There was a time when a college degree meant a good job, a steady income, and financial security. Today, a college degree may still lead to many great things, but nothing is promised.
This month the federal government released statistics on the minimum wage workforce in the United States. In the year 2013, a staggering 260,000 college graduates (those with four year degrees) were making minimum wage. If you include those who earn an associates degree the number swells to 460,000. If you include students who have some college education but not a degree, the number grows to over 1.3 million Americans. (Source: Full PDF of the Bureau of Labor Statistics)
What do these numbers mean?
If there is one takeaway from these numbers, it has to be the importance of making wise higher education decisions. Over a million Americans started their college education only to end up making minimum wage. This certainly doesn’t mean that college is a bad idea, it just means it isn’t a sure thing.
For most college students, the only sure thing is the high cost of tuition and student loan bills. Regardless of whether or not they find great job when they graduate, Uncle Sam and the banks will come to collect on the debt.
How does one avoid a college education that isn’t worth the money?
From the student loans perspective, the biggest tip would be to entirely avoid student loans. If they are absolutely necessary, confine student loan borrowing to federal government loans. Repayment plans like IBR and PAYE limit expected student loan payments to portion of one’s income. If a graduate joins the ranks of those making minimum wage, their monthly student loan payment to the government would be very low and could even be $0.
The minimum wage numbers also demonstrate the need to investigate job placement numbers. If a school is only placing a small fraction of their graduates in jobs that require degrees, it should be a red flag for incoming students. Some schools go to great lengths to inflate or even lie about their job numbers, so it is critical you do your research and get all the facts.
Equally important is the job placement figures for the individual program. The reality is that some jobs are far more in demand than others. Its great to pursue your passion, but passion alone doesn’t pay the bills. Finding a field of study with a favorable job outlook can help you avoid becoming a graduate making minimum wage.
The Bottom Line
Dropping out of high school and ending up in a minimum wage job makes paying the bills tough. Going into debt to get a college education and still ending up in a minimum wage job makes paying the bills even tougher. Because a good paying job isn’t a sure thing, smart planning is a must.