How Many Degrees to pay off a Student Loan?

One of the hot topics of the day is employment for young people.  Are people coming out of university today over-entitled hipsters who are unwilling to take entry level work and expect to be Director of Basket Weaving right out of school?  Or is it a shift in economics that is holding them back, forcing them into slave labour where they work themselves to death.

My personal experience: I fall somewhere in the gap between Gen X and Gen Y.  I graduated with a degree in Mechanical Engineering and partially completed a Masters in Mining Engineering (making potential employers bow down at my feet and sacrifice virgins in my name according to the news these days) and when I came out of school the recession was flirting heavily with us, but not ready for hot, sweaty sex just yet.  From there I worked myself into a niche where there are only a few jobs, but even fewer people who know how to do it well.  That is to say I have been blessed with continuous, gainful employment and I thank God for it. 

A major reason I got there was because I went to university.  My parents recommended demanded it.  I think I’m typical of my generation in this regard.  My parents’ generation largely did not go to university (8-12% had a Bachelor’s or higher in their time. They saw a significant difference in the lifestyle of those who had vs. those who had not.  That is borne out by the statistics from back in the day. 

	Overall		High School		Bachelors+
Year	Male	Female	Male	Female	Male	Female
1991	23,686	11,580	21,546	10,818	$39,803	23,627

http://www.census.gov/hhes/www/income/data/historical/people/ Table P-16.  My earnings in 1991 were$52. 

Side note – most all of this data is American – it’s a lot easier to find, I’m taking talking trends that are broadly similar in Canada, and for all the NSA folks reading this GO ‘MURICA!!!

So it made sense for my parents to be flogging me on that path (and I’m grateful they did).  It seems most parents of that generation said the same thing as the percentage of people with a Bachelor’s Degree has been steadily climbing.  

http://www.census.gov/newsroom/pdf/women_workforce_slides.pdf

Given the veritable flood of ivory tower elitists compared to yesteryear, supply and demand (it’s the law, doncha know), and all the bitching and whining about no one being able to find a job after university I was expecting to see the wage gap between high school and a Bachelor’s degree shrink from 1991 to today. 

	Overall		High School		Bachelors+		Difference
Year	Male	Female	Male	Female	Male	Female	Male	Female
1991	$23,686	$11,580	$21,546	$10,818	$39,803	$23,627	84%	118%
2001	$32,494	$18,549	$28,343	$15,665	$54,069	$33,842	91%	116%
2012	$38,428	$23,946	$31,064	$18,213	$63,272	$42,027	104%	131%

Median Earnings by Education and Year, or Stay in School, yo.

Well shit, that didn’t work.  Admittedly, I smoothed things out considerably by looking at only three years out of 20, but generally the wage premium for a degree has remained fairly steady for the last 20 years.  Maybe we need to dig deeper into the data.  Supposedly some degrees are worth more than others.  Much of this has been ballyhooed about in the news.  Get a degree in

• Engineering
• Advertising
• Pharmacy
• Accounting

and you will be rich, famous and sexy when naked.  Get a degree in

• Arts
• Psychology
• Education
• Social Science

and the stairway down from your convocation goes directly into debtor’s prison. 

That’s all good to know, if not terribly surprising.  Not many people expect to get a Physicist’s salary after their degree in Film History.  It’s nice to know what the employment and salary prospects are for various degrees.  Less for selection purposes (people choose degrees in line with their gifts, abilities and interests more than money – not everyone is meant to be a teacher or an accountant), but more so you can answer the question of whether it will be you or your children that pay off your student loan.  

Universities are complicit in this.  They sell you on the general (People with degrees make more money and are sexier when naked), but don’t get into the specifics (those Advertising majors are smokin’ but avert your eyes from the basket weavers).  Their objective is to….well, that’s a good question worth its own discussion. 

Here’s the annoying thing about all this.  Governments, business, lobbyists, and disgruntled bloggers can spit out all the statistical meanderings we want.  Yes, it can guide policy to an extent (what are the values of our country, our province, and how does our post-secondary education system encourage and support that).  But it doesn't mean jack to anyone individually.  Looking at this data and saying “hey, everything is alright,” doesn't help my friend with his teaching degree find a position in Vancouver when there are none. 

Looking at the data and saying “there’s way too many new teachers, let’s cut the number of education grads in half,” doesn't help a First Nations school hire a teacher when none are willing to go there.  Problems are local and personal.  Knowing engineering pays more than film school doesn't help the kid who made 50 short films in high school that created a YouTube cult following, but can’t for his life pass remedial Math 9. 

I struggled for a long time to find a conclusion to this post.  And to leave it here just seemed whiny and bitchy.  Overall, a Bachelor’s degree is still a great investment.  Some maybe more so than others.  Parents, discuss this with your kids.  Encourage post-secondary, but don’t just leave it at that: help them map out where their choices in post-secondary lead them five, ten years down the road. 

And don’t forget non-degree options as well.  Trades can offer as good or better money and lifestyle (again it’s specific and local – Heavy Duty Mechanics and Welders are currently hot, carpenters less so.  It will change before your kids graduate).  None of this is to force them down one road or another, but so they at least know the consequences of the choices they’re making.  Then when you have to bail out their $100,000 student loan for their degree in Post-Modern Latvian Chamber Pots you can say I told you so.