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Inside Higher Ed
Great Recession Graduates: Where Are They Now?
One in five of those receiving bachelor's degrees in 2007-08 had
negative net worth in 2018, and 14 percent couldn't pay essential
expenses.
By Emma Whitford
January 14, 2021
Ten years after earning their bachelor’s degree, 86 percent of college
graduates had a retirement account and 63 percent owned a home,
according to a new report from the National Center for Education
Statistics.
Despite the often-held assumption that well-educated but indebted
millennials can't afford to buy homes, the new NCES report paints a
different picture. That picture may reflect more on the housing market
than on higher education, but economists said the new data are a good
sign for colleges and universities that might be worried bachelor's
degrees provide lesser value to graduates during a recession.
“I think what we’re seeing here is that even though the Great
Recession was driven somewhat by a financial bubble and somewhat
associated with the housing bubble, interest rates have just been at a
historic low,” said Jeff Strohl, director of research at the Georgetown
University Center on Education and the Workforce. “That could be a big,
important factor.”
The new report is part of a longitudinal study that examines financial
and career outcomes for a group of graduates that earned bachelor’s
degrees during the 2007-08 academic year and entered the workforce at
the beginning of the Great Recession. More than 137,000 students were
surveyed for NCES’s National Postsecondary Student Aid Study, and
17,100 of those students were eligible to be included in the new
longitudinal study. Those students represent roughly 1.6 million
students who completed a bachelor’s degree between July 1, 2007, and
June 30, 2008, according to the report.
In the decade following their graduation, 2007-08 bachelor’s degree
holders were, on average, employed for 85 percent of months, unemployed
for 7 percent of months and out of the workforce for 9 percent of
months. Among those who were part of the workforce in 2018, about 85
percent held full-time jobs. More than 90 percent of employed men and
81 percent of employed women were working full-time jobs in 2018.
The study's findings reveal that graduates during the Great Recession
are about on par with graduates from other nonrecession years, Strohl
said.
"These numbers meet roughly the historic norm," Strohl said. "I'm
thinking that the recession just wasn't as hard-hitting on the
[bachelor's degree-holding] portion of the population."
To assess exactly how the Great Recession impacted these graduates’
careers and financial lives, the cohort must be compared with a control
group of graduates that did not enter the workforce during a recession,
said Till von Wachter, a professor of economics at the University of
California, Los Angeles.
He examined similar comparisons in a 2019 paper, finding that people
who graduate during a recession typically catch up to others who didn't
graduate during a recession within 10 years, the same time frame used
in the new NCES report.
“While Great Recession entrants had lower entry wages because of the
large recession, they also faced an increasingly positive labor market
that likely helped their recovery process,” von Wachter wrote in an
email.
The new report’s findings could be good news for recent graduates who
are entering the workforce during the current economic downturn caused
by the ongoing pandemic. By and large, bachelor’s degree holders have
not lost jobs during the pandemic at the same rate as workers with high
school diplomas and workers in the service industry. Despite a “scary
as hell” initial labor market, today’s graduates will likely be OK in
the long run, said Strohl, of Georgetown.
“If the experience as we see here is indicative, they will land on their feet,” he said.
Still, von Wachter wonders if the long-term effects of entering the workforce during a serious recession remain unclear.
“Even though recovery in earnings seems complete after 10 years, when
we looked at graduates from the last big recession, in 1982, we found
they suffered from increased mortality and worse family outcomes in
their 40s,” von Wachter said. “The 10-year mark might not be sufficient
to assess the long-term outcomes.”
Not all of the NCES study’s 2007-08 graduates were doing well at the
10-year check-in. In 2018, almost 14 percent of graduates reported they
could not pay essential expenses -- such as mortgage or rent payments,
utility bills, or medical care -- within the past year. About 9 percent
of science, technology, engineering and math majors reported not being
able to meet essential expenses, compared to 15 percent of non-STEM
majors.
One in five 2007-08 graduates had negative net worth in 2018, according
to the report. The report considered graduates to have negative net
worth if they would still be in debt after selling major possessions,
including a home, turning investments and assets into cash, and paying
off as much debt as they could.
Of the graduates that were still paying student loans in 2018, public
college graduates paid the least per month, putting an average of $393
toward loans. Graduates from private nonprofit colleges paid $469 on
average toward monthly loan payments, and graduates from private
for-profit colleges paid $485 on average per month.
Homeownership Varies by Race, and Other Findings
Homeownership varied by race and ethnicity. About two-thirds of white
2007-08 bachelor’s degree program graduates owned a home in 2018,
compared with 47 percent of Black graduates, about 52 percent of
Hispanic or Latino graduates, and 53 percent of Asian graduates.
About 60 percent of 2007-08 graduates that enrolled in an additional
degree program after completing their bachelor’s degree owned homes in
2018. About two-thirds of graduates who didn’t pursue an additional
degree owned homes in 2018.
Graduates from 2007-08 who were married, with or without children, were
about twice as likely to own a home in 2018 than 2007-08 graduates who
were not married.
Among graduates in the study, 43 percent earned another degree or
certificate by 2018. More than a quarter of 2007-08 graduates had
earned a master’s degree; 6 percent completed an undergraduate
certificate, associate’s degree or additional bachelor’s degree; 5
percent earned a professional or other doctoral degree; 4 percent
completed a post-bachelor’s or post-master’s certificate; and 2 percent
completed an academic doctoral degree.
In 2018, a quarter of graduates from private for-profit colleges were
unable to meet essential expenses in the past 12 months, compared with
13.2 percent of public college graduates and 12.6 percent of private
nonprofit college graduates.
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