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Monday May.16, 2022
🎓 The graduation edition
3,500 Snackers told us how they see the value of a college degree
Hey Snackers,
Something’s in the air this month: college graduation. The class of ’22 is entering a superstrong labor market during an exceptionally strange time. Stocks are plunging — the Dow just had its first seven-week losing streak since 2001 — and economic growth is slowing. But the US is adding jobs at a record rate.
We asked college students and grads about higher-ed costs and student loans — and what they think their degree is really worth. Let’s dive in.
ROI
The cost of admission: up and to the right
The status… is pricey. In two-thirds of developed countries, college is free or less than $2K a year. In the US, private college costs $38K a year, on average, and public schools cost $23K out of state and $10K in state. The cost of college has tripled since 1980, while average pay for young workers is up just 20% since then. Still, many undergrads go into debt for degrees, since grads earn $1M more over their careers than non-grads. But students are reconsidering college’s value: in the past two years, US enrollment dipped 7% as more choose to “earn over learn.”
Snackers say:
- “Spending more money doesn’t always mean getting more in return… Going to college taught me that spending ‘the big bucks’ on something people traditionally value won’t always pay off.” —Isabelle, 27
- “My university BA in psychology was rewarding… and was very overpriced. My community-college AS in nursing was exponentially more financially valuable, but less fun.” —Brad, 32
The outlook… is shifting. President Biden campaigned to make public college free in the US. Now that his Build Back Better bill is stalled that’s… not likely. Meanwhile, schools are making class less costly to woo students: Columbia University recently nixed tuition for kids whose families make less than $150K/year, and Utica College is one of several schools exploring cheaper three-year degrees. College alternatives like coding bootcamp General Assembly also offer new ways to pay, like income-share agreements (ISAs) that charge a % of earnings once grads land jobs (alums work at Google and JPMorgan).
Hired
The labor market: opportunity knocking
The status… is green. On paper, it couldn't be a better time to land your first job. The US is experiencing basically full employment. Last month the US added 428K jobs, leaving a record 12M “help wanted” signs unfilled. That’s good news for college seniors, since employers plan to hire over a quarter more graduates this May compared with last year. They’ll be making an average starting salary of $55K, but the return on (degree) investment tends to vary (comp-sci majors are starting at $72K, English majors at $49K).
Nearly two-thirds of all public bachelor's degree programs leave graduates able to earn enough to cover the cost of college within a decade. But for recent grads, a survey found more than half don’t end up working in their field of study — and nearly half live paycheck to paycheck.
SnackStat: 78% of Snackers said they felt “fairly confident” or “very confident” about their job prospects as college students or recent grads.
Snackers say:
- “There are a lot of jobs you can’t even interview for unless you have a degree. Having it helps get your foot in the door.” —Jennifer, 33
- “Growing up, degrees were the key to getting a ‘good job.’ While I do think it is valuable, it’s not at the rate of what I am paying.” —Thomas, 42
The outlook… is unclear. Even though companies like Starbucks pay extra so that you'll make rush-hour lattes, overall wages aren't keeping up with inflation. Many students feel that tacking on two years (or more) for grad school is the cost of doing biz to land a competitive role in certain fields. The value of that extra degree is mixed: while master’s degree holders can make 20% more than those with a bachelor’s, employability (aka: the odds of getting hired) increases only by 3%. Plus, more school means more tuition: nearly half of federal student-loan debt comes from postgrad for master’s and Ph.D. programs.
Interest
Student debt: forgive and forget?
The status… is spiraling. Colleges raise prices, lenders dole out aid, and colleges raise prices (again). For decades, tuition increases have outpaced household incomes, forcing families to rely on loans. Today, two-thirds of college students graduate with debt, which typically takes 17 years to pay off. The average loan balance at graduation has tripled since the ’90s to more than $30K — and nearly a tenth of borrowers owe more than $100K. To help relieve the burden, Biden pledged to make at least some college free, and promised at least $10K in loan forgiveness for each borrower. So far, his admin has forgiven $17B worth of federal student debt for 675K borrowers — a fraction of the $1.7T in student loans Americans owe.
SnackStat: 65% of Snackers said their college degree was “fairly valuable” or “very valuable” relative to their tuition investment. A quarter said it wasn’t “particularly valuable,” and 9% said it was “worthless.”
Snackers say…
- “I made six figures straight out of college. If you are going to college to be a librarian, the 100K in student loans are probably not worth it.” —Zack, 37
- “If I could go back, I wouldn’t do it. I would tell my children not to go to college, and get a technical job.” —Mikayla, 28
The outlook… is mixed. This month, the Education Department said it’s forgiving loans of more than 110K government workers (think: teachers, firefighters). But the rest of debt holders aren’t so lucky, since Biden’s blanket loan-forgiveness promise isn’t panning out. Still, the pause on student loans has now been extended six times since March 2020, saving borrowers $1.5B a month in interest payments alone. Payments are set to resume in September, and if nothing changes, student debt could top $3T by 2035.
ICYMI
Last week's highlights...
- Contagion: Nearly $500B was wiped off the crypto market last week as volatility has investors turning risk-averse. Not even some so-called stablecoins appear safe.
- Bottle: A baby-formula shortage is forcing worried parents to ration supplies or drive hours in search of the powdered gold. The root cause: US import limits.
- Med: The feds subpoenaed mental-health startup Cerebral over its prescription practices for pills like Adderall and Xanax, a sign regulators may rein in telemedicine.
What else we’re Snackin’
- Circus: Elon Musk put his Twitter takeover “on hold,” questioning the prevalence of bots, and the stock tanked. He said he’s still “committed” to the deal, but not everyone’s so sure.
- Downsize: Tech companies are laying off workers while the rest of the labor market thrives. As investors sour on high-growth stocks, Big Tech is downsizing.
- Irreplaceable: Goldman Sachs says stars like Beyoncé are the ultimate recession-proof play: consumers will keep spending on certain delights (like concerts) even in a downturn.
This Week
- Monday: Earnings expected from Ryanair, Take-Two Interactive, Tencent Music, BuzzFeed, Clear Secure, Wix, Monday.com, and Warby Parker
- Tuesday: The Cannes Film Festival begins. Earnings expected from Walmart, Home Depot, JD.com, The Container Store, and On Running
- Wednesday: Earnings expected from The TJX Companies, Target, Lowe’s, and Cisco
- Thursday: Jobless claims. Golf’s PGA Championship. Earnings expected from Bath & Body Works, Ross, Grab, BJ’s, Kohl's, and Palo Alto Networks
- Friday: Earnings expected from Deere & Co., Foot Locker, and Booz Allen Hamilton
- The weekend: The Preakness Stakes is Saturday. The World Economic Forum starts Sunday.
Authors of this Snacks own: bitcoin and ethereum and shares of Clear Secure, Google, Starbucks, Walmart, and Twitter
ID: 2202491
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