Young Americans and those with debt see less value in college

The Federal Reserve Bank does more than set the country’s monetary policy; it also closely monitors Americans’ views on the economy and their own financial well-being. And the latest iteration of its closely watched household survey reaffirms people’s belief in higher education, but offers significant warning signs to university leaders.

Some of the findings from “American Household Economic Well-Being in 2021” reinforce those who believe that higher education remains essential for individual economic success and satisfaction in the United States.

Americans with at least a bachelor’s degree remain much more likely than their peers to describe themselves as “at least good” financially, those with an associate’s or technical degree or who attended “university” far behind and just a little above those with just a high school diploma.

Consistent with previous iterations of the survey, a majority of Americans who went to college (52%) said the lifetime benefits of a higher education outweighed the financial costs. Nineteen percent said the benefits did not outweigh the costs, and the rest were ambivalent.

Differences in perceived value were clear based on various traits. Less than a third (31%) of those with a college degree but no degree said the benefits outweighed the costs, as did 46% of those with an associate’s degree and 67% of Americans with a college degree. a bachelor’s degree or higher.

Bachelor’s degree graduates from public and private not-for-profit colleges (69 and 63%, respectively) were more likely than their counterparts from for-profit colleges (43%) to perceive their post-secondary investments as worthwhile.

Age is another divider. At the bachelor’s and associate’s degree levels, older graduates were much more likely than younger graduates to say that the benefits of their degrees outweighed the costs. The Federal Reserve report speculates that “older respondents had longer to reap the benefits of their education than younger respondents.” He also hypothesizes that the variation may “be due to the rising cost of higher education – people who attended college more recently likely faced a higher cost than those who attended college more recently. far in the past”.

Table showing the benefits of education exceeding the costs, divided by level of education and age.

Not only that, they are more likely to have had to bear a heavier burden of financing their own studies than their predecessors – and to have had to finance it through debt, a suggestion reinforced by another section of the report, on debt impact.

The report finds that 30% of adults – around 40% of those who went to college – said they took on debt to cover those costs, with student loans accounting for the overwhelming majority of that debt.

Compared to previous years of the survey, fewer student borrowers reported being behind on their payments (12% compared to 17% in 2019), and a greater proportion of those with loan debt (73%) described themselves as doing “at least well”. financially, up from 65% in 2019. These positive results are almost certainly the direct result of Congressional and Biden administration policies that suspended student loan repayments throughout the pandemic and have continued until today. today. Repayment is due to begin this fall, though the Biden administration is considering more permanent debt relief for many borrowers.

If age was an important factor in the perceived value of their education by students, debt is even more important, especially among those with a bachelor’s degree.

While nearly three-quarters of bachelor’s degree holders who had no debt or who have paid it off believe the benefits of their education outweigh the costs, only 46% of those who currently have student debt see it that way. .

Table of self-assessed value of higher education, by level of study and debt status.

The Post-Secondary Paradox

A final section of the report, focusing on whether Americans regret their decision to pursue higher education, reflects the strange dynamics around how higher education is perceived in the United States.

A chart (below) shows that two-thirds of those who didn’t get a degree wished they had finished school, while about one in 10 Americans wished they hadn’t gone to college or had less education. ‘education.

Table of changes survey respondents would make to their previous education decisions, by level of study.

About a quarter of those who earned at least a bachelor’s degree said they wished they had attended another college (more than half of those who attended a for-profit college said this), while more than one third (37%) wished they’d chosen a different field of study.

Students who studied in humanities, arts, and social science programs were the most likely to say this.

Table of respondents who would choose a different field of study, divided by field of study.

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