I recently had the opportunity to sit down with a trio of college students finishing up their last credits at a well-known college.
- One graduated with minimal college debt and accepted a modest entry-level salary in a job she’s passionate about.
- Another said her college debts meant she wouldn’t be able to afford her field, so she’s instead pursuing a list of unsatisfying jobs for the express purpose of paying down loans.
- The third will end the year eight credits short of her college degree and work odd jobs because she ran out of the means to afford tuition.
All three went into college with big dreams. But, due to finances, only one will capitalize on those dreams.
The Real Costs of $1 Trillion in Debt
My tiny study won’t qualify for any scientific grants, but it’s not entirely unrepresentative either.
According to a CNBC story, 44% of new graduates are underemployed. Per a recent blog by Bill Gates, 20% of today’s workforce has paid for (or more likely, financed) college degree programs they haven’t finished. That’s not just an enormous waste of talent and resources; it’s also an ominous sign for corporate futures.
These, say experts, are the real consequences of college debt. Because results like that may make millennials wonder if college is worth it – a question Mr. Gates, arguably the world’s most successful college dropout, answered recently with a single word: yes. Pew Research Center agrees, calling graduates better off in salary, job satisfaction, and quality of life.
Capitalizing on College-Learned Skills
It’s widely agreed that companies – and economies – are better off with college graduates, too. MIT economist David Autor recently told the New York Times that educated societies are generally richer, healthier, and better functioning. “The evidence favors the idea that human capital investments pay off over the medium and long term,” he told the paper.
But the benefits of those degrees are being challenged. College loans are taking hefty, mortgage-sized bites out of salaries before they’ve even been earned. And as shown by the aforementioned student, those financial obligations are guiding graduates away from the careers they’re passionate about (the ones they trained for) and toward less-satisfying occupations merely for the purpose of paying off loans.
Strategizing for Lower College Debt
Companies don’t just need people with degrees — they need the skills that come with those degrees; they need people who are invested (that magic word – engaged) in their jobs; and they need people who aren’t so stressed out by money that they can’t think.
So realizing the benefits of college will require freeing people to pursue the careers they’re passionate about, not just the ones the meet the salary requirements preordained by their loan obligations. And that requires helping people make educated, strategic choices about financing their education today so they won’t stunt their options later on.
Doing that means advising students before they sign on the dotted line; it means encouraging people to avoid financial debt that sandbags their futures; and it means factoring finances not just into the choice of loan, but into the choice of alma mater. Most important, it means communicating with today’s employees – the parents of tomorrow’s college students – to make better debt consumers.
So Why Should You Care?
Employers, then, have an opportunity to make higher education seem more like a path to a great future than a mindless treadmill…or indentured servitude.
All of that is not to say that college should be the default setting. Not all dreams and ambitions require a four-year degree, and pursuing non-degree ambitions should not be looked down upon as second-rate choices. But there’s a big difference between choosing a non-college vocation because it’s a dream and settling for one because college is out of reach.
In the great cosmic universe, it’s easy to imagine that what happens with an employee’s family and how they pay for college is of little consequence to employers. But raising financially savvy consumers – especially when it comes to education debt – falls to all of us.
Because chosen unwisely, those financial burdens will likely come back to bite us all later on.
Register now for the upcoming webinar, Employee Financial Wellness: Your $1 Trillion Problem. On June 11 at noon, take a 30-minute lunch break to hear Neuberger Berman’s SVP for Benefits & Compensation, Wayne Klieger, and Bright Horizons’ SVP for Client Relations, Patrick Donovan, explore how employees are struggling with financial wellness; why employers are concerned; and what innovative solutions these employers of choice are utilizing to address the problem and achieve results.