How do you know the economy is good? People are debating whether college is worth it again.
Next semester’s enrollment around the country is down by 275,000 from last year, according to education research center National Student Clearinghouse (NSC). And most of the drop is made up of students older than 24, or “nontraditional” students.
The number of students older than 24 has declined by 263,000 from last year. Traditional college-age students’ (18-24-year-olds) enrollment numbers are consistent with 2017 — only increasing by 0.4 percentage points.
“The part-time associates and certificate programs that were so attractive to adult students, particularly the unemployed, a decade ago, are showing all the effects of the recovering economy drawing those students back into the workforce today,” says NSC executive Doug Shapiro.
College enrollment decline and economic improvement
College enrollment decline isn’t new to this year. The NSC has shown consistent declines among nontraditional students every fall, going back to 2015. College enrollment peaked at 21 million in 2010, during the Great Recession, according to data from the National Center for Education Statistics.
College enrollment has gone up during every recession since 1980, according to research from Georgetown University. But no recession has seen the boost in enrollment the way that the Great Recession did.
Leaving the question: Is the current decline in enrollment a bad thing? As a 2016 CNN report suggests, the number of older students steering away from college and staying in the workforce is hurting their chances of earning more over their lifetimes.
College graduates earn double the income of workers with only a high school diploma. On the other side of the coin, the investment in earning a college education is tough to pay without borrowing. And that is on the on the rise too.
Borrowing for school is getting more expensive
Half of parents plan to take out loans for their children’s education costs this upcoming school year, says a survey from online lender College Ave Student Loans.
As college enrollment has gone down, interest rates on student loans have gone up. Congress implemented a system to determine interest rates on federal student loans five years ago.
The Department of Education “adjusts interest rates for loans to new borrowers, depending on the results of an auction of 10-year Treasury notes every May,” according to online lender Credible.
Interest rates increased this year, therefore new loan borrowers will pay more. Borrowers who plan to take out loans as of July will be 0.60 percentage points higher than last year. Federal student loan rates have gone up by 1.29 percentage points over the past two years.
A recently released quiz from Credible concludes that only a handful of student loan borrowers understand how their loans work. And what they don’t know will hurt them when it’s time to pay them back.
“For students and families who plan to borrow for college, rising interest rates may translate into higher monthly student loan payments and thousands of dollars in additional total repayment costs after graduation,” says Credible CEO Stephen Dash. “But for many borrowers, that could come as a surprise, because students typically take out loans one semester or one year at a time, and don’t start repaying them until they leave school.”