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WSJ Your Money Briefing
College: Calculating the Risks
00:06:43
College costs have leveled off. But as Wall Street Journal higher education reporter Douglas Belkin explains, obstacles still exist that can leave some worse off than if they hadn't gone to college.
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Still running global payroll like a relay race. Deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and pay teams in 150 plus countries with in house local experts and white glove delivery and deal plugs into what you already use. Workday SAP Netsuite operate like a local everywhere. Visit d e l.com WSJ that's d e e l.com WSJ.
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With youh Money Briefing I'm JR Whalen at the Wall Street Journal in New York. Going to college isn't enough these days. What's important in order to find success in the workforce is selecting the right major and being in a position where you can finish college. We'll explain more in a moment. First, these Money in Market stories you should know the Producer Price Index, that's the measure of prices that businesses receive for their goods and services, edged up 0.1% in Novemb from a month earlier. That was a much more moderate gain compared to the 0.6% increase in October and 0.2% jump in September. The more moderate increase last month was mainly due to a sharp drop in energy prices. The Producer Price Index usually follows the same trends as other broad inflation gauges, but it doesn't always translate to what consumers actually pay. Other inflation readings, including the Federal Reserve's Personal Consumption Expenditures Index, have suggested no signs of of accelerating inflation and what's the value of a mansion near President Trump's Mar a Lago Club in Palm Beach, Florida? As much as $44.5 million. The Wall Street Journal Real Estate Bureau reports that Cory Schottenstein, a Trump elector in the 2016 election, is offering a 13,000 square foot mansion on Everglades island, about two miles away from Trump's club. It's still under construction, but would also include an additional 4,000 square feet of of external living space. The house will have six bedrooms, a temperature controlled wine room, a gym with a living wall of moss, a rooftop terrace and a pool that wraps around the back of the house. Schottenstein purchased the property in 2016 for just over $12 million. See the story and illustrations on WSJ.com and the WSJ app. Going to college, getting a degree and finding success in the workforce isn't as sure a thing as it once was, and has a lot to do with what a student studies and whether they actually graduate. Wall Street Journal higher education reporter Douglas Belkin joins us with details as part of the Journal's ongoing research and ongoing studies of the risk of going to college. So Doug, the number of high school graduates who attend college is significantly higher than it was 40 years ago. But how they manage their college career, that seems to be very pivotal.
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There was a big push by the federal government in the 1980s to get more people to enroll in college, and it's been very successful. But the outcomes of what happens after people enroll are fairly uneven. And that, along with the fact that there's been such an increase in the cost of going to college, the risk associated to enrollment has become a significant factor for folks who are considering what to do after high school graduation.
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In your feature in the Journal, you point out that the advantage of a college degree peaked in 2000, but is now growing again. What caused the decline and what is the reasoning behind the more recent uptick?
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The labor market's been really tight right now, but initially what happened was there was just a lot of kids came out of college and it devalued the degree. So there are certain degrees from certain schools and certain subjects that maintain a really high premium, but there's a lot of degrees and from a lot of schools that do not. So there's this real distinction between what kind of degree you're getting and where you're getting it from. As the labor market tightens and the skills that employers demand get increasingly more technical and the premium on higher order thinking continues to grow, that's helping to drive up the salary differential between a high school graduate and a college graduate.
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And the nature of the workforce is another variable here. Many college students don't always land a job that actually requires a college degree.
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C
Yeah, this is a really interesting and powerful factor that is often not taken into account when folks enter college. But when people graduate, there's a significant amount of underemployment, and that lasts through the 20s for probably about almost half of people who graduate. That begins to drop off. But up to a third of people 10 years out of college remain in a job that does not demand a college degree. So essentially what they've done is spend a lot of time and money getting a degree which may have been fulfilling, and help them think better, be a better citizen, a better person, and. But they're not getting paid for it.
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And the worst case scenario has got to be students who don't complete college and still owe substantial loan balances.
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C
This is a huge problem in America. This is really behind a lot of what we're seeing with the college default rate. So there's $1.5 trillion in student loans out there, and up to a third of them of folks who do not graduate end up defaulting on those loans at some point up until the age of 33, which is where the data goes right now. That has important and really pernicious impacts on credit and on your ability to buy things down the line. So for these kids who enter college, take out loans and don't graduate, many of them are worse off than if they'd not enrolled in the first place.
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And you spoke to experts, higher education experts that have some very, very key advice for students setting out to go to college to really almost like make a checklist of things to accomplish and to make sure that they are setting out on the right course for them.
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C
Different kids have different amounts of wiggle room. If you come from a family that's going to pay cash for school, if you have top grades and they're going to get you into a top school, then you essentially have more room to experiment and to fail. That's the very top prestigious folks in this country. If you're in the middle and you study the wrong thing or you don't graduate or you go to a school that costs too much and you have to take out too much debt, then you're putting yourself at significant risk for failure to pay off those loans down the line. And that can really impact your financial future.
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And then some experts suggest also that students should consider a certificate program that might lead them to a job that's more germane to their interests.
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So these have become a really important part of the post secondary education universe in the last 10 years or so. And what's happening is you can get a certificate that's very closely aligned with a specific need in the job market that will get you into a job that will pay very well. That's better than going to a four year degree and dropping out and taking on debt. You have no credential to leverage to pay off that debt.
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B
All right, that's good advice for potential college graduates and those in college as well. That is Wall Street Journal higher education reporter Doug Belkin joining us from our Chicago bureau. Doug, thanks for being with us.
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C
Thanks very much for having me.
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And that's your money briefing. I'm JR Whalen in New York for for the Wall Street Journal.
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Still running global payroll like a relay race deal replaces fragmented Payroll vendors with one global system. No third parties. Hire, manage and pay teams in 150 plus countries with in house local experts and white glove delivery and deal plugs into what you already use. Workday, SAP, NetSuite, operate like a local everywhere visit d eel.com WSJ that's d e-l.com WSJ.