The College Degree Is Less a Must and More a Financial Calculation

The paycheck used to be the whole argument behind a college degree. Go to college, take on debt, and the diploma would pay for itself many times over across a career. That bargain is now being renegotiated in real time, and the latest data suggest that both sides have lost some confidence in the deal.“A four-year college degree remains one of the most reliable paths to higher earnings, lower unemployment, and greater long-term economic mobility,” the vice president and chief data and research officer at the Lumina Foundation, Courtney Brown, tells The New York Sun.Yet, a March 2026 study published by the Lumina Foundation and Gallup called “Aligning Education and Work” found that while three-quarters of American employers surveyed said a college degree still matters and will carry as much weight, or more, in hiring decisions five years from now, fewer think it reflects a job well done.Only about half of the 2,000 employers surveyed said they believe colleges are graduating students with the skills their businesses need. Nearly seven in 10 employers say new hires require moderate to extensive additional training to get up to speed.That confluence among credential, preparation, and value arrives at a moment when the job market for new graduates has turned unusually hostile — as artificial intelligence displaces the human mind and the cost of college makes a student loan less desirable. “For decades, universities held a near-monopoly on knowledge and credentials,” a political strategist and managing director at Nestpoint Associates, John Thomas, tells the Sun. “That monopoly is now being broken by AI, which gives ambitious young people direct access to expertise and tools without needing to sit through four years of outdated curricula and accumulate massive debt.”Where the Pain Is ConcentratedThe unemployment rate for recent college graduates stood at 5.7 percent in the second quarter of 2026, according to the latest data from the Federal Reserve Bank of New York’s tracker. That’s well above the national unemployment rate of 4.2 percent, measured in September. The underemployment rate during that period edged up to 42 percent, a historically high level.The damage from that hostile market is not spread evenly across majors. Criminal justice graduates posted the second-highest underemployment rate of the 73 majors the New York Fed tracks, at 65.8 percent, while 17 majors exceeded 50 percent. Anthropology majors have the highest unemployment rate of all majors, at 7.9 percent, according to the New York Fed’s analysis of 2024 data.More surprising is what is happening at the top of the résumé pile. Computer engineering, at 7.8 percent, and computer science, at 7.0 percent, are among the majors with the highest unemployment, fields that a decade ago were considered the surest tickets to a six-figure salary. Their underemployment rates are far below the 42 percent average, which suggests graduates who find work are still landing degree-level jobs, but fewer are finding any. Researchers increasingly tie the shift to artificial intelligence eating into the junior-level coding and entry-level analyst work that used to train new graduates on the job. Two Census Bureau papers found that graduates in the most AI-exposed majors were five percentage points less likely to hold a job a quarter after graduation after ChatGPT’s release, and their initial earnings fell 13 percent.BlackRock’s chief executive, Larry Fink, reportedly warned attendees at the firm’s 2026 Infrastructure Summit in March that this year’s graduating class could face the highest unemployment rate among new graduates in years, even without a recession. He pointed in part to AI displacing entry-level roles.Not everyone agrees on the cause. Researchers at the Economic Policy Institute find the picture more nuanced than the headlines suggest. It argues that the increase in unemployment figures is driven largely by supply and demand — more young workers are entering the labor force in search of a job while the college wage premium is flat or falling.The hiring slowdown, not the devalued degree, is the bottleneck, contends Ms. Brown at the Lumina Foundation. “Entry-level hiring has slowed, making the transition from college to work more difficult,” Ms. Brown says. “That’s a short-term labor market challenge, not evidence that a college degree has lost its long-term value.”Others point to several causes for diminishing returns. The “current job market is being disrupted by several factors, including the rapid deployment of AI across several sectors,” Mr. Nietzel tells the Sun. “Over a longer time horizon, however, individuals with a BA/BS or higher are less likely to be unemployed than those without such degrees.”The dispute over cause matters less to graduates than what employers are asking of them. One veteran of the workforce-training space says the goalposts have moved faster than most graduates have noticed.“In less than one generation, hiring managers have gone from considering high-potential candidates with no relevant skills or experience for entry-level positions to explicitly or implicitly requiring lots, thereby transforming ‘good entry-level job’ into something of an oxymoron for the average graduate,” the managing director of Achieve Partners and author of “Apprentice Nation,” Ryan Craig, tells the Sun.“As companies are beginning to expect new workers to use AI for lower-level tasks and instead spend their time on higher-value client work, project work, and product work, the experience gap is likely to become a chasm,” Mr. Craig adds.The Trades Are Having a MomentAs white-collar entry points shrink, the trades are filling the vacuum. The number of active registered apprenticeships more than doubled in a decade, from about 318,000 in fiscal 2014 to about 680,000 in fiscal 2024, according to the Department of Labor. Enrollment at community colleges with a high vocational focus jumped 16 percent in fall 2023, the biggest increase the National Student Clearinghouse has recorded since it began tracking the category.The construction industry alone needs roughly 349,000 additional net new workers in 2026 to keep pace with demand, the trade association Associated Builders and Contractors estimates, down from 439,000 for 2025 yet still a persistent gap driven largely by retirements. Median pay for electricians, plumbers, and HVAC technicians runs about $61,000 to $64,000 a year, with top earners clearing six figures, all without the four-year tuition bill or the loan balance behind it.Apprenticeships are not a ready-made escape hatch, though, says Mr. Craig, because so few are available. “Trade schools prepare job seekers for apprenticeships. Because we’ve underinvested in work-based learning, we are way behind other developed countries on apprenticeships. So, the answer is no, they’re not a real substitute yet because there’s a shortage of them. After all, we haven’t invested in them,” he said.Others see the alternative track more optimistically, especially paired with artificial intelligence. “For many young Americans, trade schools and apprenticeships are not just a substitute — they’re often the smarter path,” Mr. Thomas says. “Combined with AI tools, a motivated young person can now learn high-value skills quickly, start a business, or build something real without spending four years and six figures in a university setting.”The Lumina Foundation’s view is more equivocal. “Trade schools and apprenticeships can lead to strong careers, just as bachelor’s degrees can,” Ms. Brown says. “Our economy and labor market need people with a wide range of high-quality post-high school credentials.”The cultural stigma that once steered ambitious teenagers away from the trades and toward a university lecture hall appears to be fading just as college prices have risen faster than inflation. Over the long run, the cost of college rose about seven percent a year from 1980 to 2004, according to the Federal Reserve Bank of Kansas City, though that pace has slowed to roughly two percent a year since 2005. The average federal student loan debt now stands at about $40,000 per borrower. That math is beginning to reshape the higher education landscape itself, not just the choices individual families make.The Youth Job Gap Has NarrowedNew data complicate the picture further. The unemployment rate for workers ages 22 to 34 who never finished college has rarely been lower in two decades, according to an analysis of Bureau of Labor Statistics data by the labor-market think tank Burning Glass Institute. At the same time, the employment gap between graduates and non-graduates has narrowed to its smallest level in roughly 30 years, while young college graduates face one of their toughest stretches in years.The institute’s chief economist, Gad Levanon, attributes the shift to a rapidly growing supply of people with a bachelor’s degree even as the pool of non-graduates shrinks, a dynamic he does not expect to be temporary.Degree-holders still hold an edge. In their prime working years, they post lower unemployment overall: 2.7 percent for graduates aged 25 to 54 over the 12 months ending in July, versus 4.7 percent for workers with only a high school diploma. The Economic Policy Institute puts unemployment for workers ages 22 to 27 without a four-year degree at 7.1 percent in March, versus 5.3 percent for graduates. Young workers without degrees are doing unusually well by their own historical standards, while young graduates are doing unusually poorly by theirs.Does the Degree Still Pay Off?Whether the degree is worth it to employers, it is overwhelmingly worth it to graduates. The Lumina-Gallup data show 71 percent of alumni surveyed say their education was worth the cost, and 93 percent say they would earn their degree again if given the choice.Mr. Craig says those investigating in education can decide whether college as it currently exists still pays off based on four criteria: whether they are attending a highly selective institution, choosing a STEM or health sciences program, picking a school with formalized paid work-based learning, or having the family resources to attend debt-free.“If you aren’t checking any of these four boxes, return on investment from college is likely to disappoint,” he says.For some professions, however, there is no substitute for a credential. “BA/BS or higher degrees are still typically required for those who want to be teachers, health care professionals, attorneys, accountants, engineers, architects, scientists,” Mr. Nietzel says.“For most students, college will pay off financially over the years, but it requires a long-term commitment that some students are not prepared to make right after high school. For them, taking a job or earning a high-quality short-term credential could be the best course of action, at least initially after finishing high school.”

The College Degree Is Less a Must and More a Financial Calculation

The College Degree Is Less a Must and More a Financial Calculation

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