Report: California College Grads Better Off Than If They Had Sought Work Earlier

Appeared in: Inside Bay Area & Marin Independent Journal

By: Katy Murphy

Published on: 06/04/13

Finally, some good news for new college graduates as they enter the real world, staggering under a record burden of student loan debt: As tough as it is, they are much better off than if they had looked for work straight out of high school.

Twenty-nine percent of California's recent high school graduates were unemployed in 2011, compared to 10.5 percent of young college graduates, and workers with college degrees -- in any major -- still earn much more than those without one, according to a report released Monday night by the Public Policy Institute of California.

The often-asked question -- Is college worth it? -- is a valid one, said Hans Johnson, the report's author. "But I think the answer is a clear, resounding yes."
Feeroza Joyaa, a recent Samuel Merritt University nursing school graduate, made that calculation years ago. Now, she is hoping the college advantage pays off before her loans come due in about six months.

"I need to get a job," she said. "I have that six-month period, but it's still kind of scary."

California's graduates are less in debt than their peers elsewhere in the nation, thanks to the state's robust community college and public university systems, which charge lower tuition than private schools, and to state aid for low-income students, Johnson said.

But the report also notes a troubling trend: As the state cut back its investment in higher education, causing tuition to rise, more and more California freshmen began to take out loans, and larger ones.

About 45 percent of the state's college freshmen took on student loan debt in 2010, up from one-third in 2000. And between 2005 and 2010, the average loan amount, adjusted for inflation, increased by 36 percent -- to $8,000 for the first year of school alone.

Students at private colleges are far more likely to take out loans than those at public colleges: 78 percent of California freshmen at for-profit colleges borrowed money, compared to 39 percent of public college students and 59 percent at private nonprofit colleges, according to the report.

Given that disparity, the Public Policy Institute recommends that the state adequately fund its public colleges and universities, make it easier for students to transfer from community colleges to four-year institutions and continue exploring the promise of online courses. California's support for public higher education fell by one-third between 2001 and 2011, even as enrollment increased, according to the report.

The analysis comes as interest rates on new, federally subsidized Stafford Loans are set to double. As of July 1, barring Congressional action, the rate will rise from 3.4 percent to 6.8 percent, the subject of a political showdown in Washington.

Issues of interest rates, job prospects and the growing debt burden weigh heavily on the minds of recent graduates.

To save money, Joyaa lived with her family in Fremont while she earned a nursing degree from Samuel Merritt´╗┐, a private college in Oakland. She also attended San Francisco State and Holy Names University. But she needed loans, and the recent graduate is keenly aware that payments on some $50,000 worth of debt will soon come due. Still, to Joyaa and others wanting a stable, successful career, the financial struggle was a necessary gamble.

Cal State East Bay graduating senior Laurel O'Brien recalls how deflated she felt before going to college, landing only food service and nanny jobs. The environmental studies major will look for work when she returns from an overseas trip after graduating this month. "It doesn't seem fair sometimes, the way the system is set up, but we all know, looking at the alternatives, there's no question that it is all worth it," she said.

View the full report, "Student Debt and the Value of a College Degree," at


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