Peter Morici is an economist and business professor at the University of Maryland and a national columnist. He tweets @pmorici1.
In this essay, Morici warns against the current push to send more high school graduates to college.
By Peter Morici
Across the country, millions of families are preparing to send their 18-year-olds off to college — for many, this will be the worst thing they ever did to their children. For half the students who give college a try, it will prove a lousy investment. Democratic presidential hopefuls promising free tuition should know better than to hawk such snake oil.
The whole premise behind federal student loan programs — from the 1958 National Defense Education Act to the expansive arrangements last modified by President Obama — is that higher education is a good investment. For the nation, a more skilled labor force increases national productivity and for the students, graduates enjoy higher lifetime earnings.
The nation sends about 70% of high school graduates to college but judged by their math and reading scores, too many are unqualified and only about 60% graduate. The other 40% borrow huge sums, but their productivity and earning power is not much improved. College debt often haunts them for decades, delay marriages and children, homeownership and other goals that would simply be more attainable had they never set foot on a college campus.
Although the average college graduate earns about $33,000 a year more than the typical high school graduate, one-quarter of graduates — about 15% of students enrolled as freshmen — earn no more and often less than the typical high school graduate. They simply would have been better off learning a skill through the military or enrolling in an apprenticeship program.
For Uncle Sam, over half of the student loans offered to freshmen actually lowered national productivity and GDP. The money spent on tuition could have been better invested elsewhere — better roads, support for private apprenticeship programs, R&D grants to develop artificial intelligence and robots and the like. And many highly educated college faculties might be better deployed in managerial and professional roles elsewhere in the private sector or government service.
Students enrolled in college are generally not working full time. That robs students and the economy of about $40,000 per year for those who do not belong in college in the first place.
Uncle Sam takes the losses on unpaid student loans — and those are mounting very rapidly. If the banks that made the loans and colleges that enrolled unqualified students had to bear those losses, rest assured they would screen students much more carefully — a lot of unqualified students would only be admitted if their parents footed the entire bill.
Universities would not be so eager to push majors that impart left-wing ideological biases — women’s studies and what goes on in many liberal arts and general business programs. They would ensure students spent more time in the classroom and learned something useful and less time at student unions with Club Med amenities or demonstrating for social justice.
Independent assessments show that 40% of college graduates lack essential critical thinking and problem-solving skills required by businesses for entry level of management and professional positions. It is no surprise that 40% of college graduates end up serving coffee at Starbucks or in other positions that do not require a bachelor’s degree.
Many more young people should be enrolled in U.S. Department of Labor-certified apprenticeships or similar private sector programs. President Trump and his daughter Ivanka are working tirelessly to expand the scope of industries and careers offered young people and provide businesses with the skilled workers they chronically complain are unavailable.
Privately supported apprenticeships are not merely in blue-collar trades like welding but rather the full range of good-paying entry-level opportunities in banking, hospitality, information technology and automation systems that define the post-industrial economy.
Usually completed in less than four years, students earn while they learn — about $15 an hour. Eighty-seven percent move into positions that pay an average of $60,000 a year — for college graduates, the average is about $50,000 and subtracting the above-mentioned non-skills-based majors, the college average is a lot less.
Offering free tuition to young people will actually make many college freshmen worse off. They will still borrow to cover living expenses and either won’t complete college or receive a degree that is not worth much when they could be earning a decent wage and learning a useful skill. That’s something university faculties seem too clueless or angry with society to provide.
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