Many full-time workers in the 25-35 age group with college training don’t need reminding that they’re struggling to balance paying for student loans while at the same time attempting to have decent housing and handling their day-to-day expenses.
I’m not in that age group, but our two children are – and I can see from their friends and work colleagues just how much of a challenge it is for many of them to balance these competing necessities.
One way to deal with the challenge is to settle for the sardine-like living arrangements one encounters in quite a few urban areas, with anywhere from three to six people residing in the same (medium-sized) apartment or (small) house.
Somehow, things just didn’t see so difficult for me “back in the day.” Of course, the entirety of my student loans following college amounted to a monthly payment of $31.28, with seven years to pay it off.
And my first apartment – a one-bedroom flat in an elegant 1920’s building, complete with a beautiful lobby and old-fashioned glam elevator, cost me a mere $185 per month.
Not only that, it was only a five-minute bus ride to my downtown banking job.
Now, a newly released analysis published by the American Consumer’s Newsletter helps quantify the different reality for today’s younger workers.
What the data show is that a college degree does continue to provide higher earnings for younger workers compared to those without one.
But … it also reveals that adjusted for inflation, their earnings are lower than their college-educated counterparts in the past.
According to a National Center for Education Statistics analysis as published by the AC Newsletter, here’s a summary of the median earnings differences for male full-time workers in the 25-34 age cohort, comparing 2016 to the year 2000 in inflation-adjusted dollars:
- Master’s or higher degree: $71,640 … down 6.4% from 2000
- Bachelor’s degree: $56,960 … down 8.8%
- Associate’s degree: $43,000 … down 11.8%
- Some college, but no degree: $37,980 … down 14.3%
- High school degree: $34,750 … down 13.6%
- High school dropout: $28,560 … up 2.8%
Thus, among full-time male workers across all education levels, only high school dropouts have experienced a real increase in earnings between 2000 and 2016.
Among female workers, the trends are a little better, but still hardly impressive – and they also start from lower 2000 income levels to begin with:
- Master’s or higher degree: $57,690 … down 0.5% from 2000
- Bachelor’s degree: $44,990 … down 7.5%
- Associate’s degree: $31,870 … down 12.0%
- Some college, but no degree: $29,980 … down 13.8%
- High school degree: $28,000 … down 7.2%
- High school dropout: $21,900 … up 5.0%
What’s even more challenging for workers carrying student loan debt is that those debt levels are higher than ever – often substantially so.
According to a Brookings Institution comparative study, fewer than 5% of students leaving school in 2000 carried more than $50,000 in student loan debt. In inflation-adjusted terms, by 2014, that percentage had risen to ~17%.
Looked at another way, ~40% of borrowers are carrying student loan debt balances exceeding $25,000. It doesn’t take a finance whiz to figure out how big of a hit that is out of a worker’s paycheck.
It makes the some of today’s realities: people living at home longer following college; having frat- or sorority-like living arrangements; putting off plans to purchase a home, or even putting off marriage plans – all the more understandable.
And I’m not exactly sure what the remedy is, either. When it comes to overburdened education debt, it isn’t as if people can go back and rewrite the script very easily.