Action Project

Degrees don’t guarantee warm welcome to workforce, debt repayment

After graduation, paying off debt is not a foreign priority. But, for many graduates, socioeconomic status, nationality difference and degree programs factor into their ability to join the workforce immediately and pay off their loans.

Image By: Max Homstad

Many graduates enter the job market with the intention of paying off their student loan debts.

But, is it possible for Wisconsin graduates of color — including those with international backgrounds — and those who pursue degrees in the humanities to do so?

The answer is yes, according to findings throughout the state, but not without difficulty.

In 2016, The Institution for College Access reported that student loan debt on average was $30,059 for Wisconsin college graduates.

According to the same report, around 70 percent of college students take on student loan debt in Wisconsin, ranking the sixth highest in the country.

The U.S. Department of Education also revealed that the number of undergraduate students who repaid their college student loans over the 10-year period was close to 74 percent in 2006.

In 2015, nearly 9,090 Wisconsin college graduates from two- and four-year schools began repaying loans but ultimately defaulted, according to the latest report from the U.S. Department of Education.

However, the American Institute for Research reveals that repayment is more than just a fiscal concern. Racial disparities play a key role in widening the racial wealth gap by generating a rise in average student debt.

In 1992, African-American graduates had an overall default rate more than five times higher than white college students. This increased more than nine times for Asian students.

In fact, African-American college graduates owe $7,400 more on average than white graduates, according to a report from The Brookings Institution in 2016.

“Student loan debt is racialized in the U.S., not only because youth of color — particularly black youth — need to take on more debt in order to afford college, but also because blacks have a harder time repaying that debt once they leave college than do whites," said Jason Houle, an assistant professor of sociology at Dartmouth.

Racial disparities in student debt between African-Americans and whites may perpetuate the racial wealth gap, according to a study released by sociologists from UW-Madison and Dartmouth College.

Houle found student debt is linked to economic inequalities by race. The study revealed that upon leaving college, African-Americans have 86 percent more student debt than their white counterparts.

Repaying student loans is still difficult for young African-American adults even if they have the same amount of student debt as white graduates.

“Racial disparities in debt are large after young people leave college and continue to increase across the early adult course,” Houle said.

According to Houle, African-American youth are more likely to leave college without a diploma and are more likely to come from less advantaged backgrounds, which are contributing factors to their difficulty in repaying debt.

The unemployment rate is 7.5 percent for African-American adults, while for white adults it is 3.8 percent. Socioeconomic status and job stability influence repayment, and Houle found that it was especially notable through the racial inequalities within the labor market.

While domestic students continue to face racial inequalities in student loans, international students are also experiencing financial difficulties.

“These students are often in already precarious situations because their visas prohibit them from taking jobs outside of the university, as domestic graduate employees are allowed to do,” said Adria E. Brooks, a member of the Teaching Assistants’ Association.

International students are not only prohibited from working outside the campus but are also obligated to pay international student fees combined with higher tuition compared to domestic students.

“I have been working on campus since my freshman year,” said Yanting Liang, an international student at UW-Madison. “I have to work in order to pay my rent because my parents have already paid my tuition.”

Not only do race and socioeconomic status influence graduate debt, different majors also impact students’ ability to leave debt-free due to a significant variance in salaries.

The College of Letters and Science Career Initiative Alumni Salary Survey showed that for many humanities majors, the promise of job prosperity dwindles after receiving their diploma.Median salaries ranged from $30,000 to $39,999 for students who graduated from L&S and their unemployment rate was 26.2 percent.

“Graduates in the humanities, in particular, feel like there is too small of a job market,” Brooks said. “Some folks are prolonging their time to degree in hopes that a job will open up, or are dropping out because there are too few job prospects.”

Although the workforce does not always offer the same opportunities as STEM, survey participants reported that the creativity and interpersonal skills gained from pursuing a humanities degree is irreplaceable. Nearly 70 percent of students believed that studying humanities at UW-Madison gave them a competitive advantage.

Alumni in the labor market also demonstrated positive connections with their UW-Madison experience. Among the working alumni, approximately 90 percent would choose to attend UW-Madison if they could do it again.

Graduates who obtained STEM degrees often found high-paying jobs that tended to ease their financial burdens, according to 2016-17 annual graduate reports from the College of Engineering at UW-Madison.

The report showed that approximately 70 percent of graduates joined the workforce right after they graduated from college. The median salary for UW-Madison College of Engineering graduates was around $65,000.

Liang, who majored in Computer Science, said he just recently received a job interview from Google.

“I know almost everyone from my study group have received interviews,” Liang said, “One of them has already accepted an official job offer.”

The job market is more readily available for students pursuing STEM, as technology and medical services continue to advance and the number of positions in the field increase.

However, that does not mean hope is lost for humanities graduates. The surging appeal of fundamental skills and creativity show the difference between surviving and thriving in the industry.

As campuses begin to facilitate this change, the demand for affordable and accessible education becomes more tangible. Students who raise their voices will pave the way for university leadership to hear them.

But, is this enough to mitigate unattainable payment expectations resulting in insurmountable college costs?

State and institutional need-based aid is the most critical — and effective — starting point, according to Noel Radomski, the managing director of the Wisconsin Center for the Advancement of Postsecondary Education.

“This is the most important aid needed in order to recruit, admit, enroll, and graduate lower-income students, many of who are first-generation and underrepresented students,” he said.

The workforce is both an exhilarating and terrifying place for many graduates. But, the first step is earning a degree. As industries adjust their expectations of ideal laborers, universities need to provide adequate aid and access for all their students to be successful.

The universities that are able to respond to this shift will prepare their students to be prosperous in a dynamic workforce and a growing society.

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