College has never been worth so much – or so little.

New research from the Pew Center shows the wage gap between those with a college degree and those without is at an all-time high. Moreover, the college wage premium has actually been widening. Yet at the same time, real average earnings for young college graduates are at historic lows – down 6 percent from 2007 levels, even as the labor market recovers. Average student debt per borrower has climbed to a staggering $29,400.

Does this double-sided truth about the “value” of college mean that today’s four-year model is sustainable, or is it a sign that change is coming?

At first blush, one might conclude that going to college – specifically a four-year college – is a necessity. But that misses the point of what’s actually driving the wage gap between college and non-college grads, something that young college graduates already know – that not all of this boost is because of a lift-off in the bachelor’s degree job market.

In reality, a college degree is worth “more” in large part because a high school diploma is worth so much less. My research shows college graduates, particularly recent graduates, are increasingly taking lower-skill jobs at the expense of their less educated peers. Because many new jobs being created are low-skill instead of middle-skill, college graduates are getting first dibs, squeezing those with less education from the workforce.

Real average earnings for young college graduates is at an historic low.

Even worse, the price to compete for these lower-skill jobs is getting higher. As college becomes less affordable, and the labor market less generous, fewer people are able to buy the seemingly only ticket in town for success. New Fed data shows outstanding student debt increased $53 billion in the last 3 months of 2013 alone, with student loans dominating all new borrowing by young Americans under 30 in 2013. Succeeding in today’s higher education model allows for little margin of error: either you make the sacrifice and get the four year degree, or it’s game over.

No group epitomizes the failings of the current college system more than those who enrolled in college but failed to graduate – college drop-outs. Though often left out of the conversation, the latest figures show that the average four-year completion rate for those entering four-year colleges was 38.6 percent and that the six-year completion rate is still just 58.8 percent (rates are lower for two-year schools, but many transfer to other institutions). Minorities and low-income Americans are even less likely to complete college, exacerbating already growing inequality.

Just 58.8 percent of college students complete their degree in six years.

College drop-outs face the worst struggle of all. On average, they make little more than those with a high school diploma but are still saddled with thousands in student debt. They are at the highest risk of defaulting on their student loans, by some estimates up to four times more likely than graduates. They are the most vulnerable in terms of financial security, from slipping into a hole they cannot climb out of.

The large share of college drop-outs is evidence that the current structure of postsecondary education as the main vehicle for workforce preparation isn’t working.

Their fate is also an indication that the future of college may – and should – look very different. The ongoing revolution of low-cost, high speed broadband makes education more accessible, affordable, and customizable. This, coupled with decreasing returns on the four-year college model, should lead to more post-secondary pathways into the workforce (such as German-style “apprenticeships”). These alternative pathways have the potential to be just as effective at preparing people for the world of work, except at a lower cost. The nature of today’s innovative data-driven economy means preparing for tomorrow’s high-skill, high-wage jobs will naturally include digitally-oriented training and a dynamic curriculum.

The ideal post-secondary system of the future should correct some of the biggest workforce challenges facing Americans today. These are Americans who are unable to afford college, or who don’t want to take on thousands in student debt to succeed.

Four-year college might need to be just one of several options available to high school graduates.

One way this could happen is if the current four-year model of college becomes one of several options after high school. Instead, what we could see is employers becoming better integrated into the workforce preparation process, as current workforce demands are unmet and training becomes a lower cost proposition that can be virtually administered. We may also see a renaissance in vocational training, which can cost-effectively prepare workers for well-paid technical and even computer and data-driven jobs. Industry certifications could take the place of a degree. It may be that only a few will pursue a four-year degree, much like a doctorate-level credential is pursued today, in specialty fields.

Still, wholesale change is unlikely to happen quickly, so long as the generous federal student aid system in place prolongs the current college model. The federal government administers more than 90 percent of new student aid – to the tune of more than $100 billion annually – but demands little accountability on the part of institutions and borrowers in terms of graduation rates and employment success.

For the millions of young Americans who’ve already been left behind, reform can’t come soon enough. That’s why the conversation to rethink college must begin now.

[Cross-posted at Republic 3.0]

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Diana G. Carew is Director of the Young American Prosperity Project at the Progressive Policy Institute. Contact her at