We need to rethink cost-benefit analysis of education, and what we get out of it

November 10, 2021

Angela Prince is the CEO of Climb Credit, an organization that helps the next generation of workers assess their best educational path based on ROI and offers them accessible loans. Here, she shares her optimistic, realistic, and pessimistic views for the future of post-secondary education in America—and why the cost burden widens the wealth gap.

We have too much student debt in this country. $1.7 trillion worth of student debt is crushing workers well after they enter the workforce. But at Climb, we're always talking about the underlying problem: College is too expensive, and the divide between those who can afford it and those who go into debt continues to perpetuate the wealth gap. The share of students taking out loans to finance their education continues to rise, from 1993 to 2012 it grew from 49% to 69%, per the Pew Research Center.

Being in debt for education in and of itself is not a bad thing. Education can open up new career paths, licenses, skills, and trades—whether you become a long haul trucker, a coder, or a doctor. But, we have a post-secondary education cost crisis, and the ROI is often dismal. These trends also often have a more heavy impact on Black Americans. As the Brookings Institution noted earlier this year, “After graduation, loans quickly balloon, delaying or even preventing Black Americans from building wealth. According to our analysis of the Census Bureau's 2018 Survey of Income and Program Participation (SIPP), there is a significant wealth disparity between Black and non-Black people at every age group, and Black people are not building wealth at the same pace as their non-Black peers, particularly in their prime working ages.”

Americans are going into debt because they think they need a degree from a four-year university. The burden of student loan repayments stymies an ability to build wealth. Black graduates carry nearly twice as much debt as their white classmates, per the Brookings Institution. We need to better educate future workers on the different education options available—and the financial pros and cons each offer.

The optimistic outlook: Americans acknowledge that the four-year degree is not the only path to financial stability 

We need to rethink and reimagine education, and the cost of it. Now, obviously, brain surgeons need lots of schooling. Mechanical engineers need lots of schooling. But we need to celebrate all of the paths available to workers. There is vocational training— nursing, coding, trucking, heavy equipment operation, the options abound—that is considerably cheaper than the traditional four-year college experience. These programs can help fill huge skill gaps in our economy and ensure people enter the workforce sooner. 

Students going into the kinds of programs we work with at Climb have a clear picture of what their future could look like. People are making a decision with all of the information in front of them: how much it costs, the typical payscale after certification, and how much their loan payments will be. They know what to expect on the other side. They know what their monthly loans will be and can estimate  how their new wages will cover it.

Right now, there's an information layer that's missing. We need to educate Americans on what paths are available. College is great for some people. I went to college. It's not the best option for others. Our communities need to do a better job of making both young students and mid-career workers aware of the jobs available—and the affordable ways to finance them. 

Basically I would say that the lowest bar is we, as a country, help people find those ways to reskill or upskill workers and ensure they have access to financial products that help them get that education.

The middle ground: Private companies move away from the four-year degree requirement

We need to lower barriers to entry to the workforce. Not everyone needs to go to college, but the way the current job market is set up effectively requires a degree. I say this all the time: college is great and the right choice for a lot of people, but it shouldn't be a requirement for a lot of jobs. 

Some very important companies have made these changes. Netflix no longer has a four-year degree requirement. Google doesn't either. Not too long ago, these companies, and companies like them, required a four-year degree; and much of their workforce graduated from a small number of prestigious schools. It was really exclusionary hiring. 

Netflix and Google are the kind of companies that other employers take cues from, so when they start hiring people without four-year degrees, other companies and institutions start to realize they can do that, too. So to me, it's a seismic change. Once those companies start lifting those requirements, things are going to start to change.

This change also signals to workers that they don't necessarily need to take on the debt of a four-year degree. Maybe they just need a couple of certification classes that they can get in six months. If you don't need a college degree to work at some of the most desirable companies in the world, it becomes cheaper for workers. Less debt, and they get to enter the workforce sooner. 

Pessimistic: The status quo remains

I don't think it can get any worse. Seriously: The doomsday scenario realistically would be what we have right now where college is too expensive and the job market makes most everyone feel like they need to participate in order to get a job. 

Many people aren't happy with what they get. People rack up debt that they are under for years. Plus, when you go to college, you do not know how much that's going to cost you. Our government could make schools put an actual price tag that they are held to. They can make the schools say, “Here is what your monthly carrying cost for this education is going to be on the other side, given the way you're financing it.” All of those things are doable. We just don't make anyone do them, and then we tell everyone that's the only path.

I don't think this is a sustainable situation. I'm hopeful that we can educate future workers—and current workers looking for a career change—on the options available to them. For some, that might still be a four-year degree. For others, it could be certifications with specific objectives and jobs upon completion. For those who choose the latter, entering the workforce earlier with less debt will allow workers to slowly build wealth and security without the overhead of a four-year degree and the years of loan payments. Americans who don't feel the pull of traditional college deserve more options—and ways to finance them—with clear objectives, payscales, and paths. 

About the Author
Angela Prince

Angela Prince is the CEO of Climb Credit, an organization that helps the next generation of workers assess their best educational path based on ROI and offers them accessible loans.

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