High College Dropout Rate Threatens U.S. Growth
This article was originally published by the Fiscal Times on Tuesday, Oct. 28, 2010
Just over half the students who enter a four-year college complete their degree and even fewer community college students graduate, leaving many without the qualifications they need to land a job.
By Katherine Reynolds Lewis
Millions of first-year college students and their families now paying for the most expensive postsecondary education in U.S. history face a land mine: just 56 percent of those who enroll in a four-year college earn a bachelor’s degree. Those new undergraduates are now reaching the end of the first semester, a critical crossroads between finishing and dropping out.
Some students drop out because of trouble paying the cost — the average college debt upon graduation is a whopping $24,000. Others struggle to hold down a job while also attending college — tuition, room and board at many private universities tops $50,000 a year, and some state schools charges $10,000 a year just for tuition. But more than half of first-year students are simply underprepared for college-level work, said Jeff King, director of the Koehler Center for Teaching Excellence at Texas Christian University, which is developing a tool to identify students who are most at risk of dropping out. “There’s increasing pressure … to prove that after these thousands of dollars that parents are paying for a credential, the students are learning,” King said.
Education policymakers for decades have focused on opening the doors to higher education to more students, without much thought about whether those students are prepared and what happens if they’re not. Now, they’re starting to take action. Over the past decade, the U.S. has fallen from leader to 12th place in the ratio of young people with the equivalent of a bachelor’s degree, well behind Russia, Canada, Korea and Japan.
Recession Aside, Are We Headed for a Labor Shortage?
This article was originally published by the Fiscal Times on Thursday, Aug. 26, 2010.
Despite one of the worst recessions of modern times, the U.S. economy could face significant labor shortages in the coming months because of a mismatch between the quality of the available labor and the demands of industry.
By Katherine Reynolds Lewis
Alan Yellowitz of Fairfax, Va., has been job hunting since January 2009, when he was laid off from his information technology sales job along with the rest of his department. Competing with hundreds of applicants for every opening, he has clawed his way to the final round of interviews several times — only to fall short of winning the position. "There are so many more people looking for the same jobs," Yellowitz, 47, said in an interview. "It's crazy how companies are picking and choosing. You feel beat up after a while."
Yellowitz — like many of the other 14.6 million unemployed Americans like him — wasn’t supposed to be in this bind, as the oldest Baby Boomers started to retire and the labor supply began to tighten. Nearly 20 years ago, the first in a series of economic reports predicted a dramatic labor shortage as an estimated 76 million Baby Boomers departed the workforce and the smaller cohort of Generation X workers — or Baby Bust — took their place. As recently as this spring, researchers predicted there could be five million more jobs than workers available to fill them by 2018, resulting in $3 trillion of lost U.S. economic output.
"We have this huge bump coming through of older people followed by a dearth of younger people," said lead researcher Barry Bluestone, an economist and dean of the School of Public Policy and Urban Affairs at Northeastern University. "We're going to have a huge labor market shortage."
Huge labor shortage? That’s hard to imagine amid the worst recession in modern times, with unemployment locked at 9.5 percent and many discouraged Americans simply dropping out of the market. One skeptic, Wharton business school professor Peter Cappelli, said. "They've been predicting a labor shortage since the mid-1990's and guess what, it's not happening.”
Yet some evidence suggests there may already be spot shortages of labor, as employers complain about the difficulty of filling open positions and the lack of skilled workers.
Parents flock to prepaid college plans
This article was originally published by Msn.com on Friday, Feb. 6, 2009.
The bear market has made 529s that let you pay tomorrow's tuition at today's prices attractive. But they come with strings -- and states might not be able to keep their promises.
By Katherine Reynolds Lewis
If you thought paying for college was hard before last year, talk to some parents who had invested their kids' college cash in the stock market.
The past year's losses have crushed many parents' dreams of saving enough for their children's higher education or even a substantial chunk of that bill.
That's why a growing number of parents are turning to prepaid 529 plans, state-sponsored programs that let you pay today's prices for future tuition. Although some plans require students to attend a state university, most states let you use the money at any accredited higher-ed institution.
"When everything's going well in the markets, people think they can go it alone," said Kathleen McGrath, the director of Pennsylvania's tuition account program bureau. "When things get rocky, that's when they want the safety of the prepaid plan."
The Great College Savings Fiasco
This article was originally published by Msn.com on Thursday, Jan. 15, 2009.
529 plans, sold for a decade as the 1-stop solution to paying for college, haven't performed as advertised. And for many families, there's a better option available.
By Katherine Reynolds Lewis
Mention "college savings" to a financial professional and you'll likely be steered to a 529 plan.
In the decade since these investment accounts were created, they've become practically synonymous with college savings. Savingforcollege.com and the College Savings Plan Network are exclusively focused on 529 plans, for instance.
But many parents who have invested in 529s, counting on the market to help cover the soaring costs of college, would've been better off putting the money under their mattresses.
The plummeting stock market has erased many if not most gains. The balance could be less than the parents have contributed. And parents of older children, in particular, don't have much time to make up losses before they need to pay tuition.
Margot Black, a Los Angeles writer and publicist, put $15,000 into a 529 plan for her toddler son, only to see the account lose 40% of its value in less than a year.
"It was heartbreaking to watch," Black said. "The 529 plan is sold to parents as the no-hassle investing fund. . . . I honestly thought we had done such a good job upfront that we could relax."
Simply put, 529 plans don't live up to the hype. Though they remain a good choice for some, you should understand the trade-offs and alternatives before putting your college fund into one of these heavily marketed plans.
