A recent study shows that receiving a higher education in Wisconsin pays off for some students significantly less than it does for others. A high-paying job can justify the significant debt incurred from student loans, but a low-paying job paired with loans can make college a questionable investment.
Recent tuition increases have made college much less affordable. Student loan debt now exceeds 65% of average annual earnings. In the last ten years, the share of total educational costs paid by UW students went from 38 percent to 71 percent. Tuition has risen as state tax support for the UW system has decreased from 32 percent of system budgets to less than 20 percent since 2002.
Wisconsin college graduates face a weak job market and high student loan debt. In response, the Wisconsin Taxpayers Alliance recently investigated which students will benefit from college and what degrees will lead them to successful employment. Their findings suggest that colleges are admitting students who are not well prepared to succeed academically, and that some students are choosing degrees that lead to low-paying jobs.
Low admission standards allow academically unprepared students to struggle through college with low chances of success. In 2011-12, 16 percent of new freshmen at four year UW campuses had graduated in the bottom half of their high school classes. This percentage was over 30 percent at Milwaukee, Parkside, Stout, and Superior. A low high school class rank does not guarantee that a student will be unable to succeed in college, but in general, such students often gain more from alternative options.
At University of Wisconsin—La Crosse, about 86 percent of new freshmen return for a second year. Wisconsin universities Madison and Eau Claire also have high retention rates. The other ten UW campuses average about an 80 percent retention rate of freshmen returning for a second year. While this is higher than the national average, the 20 percent of students who drop out receive little or no return on their initial college investment.
The Wisconsin Taxpayers Alliance also suggests that students who are well positioned to succeed in college are not necessarily well positioned to succeed in the job market. Some degrees lead to significantly higher paying and in-demand jobs, where other degrees land graduates in low paying jobs after struggling through a weak job market.
Students graduating with degrees in engineering, computer science, math, health, and business have a higher chance of finding a well-paying job. In 2011, 34 percent of UW graduates had a degree in one of these areas. 30 percent of 2011 UW graduates got degrees in recreation, liberal arts, humanities, arts, psychology, sociology, or education. These areas have above average unemployment rates and below average pay rates. The average starting salary in 2010 for graduates with an engineering degree was $55,000, whereas the starting salary for graduates who majored in humanities, arts, social sciences, and education averaged to less than $35,000.
About 76 percent of UW—La Crosse students graduate in six years or less. 84 percent of UW—Madison and 73 percent of Eau Claire students graduate within six years. A combined 66 percent of students from the other UW system schools graduate in six years or less, and less than half of the students at Milwaukee, Parkside, and Superior graduate within six years of enrollment. For these students, depending on their chosen degree, college could still be a sound investment. For the students who do not graduate or incur upwards of six years’ worth of student loans, college may not be worth the debt.