Unemployment of Recent College Grads a Key Threat to Higher Education

With the skyrocketing cost of education, families increasingly make matriculation decisions based on the perception that a particular college’s students get good jobs. Until recently, the ability to verify those perceptions has been limited. But now, there is a push for greater transparency, as illustrated by the introduction of the College Scorecard.

Are colleges ready and prepared to provide the information families need? And, how will prospective students react to comprehensive data on the real career outcomes of recent college grads? Colleges and universities need to embrace the new transparency, and where they identify unsatisfactory results, take measures to enhance career preparation.

The national situation for recent college grads

In February, unemployment statistics hit a milestone. The 7.7% overall unemployment rate, as measured by the Bureau of Labor Statistics was the lowest in four years. This unemployment rate covers everyone in the civilian population, regardless of educational attainment. Sadly, not all populations have been affected equally by the good unemployment news. Bachelor’s degree graduates under the age of 25 were among those groups hardest hit by the Great Recession; and, even as the economy recovers, 8.3% of this cohort who want work have been unable to find anything at all.

Career outcomes affect matriculation

The poor job prospects of a large number of new graduates has become a key threat to success for many colleges, impacting them where it hurts most: the decision whether or not to matriculate at a particular school.

Today’s students look at college in a very different way than their parents. In 1976, two thirds of incoming freshmen claimed that getting a better job was a prime reason for getting a college education. At that time, there was an unquestioned assumption that a college education was a leg up on the career ladder.

The Higher Education Research Institute’s 2012 survey of college freshmen shows how much has changed in the past few decades: now, almost 88% of students select their college because they perceive its graduates get good jobs. Students know college costs have risen dramatically, particularly in the past ten years, and they and their parents want to know whether the investment is worth the price.

Until now, the decision to matriculate has often been made based on blind faith that the chosen college or university will lead to a good job. Few prospective families evaluate the strength of the career preparation provided, or the resources devoted to helping students gain access to job and internship opportunities. Higher education should be concerned that when the bill-payers start to scrutinize career outcomes the way they would an investment in stocks or a new house, they will be not be impressed.

College Scorecard encourages investigation of career outcomes

The College Scorecard, introduced by the Department of Education in February 2013 is intended to make it much easier for families to get the answers they need about individual colleges and universities, and compare costs, student debt, and employment prospects for the school’s graduates.

Once students and their parents become used to comparing information about the colleges in which they are interested, they will be more likely to demand detailed statistics on employment. At present, the College Scorecard has not started to post employment information. Instead, it advises families to contact the relevant college or university for more information on how many students get jobs, what kinds of jobs they get and how much those graduates typically earn.
Higher education is not ready for the kind of scrutiny on career outcomes that the College Scorecard recommends.

Career outcomes data hard to find, and even harder to interpret

Most families who ask colleges about careers ask very generic questions, for example “how many Fortune 500 companies recruit on campus”, or “how many students get into law school or medical school”. Since the majority of parents have little knowledge about what it takes for new graduates to successfully find employment in the 21st century, they are blissfully unaware of the kinds of questions they should be asking. Most are simply reassured by answers that imply that a college’s graduates do very well—no matter that there is no comprehensive data to back up the claims.

When parents try to find career information on college websites or in Viewbooks, they are often thwarted in their efforts. An electronic search on career outcomes or career statistics at a particular college often generates no results, or results that are misleading. Sometimes the response rate–if even mentioned–is less than 25%; salary information is hard to find; and there is no indication of what steps graduates took to secure their success. There are, however, a number of institutions that can serve as models: A prime example of a school that is serious about data collection is the University of Pennsylvania. U Penn received a survey response rate of 71% from the Class of 2011, and provides a full picture of each graduating class’ career outcomes that is easily accessible to both internal and external audiences.

Later this year, the National Association of Colleges and Employers (NACE) is expected to produce guidelines for data collection on career outcomes, so that schools can standardize their procedures and facilitate comparisons. However, standardization is only part of the problem. Schools will need to change their cultures so that students are expected and even incentivized to provide career-related information. They will also need to devote time and personnel to analyzing data and using it to guide services and initiatives.

Career outcomes information may not paint a positive picture

An important consideration for colleges and universities, as they commit to greater transparency about career outcomes, is that the results may not be as good as their rhetoric. According to a 2013 report titled “Why Are Recent College Graduates Underemployed” conducted by the Center for College Affordability and Productivity, almost half of all employed U.S. college graduates are in jobs that the Bureau of Labor Statistics classifies as not requiring a four-year education.

Given the impact of the recession and the difficulty in finding any job, the situation for recent graduates is undoubtedly much worse than for their older peers. When a bachelor’s degree from a particular college is not perceived to lead to more money and a better position, families will increasingly question the value of that institution.

Taking action based on data

It is likely that private institutions will have some breathing room before being required to provide employment and salary information on their graduates. The pressure from families, however, may be sufficient to prod institutions towards transparency long before the advent of regulations. If colleges and universities truly want to make careers an institutional advantage that encourages matriculation, they need to think about obtaining good baseline data starting with the Class of 2013. Only then can they see where an investment in career preparation or the enhancement of opportunities can pay the greatest dividends.

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