Is Your Student Loan Worth It? Research Says…
February 15, 2013

With a trillion dollars outstanding in student loan debt and more than half of that in deferment or delinquency, you have to wonder is college really worth it? According to research by Pew’s Economic Mobility Project, educational debt is definitely worth the expense in the long term. Published last month, their report “How Much Protection Does a College Degree Afford? The Impact of the Recession on Recent College Graduates” can be read in full here, but we’ve culled some interesting data about employment percentages and wages before, during and after the current recession.

Here are some of the main topics the report addressed and what they mean for student loan borrowers:

Employability Before the Recession

Prior to the recession, high school graduates seeking work were employed at a level of 55%. For those with an Associate’s degree, 64% were employed. Employment rates were much higher for those with Bachelor’s degrees at 69%. But this was before the recession. Pew researchers wondered (and I’m a little curious myself) whether having a college degree made you more recession-proof. If so, then despite the cost of a student loan, it could be good insurance against hard times.

Employability During the Recession

During the recession, high school graduates saw job losses of 16%. For those holding an Associate’s degree, they saw employment declines of 11%. But for those with a Bachelor’s, the rate of job losses was much less at just 7%. Also of note during the recession is that out of work Bachelor’s degree holders who transitioned from being in school to trying to find a job or not working to looking for work remained stable, meaning that those looking for a job were likely to find one. In stark contrast, those high school graduates searching for employment were 8% less likely to find it and those with Associate’s were 10% less likely to find jobs. This means that holding a four year degree seemed to act as a buffer during times of recession when it came to employment.

Employability After the Recession

After the recession, when it seems like job prospects should be increasing, the Pew research seems to indicate just the opposite. For high school graduates, employment rates dropped 4% during the recession and then another 4% after the recession rather than recovering. For those holding Associate’s degrees, employment rates dropped 2% during the recession and then another 5% after. For those with a Bachelor’s, the recession saw them 2% less employed and then another 2% after the recession. And what’s interesting to note is that even at the lowest employment period (post-recession), those with Bachelor’s degrees were 65% employed. This is higher than either the high school graduate or Associate’s employment rates pre-recession (55% and 64% respectively).

Earnings Before and After the Recession

And it’s not just the percentage of employment that differs starkly from high school to Associate’s degree to Bachelor’s degree holders, it’s also the level of wages earned. High school grads were paid, on average, $438 per week prior to the recession, but saw a 10% decrease to an average weekly wage of $394. For Associate’s degree holders, pay dropped 11.8% from $512 earned per week before the recession down to $452 per week after the recession. But Bachelor’s degree holders saw a much lower drop in average earnings. They earned $681 on average, per week, prior to the recession and saw almost half the pay cut as the other two categories at just 5.3%.

So for those who wonder if a Bachelor’s degree is worth it, the short answer seems to be yes. If you put in your time and earn your diploma, you’ll have higher odds of getting and keeping a job and a better chance of maintaining your average earnings, even if the economy hits a roadblock. So even if your student loan debt is so oppressive that it feels like the end of the world, just hang on – it will be worth it in the long run. And if you are so overwhelmed by student loans and not able (or barely able) to make your loan payments, it may not feel like you have an edge by holding a Bachelor’s, but in many ways you do and this research supports that notion. If you are trying to get a grip on your student loans and figure out how to pay them off faster and more affordably, try’s completely free tool for optimizing student loan debt!