Students of all ages are heading back to the classroom. Whether your student is starting grade school or off to college, are you thinking about student debt for college? Has student debt changed all that much in the last 40 years?
Many are horrified at the amount of student debt burdening college grads today– it’s not unusual for a student at a public university in Iowa to borrow $28,000 or more. And how will they repay that loan if the economy won’t cooperate and provide good jobs?
Before we bail out today’s borrowers, let’s compare their plight to the student borrowers before them who also balanced educational goals and loans. For our example, let’s consider three scenarios for an in-state student graduating with a B.S. from a four-year public university in Iowa. Regardless of the scary-looking dollar amounts, what’s important to see is the ratio of the loan to tuition and the comparison to salaries. It’s an eye-opening comparison:
About 40 years ago…
In 1975, the cost to attend college in Iowa averaged about $1,560/year (and fees skyrocketed the next year to a whopping $2,600). Many students had $2-3,000 in loans, or roughly 1/4th their cost to earn a bachelors degree in four years.
At that time, a good starting job for a typical college grad paid under $10,000/year, and the high end of the job scale would offer 20-25% more, typically for engineers. By comparison, summer jobs for most teens meant roughly $2/hour. The minimum wage was $2.30, except for farm workers, who earned about $1.60/hour minimum.
Though several major Iowa corporations had hiring freezes, graduates could find employment somewhere, albeit not the jobs of their dreams nor for top-dollar salaries. Most took the job offer anyway.
About 30 years ago…
In 1985, the cost to attend a public university and earn the same B.S. degree was about $10,841/year. I know students who borrowed $10-12,000, or roughly 1/4th the cost to attend college for four years.
Comparatively, the starting job for a 1986 grad with a B.S. was just over $15,000, and new engineers would earn about $20,000/year. By comparison, teens would have earned about $3/hour at summer jobs. The minimum wage was $3.35.
Though Iowa was suffering through a severe farm crisis and a recession was pending, graduates found jobs somehow, although many settled for less than the job (and salary) of their dreams. But..they took the job offer anyway.
As for recent grads…
In 2012, the cost to attend a public university and earn the same bachelors degree was about $16,500/year.
Statistics show that undergraduates attending Iowa’s public universities borrow more than average, taking on about $27,000 in student loans. It appears this is roughly 1/4th the cost for a student to earn a degree (which takes many five years not four now, and includes opportunities for leadership experiences on campus, studying abroad, unpaid internships to build resumes, etc.)
Comparatively, starting jobs for 2012 graduates could be found for $45-50,000/year, and new engineers could earn $65,000/year. For this time period, summer jobs for teens meant about $7-8/hour, and the minimum wage was $7.25.
Though many grads complain that no jobs exist for them, there are companies that want to hire but can’t fill positions. Some grads are taking those jobs anyway, realizing that maybe they haven’t reached the pinnacle of their career yet and that their dream job (and salary) may come a few years down the road. Yet, many will avoid an entry-level job.
In conclusion…
Yes…college costs have risen.
- Yes…the amount students borrow is more in terms of dollars.
- Yes…students take longer to finish college (often due to their own desires).
- Yes…some students give up paying summer jobs for unpaid college experiences.
YET…college students borrow and have about the same percentage of college costs to pay back as ever- about 1/4th the cost of a bachelor’s degree.
AND, while some grads will snag their dream job right away, others realize that, like their predecessors, they should get out there and get working.
Begin with the end in mind.