The U.S. Census Bureau announced on September 14, 2021 that median household income in 2020 decreased 2.9% between 2019 and 2020, and the official poverty rate increased 1.0 percentage point. Median household income was $67,521 in 2020, a decrease from the 2019 median of $69,560, making it the first statistically significant decline in median household income since 2011. Between 2019 and 2020, the real median earnings of all workers decreased by 1.2%, while the total number of individuals with earnings decreased by about 3.0 million and the number of full-time, year-round workers decreased by approximately 13.7 million. The official poverty rate in 2020 was 11.4%, up 1.0 percentage point from 2019, marking the first increase in poverty after five consecutive annual declines. In 2020, there were 37.2 million individuals in poverty, approximately 3.3 million more than in 2019.
This deteriorating income picture has enormous implications for students who wish to attend higher education institutions. During the 1950s and 1960s, for example, a great many students achieved a college education as commuters who lived at home and traveled to the campus each day by subway, bus, and carpool. Along with their books, they brought a lunch in a brown bag along with them. During the school year, they might have worked at supermarket checkout counters on the weekends and do the same or find other low paying employment in the summertime. The net result was that they could earn enough to cover tuition costs. Clearly, those days are gone forever and have been replaced by the accumulation of substantial amounts of student debt upon completion of community college and baccalaureate degrees. Unless conditions substantially are modified, the dream of attaining such degrees increasingly will be further out of reach for many individuals. This distressing prospect occurs at a time when the possession of a degree is associated more than ever with the likelihood of earning a decent salary.
Runaway Spending In Higher Education Institutions
A new report from the American Council of Trustees and Alumni points out that an onerous debt burden currently has reached an average of $39,351 for the 65% of students who borrow money to fund their college education. That face changes from grim to tragic for the 6% whose burden is greater than $100,000. Rationalizations for this economic catastrophe are viewed as ringing hollow. College debt does not comport with the dismissive description, “good debt,” once so popular among higher education administrators. High levels of student loan debt have been shown to postpone major life events dramatically, with borrowers reporting delays in saving for retirement (62%), buying a home (55%), marriage (21%), and starting a family (28%).
The Council does not envision debt forgiveness as a meaningful solution because it merely is a way of shifting the burden to the American taxpayer. More importantly, debt cancellation is but a temporary remedy that treats the symptom and not the disease. How, exactly, did the cost to attend college in the United States rise so high? A parallel consideration is that investment in instructional staff, particularly tenured or tenure-track professors, has been overshadowed by increases in administrative staff, namely well-paid, professional employees. A proposition is advanced that even the most optimistic would be hard-pressed to argue that colleges today are providing nearly three times the educational value that they did 30 years ago, which would otherwise justify the 178% increase in sticker price at four-year public institutions since 1990. This argument crumbles in the face of studies that show that one-third of students leave college without any growth in critical thinking or analytical reasoning skills and that only 49% of employers think recent graduates are proficient in oral and written communication.
The report illustrates the implications for students, both financially and academically, of the steady growth in spending since the Great Recession. It is hoped that public awareness of this trend’s impact on student finances and student outcomes will encourage more prudent choices. A proper understanding of an institution’s spending habits can provide valuable insights for governing boards seeking to allocate scarce resources efficiently toward what most benefits students.