CHICAGO (Reuters) – When Scott Petracco graduated from the University of Illinois at Chicago with a bachelor’s degree in biology eight years ago, he thought he would quickly get a job in a laboratory and pay off $30,000 in student loans.
But the country was just emerging from the 2007-2009 recession, and he could not find a job related to his degree. Now, at age 30, he works part-time as a kidney dialysis technician in Chicago for $15 an hour. Since that does not pay the bills, he also has a second job loading freight.
“It’s nothing very exciting, but it pays well,” said Petracco, who does not think the money he spent on college was worth it. Tormented by his student loans, he has given up on going to medical school or working in his field, and is devoting “every dime I have into getting rid of the debt within six years.”
Petracco is not unusual. A study by the Federal Reserve published in May found that half of people under 30 with bachelor’s degrees wonder if the money they spent on college was worth it. It is a stunning finding in the Report on the Economic Well-Being of U.S. Households in 2017 here, and evidence that the generation that finished college right after the Great Recession is turning into the “lost generation” some economists predicted a decade ago.
Separate research by the St. Louis Federal Reserve has found that rather than bouncing back from bad economic times, the wealth of the millennial generation has decreased since 2010 and is far less than their parents’ generation at a similar stage in life.
“The generation born in the 1980s has not seen the college pay-off,” said William Emmons, an economist with the St. Louis Fed.
A key to this: Pay has not kept up with the cost of college borrowing.
Even though job opportunities have improved since the recession, Emmons thinks this year’s graduates could be weighed down by the same trends.
Although unemployment has declined to just 5.3 percent for young college graduates, the New York Federal Reserve reported in April that 42.5 percent of recent college graduates are underemployed, working in jobs that do not require college degrees.
While engineers are doing fine, with only 17 percent of industrial engineers underemployed, some 57 percent of liberal arts majors and 49 percent of biological science majors are underemployed.
That suggests that Petracco’s problem finding a job stemmed not just from the recession. So many people now go to college that competition for jobs is intense. And because so many people with college degrees are available to employers, “We should not expect to go back to the 90s with big increases in salary,” for graduates, said Emmons.
Buyer’s remorse over the big college purchase among 20-somethings fits the times. There has been a tremendous change in prosperity since baby boomers went to college.
For the generation born in the 1950s and 60s, when far fewer people went to college, graduating from college lifted incomes for young adults 57 percent higher than people who did not go to college, according to the St. Louis Fed. Now it is just 43 percent higher for people born in the 1980s, who now in their 30s or late 20s.
There has been an even worse drop-off in the ability to build wealth among people who went to college. Baby boomers born in the 1950s bought homes shortly after college and quickly built wealth in their 20s and 30s. Their wealth was 185 percent more than peers who had not gone to college.
Today, after borrowing heavily for college and starting jobs with relatively stagnant pay, those born in the 1980s have wealth only 42 percent above peers who did not go to college.
Housing – both rentals and buying – is unaffordable in many major metropolitan areas. Freddie Mac recently reported that less than half of college graduates could afford to live independently in cities. Fewer own homes.
Those who do buy often do so with help from a parent or grandparent, said Dana Bull, a 29-year-old Boston real estate agent who caters to her generation.
Having a college degree has not helped some of her peers, who struggle to get jobs. Then, Bull said, they compound the problem by adding on more debt for master’s degrees.
Editing by Beth Pinsker and Frances Kerry