger.

I think it is important for all of us to remember to raise our eyes and take the long view, even in the midst of the busyness of our days.  This thought was prompted by the 25th Anniversary of the Fall of the Berlin Wall on 9 November 2014.  A post-Soviet world is simply part of the lived experience of our students and can seem unremarkable. But, for those of us who lived through the Cold War with the nuclear threat, duck and cover drills and the existential struggle for minds and hearts between capitalist democracy and centrally planned, single party states, the fall of the Berlin Wall is arguably the single most important geopolitical event of our lifetimes.  And it was completely unexpected.  Virtually no one believed the collapse of the Soviet model was possible, to say nothing of the possibility that it could end up in the dustbin of history so quickly and relatively peacefully.  Anyone who says they thought otherwise is either lying or delusional.  The point is simply to remember and remind our students that for the vast majority of the populationthe world is a better place now than it was a generation ago.  Things can and usually do get better over the long run. There is reason for hope.

A few other reasons for hope for the future that maybe do not get enough press:

1.  Racial Attitudes.  Less than 50 years after the Civil Rights Act of 1964, the United States has elected an African American President twice.  Surely a sign of changed attitudes regardless of one’s politics, attitudes that current undergraduates take for granted.

2.  Education.  Education levels are continuing to grow in the US  and around the world–which has important implications for those educated individuals, their families and their countries.

3.  Standard of living.  The Millenials still can expect to live better than their parents–this version of the American Dream lives.  According to recent research that asks, “…whether adults tend to have higher, size-adjusted incomes than their parents did at the same age, after taking into account increases in the cost of living. The answer is, unambiguously, yes. Fully 84 percent of today’s forty-somethings have higher size-adjusted family incomes than their parents did at the same age.”

4.  World poverty.  Possibly the most inspiring economic news of the last generation is the sharp drop in the number of people living in extreme poverty even as the world population grows.  In a recent Wall Street Journal op-ed, Dartmouth economics professor Douglas Irwin notes the sharp decline in poverty among the poorest of the poor.  Here’s an excerpt from, “The Ultimate Global Antipoverty Program” (the full article is available behind a pay wall here):

The World Bank reported on Oct. 9 that the share of the world population living in extreme poverty had fallen to 15% in 2011 from 36% in 1990. Earlier this year, the International Labor Office reported that the number of workers in the world earning less than $1.25 a day has fallen to 375 million in 2013 from 811 million in 1991.

Such stunning news seems to have escaped public notice, but it means something extraordinary: The past 25 years have witnessed the greatest reduction in global poverty in the history of the world.

To what should this be attributed? Official organizations noting the trend have tended to waffle, but let’s be blunt: The credit goes to the spread of capitalism. Over the past few decades, developing countries have embraced economic-policy reforms that have cleared the way for private enterprise.

An American Enterprise Institute blog by economist Mark Perry comments on the op-ed by writing:

I will state, assert and defend the statement that if you love the poor, if you are a good Samaritan, you must stand for the free enterprise system, and you must defend it, not just for ourselves but for people around the world. It is the best anti-poverty measure ever invented.

Perry also includes a graphical description to the phenomenon Irwin describes:


Click to expand

Of course there remain challenges, even in a unified Germany,  but the Martin Luther King quote seems appropriate as we remind ourselves – and our students – that despite any immediate challenges we may face, “The arc of the moral universe is long but it bends toward justice.” A nice reminder to start the holiday season.

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By |November 17th, 2014|Categories: Higher Education||0 Comments

Benefits and Challenges of Diversity

An interesting new study by economists Sara Ellison and Wallace Mullin explores the impact of gender diversity in the workplace.  The Boston Globe succinctly summarizes the results:

Women, would you rather work only with other women?

Men, are you in a better mood at the office when you’re surrounded by male colleagues?

Yes and yes, according to a recently published study on gender diversity in the workplace. It found employees are happier when they work with people of the same sex. The slightly puzzling flip side? Single-sex workplaces aren’t nearly as productive as those where men and women earn their livings side by side.

While the Globe writer found the results puzzling, they are completely consistent with an earlier study that found benefits of diversity in a very different place–on the soccer pitch.

These results suggest that “having a broad range of viewpoints and experience provides more tools to complete a task, leading to a healthier bottom line, Ellison noted,” even if it can lead to some discomfort for employees.

This empirical analysis is yet another argument for a liberal arts education which emphasizes the benefits of “uncomfortable learning,”  where students are challenged to examine different perspectives, explore news subjects and test alternative world views.  It also provides support for the benefits of diversity on residential campuses as students interact with peers from many different backgrounds, both in and out of the classroom.  Though the research also acknowledges that diversity can create frictions as well.

New undergraduate pedagogies that emphasize group work (which have their impetus in both education theory and the demands of the 21st century workplace) provide students with both the opportunity to see the benefits of diverse viewpoints, but might well ease some of the discomfort reported by the subjects in this study.  Presumably the earlier and more often college students are encouraged (or even forced) to encounter differences, the more likely they will become comfortable with diversity and be better colleagues in the professional world after graduation.

An interesting reflection for those of us at the College of Saint Benedict (all women) and Saint John’s University (all men).  Could our unique (singular?!) model truly be the best of both worlds: the productivity benefits of an academic experience that is gender diverse combined with the happiness benefits of single sex living arrangements?  It’s a thought…

By |November 10th, 2014|Categories: Higher Education||0 Comments