One of the biggest worries for just about any recent college graduate is how they’re going to pay back their student loans. The mounting costs of higher education have grown faster than wages and led to an explosion of college debt. According to the recently released “Student Impact Project” by the young adult-focused think tank Young Invincibles, this will only get worse for North Carolinians if current trends continue.
According to conservative advocacy group Generation Opportunity, “Since 1985, college tuition grew by over 500 percent, rising significantly faster than the cost of health care, gasoline, shelter, and food. Nearly 70 percent of the class of 2014 graduated with student loan debt, with an average of nearly $30,000 per borrower. Too many of these graduates are still defaulting on their loans as the student loan default rate is close to 12 percent.”[i] North Carolina’s default rate is currently 11.1 percent according to The Corporation for Enterprise Development (CFED).[ii]
The Young Invincibles report notes that in the wake of the Great Recession, public higher education is still in recovery nationwide - only Wyoming received an “A” grade. North Carolina received a middling “C+” overall.[iii] Beneath that passing grade though, are some startling trends. Most strikingly, while North Carolina continues to have average tuition rates well below the national average, we have seen one of the highest increases in tuition both year-over-year and since the beginning of the Great Recession.[iv]
Steep tuition increases coupled with below-average per-student spending do not bode well for the state’s continued leadership in affordable public education. Even worse, North Carolina is one of only eight states that have continued to cut public education spending since the Recession.[v]
On the bright side, North Carolina was tied for fourth nationally for lowest “family share,” the percentage of higher education costs a student’s family pays.[vi] Still having a relatively low family share despite rapid tuition increases suggests that as a state we had a long way to fall, since tuition increases are one of the biggest drivers of family share increases. That ranking could erode quickly if our national leadership on raising tuition continues. A 2014 move by the UNC Board of Governors to end the practice of earmarking a portion of each tuition increase for financial aid to hold harmless those on aid shows how new policies could be undermining the affordability of a higher education in North Carolina.
Despite stubbornly high under-employment and unemployment for recent graduates, higher education is still the best path to better job opportunities.[vii] Recent work suggests that lower employment and income levels are not unique to this generation or this recession:
“In economic recessions as well as expansions, the unemployment rate of young workers (those under age 25) is typically a little more than twice as high as the overall unemployment rate… The historical fact that the unemployment rate of young workers tends to be a little more than twice the overall rate continues to be true today. In March 2015, the overall unemployment rate was 5.5 percent, and the unemployment rate of workers under age 25, at 12.3 percent, was 2.2 times as high.”[viii]
While we can point to averages both of incomes and employment as still having a strong positive correlation with higher education attainment, getting a degree is a much more expensive and thereby riskier proposition than it was for previous generations.[ix] An educated and skilled workforce is the foundation of a robust and growing economy, and shared access to affordable higher education is not just a matter of defending a historic reputation as a leader in the South, but an economic and social imperative.
[i] David Barnes, Wesley Coopersmith, Jordan Richardson, Ja’Ron Smith. (January 2016). 2016 State of the Millennial Report. Generation Opportunity. Available at https://generationopportunity.org/wp-content/uploads/2016/01/State_of_the_Millennial_2016.pdf
[ii] (2015) Assets and Opportunities Scorecard: North Carolina. Available at http://scorecard.assetsandopportunity.org/latest/state/nc
[iii] Young Invincibles. (January 2016). Student Impact Project: 2016 State Report Cards.” Available at http://younginvincibles.org/wp-content/uploads/2016/01/YI-State-Report-Cards-2016.pdf
[iv] See note 3.
[v] Chris Kardish. (July 2014). How North Carolina Turned So Red So Fast. Governing Magazine. Available at http://www.governing.com/topics/politics/gov-north-carolina-southern-progressivism.html
[vi] See note 3.
[vii] Alyssa Davis, Will Kimball, and Elise Gould. (May 27, 2015) The Class of 2015.
Economic Policy Institute. Available at http://www.epi.org/publication/the-class-of-2015/.
See note 1.
[viii] See note 7.
[ix] Beth Akers. (January 12, 2016). “Higher education debt is worth it, but isn't risk free.” Brookings Institute. Available at: http://www.brookings.edu/research/opinions/2016/01/12-higher-education-debt-akers