UPDATED: Jun 29, 2022

Advertiser Disclosure

Advertiser Disclosure: We strive to help you make confident loan decisions. Comparison shopping should be easy. We are not affiliated with any one loan provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Written By: Sara RouthierReviewed By: Joel OhmanUPDATED: Jun 29, 2022Fact Checked

The number of Americans under the age of 25 with at least a bachelor’s degree has increased 38 percent since 2000, according to Census results.

But with an unemployment rating at 7.7 percent, the notion that a bachelor’s degree guarantees a stable job is no longer believable.

Bill Baker, President of Dallas-based recruiting firm Schul Baker Partners, said master’s degrees are what bachelor’s degrees used to be.

But even though their value might have changed, an undergraduate degree is still a necessity in today’s work economy.

“It’s like a ticket to be able to play. You can’t get into the games, often times, without it,” Baker said.

‘Degree Arms Race’

A bachelor’s degree used to mean something, something big, something more than it does today.

Rita McGrath, Associate Professor at Columbia Business School, said that as more people get college degrees, the more a college degree becomes a commodity.

“Having a bachelor’s used to be more rare, and candidates with the degree could therefore be more choosy and were more expensive to hire. Today, that is no longer the case,” McGrath said.

In the current economy, employers have the upper hand, and when given the opportunity to hire entry level positions paying little more than minimum wage, they tend to choose those with undergraduate degrees.

McGrath said this is likely an unintended consequence of the “massive expansion” of bachelor’s degrees.

According to the U.S. Census Bureau, during the time period between 2002 and 2012, the number of people with undergraduate degrees increased by 25 percent. The growth in the Master’s and PhD programs was even stronger. Master’s degrees increased 43 percent, or by about 5 million people, in the past decade. For doctorates, the number increased 45 percent, equating to about 1 million people.

This growth, she said, is “indicative of a degree arms race.”

Mario Almonte, partner at Herman & Almonte PR, said the value of a degree has not changed in the past decade. He said students are still educated and prepared for their chosen field, but due to an influx in new graduates, the competition has become tougher.

The arms race continues when companies decide to hire a new candidate.

Baker said a high unemployment rate creates a law of supply and demand that works in the employer’s favor.

“In today’s environment when there are so many people unemployed, you can be pickier,” Baker said.

Even when positions do not require a degree, Baker said employers will value this because it states something about the candidate.

McGrath said employers require a bachelor’s degree because it is symbolic.

“It means someone worked hard enough and made the effort to complete a degree, which is a proxy for being able to take on challenges and finish them,” McGrath said. “Unfortunately for many people who, despite no fault on their own don’t get a degree, it becomes a signal to the employer.”

Jim Grew, president of The Grew Company, agrees that applicants without degrees exude a negative ideal.

“Without it, there are questions of drive, follow-through and intelligence that will derail many job opportunities,” he said.

Unskilled and Skilled Labor

Spikes in higher education are quickly changing the face of the country’s work economy.

According to the Chronicle of Higher Education, unskilled labor jobs are reducing drastically. In 1960, 60 percent of jobs were unskilled and required no training or previous skills. Today, only about 15 percent of available jobs are unskilled. That means that 85 percent of all jobs available require some form of education or training, which often means a college degree.

Almonte said degrees and training are now seen as more of a requirement because the market has changed.

“Twenty years ago, you had a competitive edge as an employee if you knew how to use a computer. Today, it’s taken for granted [if] you do,” he said.

Many human resources departments will not even consider a new hire without this degree.

“You won’t get the chance to prove you’re smart enough to do the job unless you show up with that degree in your pocket,” he said.

The Skewed American Dream

Completing an undergraduate program, landing a stable job and being able to pay one’s bills is definitely a part of the ideal American Dream.

But nearly half of college graduates do not get to experience this path.

According to the Bureau of Labor Statistics (BLS), 48 percent of employed U.S. college graduates are in jobs that require less than a four-year college education. Even further, 37 percent of that group holds occupations that require no more than a high-school diploma.

A conflicting trend has arisen: more education, yet fewer career paths. Not only is Generation Y becoming an over-educated generation, but they are struggling to find a job of any type.

In order to avoid this trend, some students faced with rising student loans debts and no job prospects decide to re-enter college and pursue their master’s degree.

But this decision does not always fare well.

The unemployment rate for master’s degree holders was 3.5 percent in 2012. Although this number is lower than the national average, it still accounts for a sizable portion of the population.

Baker said the reasoning could lie with the majors that students pursue in graduate school. For instance, he discussed the idea of getting a master’s in teaching. When a student simply plans to teach in a public school, Baker said they often wind up wondering why their master’s degree does not produce a sizeable income.

“I look at it from a business perspective. Is there going to be a return on investment?” Baker questioned. “I think a lot of students that continue to get their masters in areas that aren’t supported by the market do that often times because they are immature or afraid of getting into the workforce.”

Grew said students should not borrow student loans if they are not prepared to repay their debt.

“If you don’t want to do the kinds of work that will repay your debt, don’t borrow the money,” Grew said. “Once you have the debt and the benefit of the education … consider working to pay off your debt first, and later working to do what you enjoy.”

Shifting Educational Formats

Although the country is strapped by an ever-growing student loan debt figure, not every business professional thinks large debt is needed for a valuable education.

Almonte said that although he would not consider hiring anyone without at least a bachelor’s degree, it no longer matters where a student earns their degree.

“Quality information is no longer the exclusive property of a few prestigious schools. It’s all available online, often free of charge, for anyone to use,” Almonte said.

He said before the internet, garnering knowledge was “an expensive proposition.”

Now, college is more about drive than funding.

“Getting an education today is more about the individual’s ability to learn than his ability to pay for it,” Almonte said.

He said that Ivy League schools, in some cases, can even hinder students.

“It may even be detrimental to consider the more prestigious schools like Yale and Harvard for the simple fact that they are still mired in tradition and the past,” Almonte said. “Teaching students the old fashioned way may actually do more harm than good.”

As the educational model changes, so should student’s drive.

Michael Ray Smith, professor of communication studies at Campbell University, said maturity is needed for a college degree to impact students the most.

Smith said he has seen newer breeds of controlling parents. They move beyond the “helicopter parents” role and into a title he calls “Velcro parents.” These parents want to stay involved in their children’s college lives, going as far as expecting phone calls from their students after each class.

“These people don’t just hover; they are just an extension of their students,” Smith said.

Smith said this creates an unhealthy kind of dependence that will extend to when the students apply for a career-oriented goal after graduation. Maturity — in how students interact with their parents, how they approach college classes, and even when they decide to enter college — matters.

Smith said some students should delay their first year of college until they are aware of the expectations and can appreciate college for its benefits.

“There is no question that college has its benefits, but if you are trying to prepare yourself for a career, it may be [that] you really don’t know what you need until you’ve spent a year foundering in a competitive marketplace,” he said.

Smith said that college is about more than just a main event. Successful students will view college as needing three separate aspects. The first is going to classes and performing the required assignments. The second is following one’s dream job requirements (i.e. if the student is a writer, they should visit writer’s conferences or join academic groups). The third grouping is anything that makes a student click, such as auxiliary cultural activities and volunteering.

This drive, however, is not present in every college student.

Smith said some parents realize this, but figure that college is a safe place for students to “hang out” and take a few classes. But he said some students are better suited to go to a community college, for economic purposes, if they are just going to casually take a few classes. Smith said if students do not “have a good clue about what [their] heartbeat is,” they should go to a community college.

Without drive, going to college not only wastes the student’s time, it waste’s thousands of dollars. Some students are fortunate enough to have their parent’s support, while others are driven to take out students loans.

But even for those with strong financial support, Smith believes students should value college as an investment, and not a meaningless activity.

A college degree, according to Smith, should be treated like an investment.

“You don’t buy an expensive car and neglect it,” he concluded.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about loans. Our goal is to be an objective, third-party resource for everything loan related. We update our site regularly, and all content is reviewed by experts.

Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

Full Bio →

Written by Sara Routhier
Director of Outreach Sara Routhier

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

Full Bio →

Reviewed by Joel Ohman
Founder, CFP® Joel Ohman