Presidential candidates have talked up college as an important pathway to the middle class. Sen. Bernie Sanders has even called for making public colleges and universities tuition-free. But these ideas ignore a harsh reality in the American higher-education system: Only one-third of college enrollees graduate within six years and then get jobs requiring college degrees.
That is the conclusion of my new report in the Manhattan Institute's Issues 2016 series. Only 59 percent of four-year college students graduate within six years. Those who graduate face an additional hurdle — only 56 percent of recent college graduates work in a job that requires a college degree (though the figure for all college graduates is 67 percent, suggesting some underemployed graduates move up later in their careers).
Multiplied together, these numbers suggest that only 33 percent of students who enter college emerge with both a degree within six years and a relevant job soon after graduation. This is the true crisis in higher education, and one policymakers must address before they offer up more taxpayer money to colleges.
Encouraging more students to attend college may worsen the already-poor graduation rate. The new students attracted by free college are likely to attend institutions where graduation rates are lower, such as community colleges (where 40 percent graduate) or four-year colleges with open enrollment (where just 34 percent do).
Failing to graduate is a major cause of financial hardship — student-loan delinquency rates among dropouts are four times higher than among graduates, despite dropouts' having less debt. Additionally, the years that dropouts spend in college are years in which they cannot pursue other career paths, such as apprenticeships.
Those who do graduate face a weak labor market. Recent college graduates have no guarantee of landing a job that requires a college degree. This is not a death sentence — some of the jobs that do not require degrees pay quite well. But if students do not need college degrees to obtain the jobs they'll end up in, why invest in expensive diplomas in the first place?
Field of study is strongly associated with a graduate's likelihood of underemployment. Only 20 percent of engineering students are underemployed, compared with 63 percent of leisure and hospitality students. Currently, colleges have no incentive to guide students toward the career paths with the greatest chances of success. They get their tuition dollars regardless of a degree's economic value.
Before shuffling more students through the higher-education system, policymakers should consider some basic economics. When the supply of college graduates outpaces the number of jobs requiring a degree, the investment value of college falls. This is what has happened in European countries with free college systems. A recent college graduate in the United States can expect to earn 65 percent more than someone with only a high-school degree. In Denmark, which has free college, the comparable earnings premium is only 12 percent.
Reforming higher education in America must start with cleaning up the messes that already exist. Colleges must face accountability measures to incentivize them to raise graduation rates and improve career outcomes for students. Lowering barriers to college enrollment without addressing these other issues would fail the students who need their colleges to do better, and fail the taxpayers who would be left holding the bill.
Preston Cooper is a policy analyst at the Manhattan Institute. You can follow him on Twitter here.