Entry Level Jobs That Pay $123,000?

| | Comments (0) | TrackBacks (0)

Forbes
By: Stephanie Eidelman
April 21 2011

Student loans exceeded credit card debt last year as the largest source of debt for Americans. In fact this year, student loan debt alone is projected to top $1 trillion. Some call it the next bubble that's going to burst. I tend to agree.

The Project on Student Debt has reported that the average student debt for the class of 2009 was $24,000, the highest figure ever recorded and a 6 percent increase from the prior year.

If education is the way up for any society, we have a huge problem.

Here's my fundamental issue with our student debt reality, illustrated with some basic math from my own personal experience. I entered Northwestern University in 1984. While I don't have our tuition bills handy, I'm estimating that the total annual cost of tuition, room and board, and other incidentals was about $15,000 - $16,000 at the time. Upon graduation, I was lucky enough to find a job within a few months and my starting salary was in the neighborhood of $23,000.

Assuming a 5% annual increase in the cost of a Northwestern education, that puts this year's cost at $53,000 (I'll call my math close enough, as Northwestern's website pegs the full 2010-2011 cost at just over $56,000). This is a 256% increase since my college days.

I am no longer looking for an entry level job; however I am now in the position of hiring new grads. My first job was in the Washington D.C. suburbs, and indeed I am now an employer in the Washington D.C. suburbs, so I can compare apples to apples. I'll tell you now -- we do not pay entry level salaries of $58,000; It's more like $32-38,000. And honestly I'm hard pressed to find anyone I'd like to hire who is willing to work at the low end of that range (or in many cases, within that range at all). And many of my peers tell the same story.

So it seems that since I've graduated, the cost of education has increased by 256%, while entry level salaries have only increased around 40-70%. The math is similar whether one chooses an expensive private school, or a more affordable public school. Costs have increased dramatically while salaries have not.

Lots of other ancillary issues aside (like, when I graduated, it was common for the company to pay 100% of your health insurance; now that's getting harder to find), the basic math simply doesn't add up. No matter what the size of the loan, no matter what the monthly payment, even before you get into defaults, forbearance and compounded interest, today's (and tomorrow's) students whose parents cannot afford the full boat are doomed (or at least significantly handicapped) from the start.

Some argue that one important fix to the system is to allow for student loan debt to be discharged in bankruptcy. That would undoubtedly help lots of current borrowers who find themselves in a terrible bind. But long term, this needs to be fixed. It's just like the cost of healthcare, spiraling totally out of control. Designing a way to let people off the hook isn't going to fix the root of the problem.

When my twin kindergarteners graduate from college in 2026 that Northwestern education will cost about $116,000 annually, assuming the 5%/year increases continue. Wow. I really hope starting salaries at that time are $123,000.

Stephanie Eidelman is president of Kaulkin Media and publisher of insideARM.com, the most credible source of news and opinion for the professional accounts receivable management (ARM) industry.

0 TrackBacks

Listed below are links to blogs that reference this entry: Entry Level Jobs That Pay $123,000?.

TrackBack URL for this entry: http://blogs.cfed.org/cgi-sys/cgiwrap/cfed/managed-mt/mt-tb.cgi/3168

Leave a comment

About this Entry

This page contains a single entry by CFED published on April 22, 2011 3:50 PM.

Why It's Less Risky To Never Get a "Real" Job was the previous entry in this blog.

Geoffrey Canada is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.