Every year millions of Americans receive an asset that, based on past performance, promises to nearly double their lifetime incomes: a bachelor’s degree. Earning one is an achievement to be proud of. For the vast majority of young adults, however, this prize is increasingly out of reach. One answer is to make college more affordable – by lowering tuition, increasing financial aid for poor students and reducing the time needed to graduate. Such reforms deserve support. But a different answer is no less worthy of attention. Policymakers, educators and employers should focus on providing viable alternatives to a traditional college education.
There’s no doubt, having a college diploma helps. College graduates amount to about one-third of the total U.S. workforce but account for nearly 80 percent of those in the top quintile of the income distribution. In 1979, wages for workers with a bachelor’s degree were 34 percent higher than those with only a high school education. Today the wage premium is 68 percent.
At the same time, the cost of attendance at a four-year public university has more than tripled – and returns on that investment are diminishing. Median earnings for young college graduates in some fields are lower than they were at the start of the decade. Four out of 10 undergraduates who enter bachelor’s degree programs fail to finish within six years. Regardless of whether they graduate, college students leave school owing, on average, more than $28,000 in debt. Many can expect to be paying off their student loans well into their 40s.
The escalating cost of higher education might be justified if the only decent jobs going required a degree. It isn’t so. Full-time jobs paying at least $35,000 a year and not requiring a bachelor’s degree have increased from 27 million in 1991 to 30 million today – not just in blue-collar occupations in manufacturing, construction and transportation but also in services such as health care, hospitality and finance.
Of those 30 million “middle-skill” jobs, half pay more than $55,000 a year, according to the Center on Education and the Workforce at Georgetown University. (A newly minted college graduate with a B.A. in history earns a median of $43,000.) A Harvard Business School study found that workers without bachelor’s degrees could potentially fill millions of additional middle-skill jobs, if employers stopped inflating degree requirements during the hiring process.
None of this suggests that people can afford to forgo postsecondary education. High-wage, middle-skill jobs demand that workers possess basic digital proficiency and “soft skills” – the ability to communicate, think critically and solve problems. Students shouldn’t have to borrow heavily to acquire those skills. But a high school education isn’t enough.
Many [graduates] expect to be paying off their student loans well into their 40s.
States should concentrate on developing alternatives to a four-year degree. They should invest in rigorous technical schools and community colleges, built around the needs of local employers. Tennessee has done this with its 27 colleges of applied technology. Educational institutions should award credit based on competency, not attendance, and create credentials that recognize workplace proficiency, similar to the “nexus degree” approved by Georgia’s state university system. And Congress should allow Pell Grants, which help low-income students, to be used for short-term, nondegree programs such as coding boot camps – an idea supported by the Trump administration.
Employers ought to do more as well. They rely too much on automated hiring tools that exacerbate the bias against workers who lack four-year degrees. To address this, 1,300 companies have partnered with Opportunity@Work, a nonprofit based in Washington, D.C., to create a platform for training and certifying nontraditional candidates for available information technology jobs.
Strengthening work-based educational alternatives requires more public investment and closer coordination between colleges and the private sector. Apprenticeships, which combine classroom instruction at a community college with paid, on-the-job training with a local employer, are common in Germany and Switzerland but remain far too rare in the U.S. Despite bipartisan support for apprenticeship programs, federal spending on them amounts to less than 1 percent of the cost of Germany’s system.
Over the last century, the growth of America’s college-going population has raised living standards, fueled mobility and contributed to the nation’s economic strength. What’s needed now is an educational system that offers Americans more than one path to success.
Bloomberg View editorial.