So now apparently the time comes when college gets too expensive. Not “too expensive” in that obscure and sort of general “rising faster than inflation” way, but actually just too expensive for many upper middle class families who are traditionally the big drivers of American higher education. As Mary Pilon reports in the Wall Street Journal:
Many families… —upper-middle-class professionals—are suddenly downwardly mobile. For years, they used rising family wealth to help foot the bill for college, down payments for houses and start-up cash for children’s careers. But pay cuts, layoffs and the decadelong flatlining of the stock market mean many families can no longer help their children.
This comes as young adults could use a financial helping hand more than ever. The unemployment rate for workers ages 16 to 29 was 15.2% in March, the highest rate since 1948, according to the Bureau of Labor Statistics.
The trouble is that in this economy many recent college graduates, no matter how hardworking and no matter how well-credentialed, just don’t have jobs—or don’t have very good jobs —yet.
The way this used to work was that, whether deliberate or not, many reasonably wealthy families not only paid to send their children to college, they also supported their lifestyles at the beginning of their careers. But with layoffs reaching across the professors, for many this is no longer possible.
As Pilon explains, “the bank of Mom and Dad is closing at a time when young people are having trouble borrowing from traditional lenders.” This has many implications. Not only do grown children move home to save money, families also postpone retirement, and cut, often dramatically, household expenses.
The other problem is that many families worry that if the recession continues they won’t be able to pay $50,000 a year for tuition. Let’s see how long it takes for white-collar unemployment to exert pressure on college pricing.