(CNSNews.com) – Many college students are not earning enough to pay back their student loans, because they choose majors that pay too little upon graduation, and 15 percent of college grads are still paying back student loans at age 50, Peter Morici, University of Maryland Economics Professor, said Thursday.
College graduates owe on average $25,000 when they finish school, Morici said, and in some cases, graduates can rack up debt close to six figures.
“You know, if you go to a liberal arts college, and your family has reasonably decent means, but not enough to qualify for really substantial financial aid, you can get up close to six figures if you work at it, though it’s unusual. The bottom line is though is that graduates are not earning enough money to reasonably service their loans in many majors,” he said.
“You know there’s a great span across which graduates earn money. Some may only earn say $25,000 a year. It’s very difficult to service a $25,000 loan on that and pay rent, get an automobile, get to work, and so forth,” Morici said during an appearance on C-SPAN’s “Washington Journal.”
Student loan debt has surpassed credit card debt and auto debt, according to the Federal Reserve Bank. Americans 60 and over owe $36 million, and more than 15 percent are still paying back student loans at age 50.
“Absolutely, more than 15 percent are still paying back student loans at age 50. They should have long ago been retired. We have folks that are being hounded by collection agencies in their 80s. We’ve got Social Security checks being garnished. You know student loans aren’t dischargeable like other debts, like many other debts, in bankruptcy,” Morici said.
Morici said schools like NYU, Columbia University, and Princeton have large endowments so student tuition is “very heavily discounted” and their earning potential is “quite substantial.”
“However, it’s the folks that go to these small liberal arts colleges where there’s not a large endowment. They can rack up very heavy debt. Often they don’t get a major that leads to something rather substantial on the other end. So there the debt is outsized because there isn’t … as much financial aid, and the student’s earning capacity is much lower,” he said.
For example, he said, a student that goes to a small liberal arts college in Virginia, West Virginia, and western Maryland to become a reporter will make $25,000 a year to start working for a small town newspaper in the area, “but you’re not going to end up at the Wall Street Journal earning say, $60,000, $70,000 a year to start.”
“And if you’re lucky, you’ll get up to $35,000 a year, if you survive, because they go through people to keep salaries down. Those folks simply can’t service their debt. We see lots of college graduates doing things like selling cell phones. You don’t earn a lot of money doing that. They tend to be folks that got a degree in psychology or something of that nature,” Morici said.
“Often the more difficult path is the better path. If you like mathematics, and you’re good at it, then moving in the direction of finance or engineering makes some sense,” he said.
Someone who graduates in petroleum engineering can earn about $100,000 to $120,000 a year, while someone with a psychology degree can get a job paying $25,000 to $30,000, Morici wrote in a column published on Asia Times Online.
“What good is a degree in psychology, economics, sociology – any of the social sciences - without additional graduate training?” he said on C-SPAN.
“The president says he wants more college graduates. I think that’s wrong. We need more college graduates with specialized skills, but we probably don’t need as many as we have right now, and we’re requiring college and a diploma for many jobs that simply don’t need it, burdening people with too much debt, and also frankly, herding a lot of people into my classroom that don’t want to be there,” Morici added.