How unnecessary college degree requirements hurt the working class

Welcome to The Tassel, FREOPP’s newsletter on higher education policy, written by senior fellow Preston Cooper. Each month, The Tassel dives into our latest work on higher education, along with a handpicked selection of research and articles from around the web that we think are worth your time. To manage your subscription preferences, visit your Substack settings.

The role of a secretary or administrative professional was once a key starting point on the career ladder for workers with only a high school diploma. In 1990, just 9 percent of secretaries held a bachelor’s degree or higher. But that share has since risen to 33 percent, and is set to rise. An even greater proportion of job advertisements for secretaries require four-year degrees, and some quick calculations show that more than 750,000 secretarial positions could close to workers without degrees over the coming years.

This phenomenon—degree inflation—is the focus of my latest report for FREOPP. Degree inflation occurs when employers increase education requirements for given jobs, such as requiring bachelor’s degrees for occupations that were previously open to high school graduates. The result is that positions which were once open to workers without a four-year college education are now closed to the majority of the population (62 percent of adult Americans lack a bachelor’s degree).

This phenomenon might be benign if workers’ higher levels of education made them more productive on the job, translating into higher earnings. But that is not always true. Rather than helping people in lower income brackets rise up the income ladder, degree inflation causes the education levels of those lower income brackets to rise. The share of workers earning between $40,000 and $60,000 who hold a bachelor’s degree or higher increased from 26 percent in 1980 to 38 percent today.

My report quantifies degree inflation by examining the increase in the share of workers in each occupation with a bachelor’s degree or higher between 1990 and 2021. I combine this measure with each job’s overall importance to the economy in 2021 to identify the occupations which are most responsible for overall degree inflation.

The exercise shows that the five occupations driving degree inflation to the greatest extent are: managers and administrators, registered nurses, computer software developers, salespersons, and secretaries. While degree inflation has affected white-collar jobs the most, few sectors of the economy are immune from the phenomenon.

Fortunately, employers have begun to recognize the problem. Companies such as AT&T, IBM, and Accenture have made a concerted effort to remove the bachelor’s degree as a requirement for many roles. Thirteen states (and counting!) have removed degree requirements for most jobs in the state executive branch.

But public policy can play a greater role. States should repeal laws and regulations that require workers in certain occupations to hold degrees. (Why do you need a college degree to be a home interior designer in Virginia, but not North Carolina?) The federal government should ensure that funding streams such as Pell Grants do not unduly privilege traditional colleges and universities over alternative postsecondary pathways that could prepare students for the workforce faster and at a lower cost.

A college degree should not be a requirement to enjoy a middle-class standard of living. But private-sector initiative combined with smart policy changes can begin to turn degree inflation around.

To learn more, check out my full report at FREOPP.org. You can also read my interview on the subject with Ben Wilterdink at Profectus Magazine.

What I’m writing

• Making sense of the latest student loan cancellation announcements. The Biden administration’s signature loan-cancellation policy did not survive Supreme Court scrutiny, but there are several other initiatives in the works to cancel loans by executive fiat. I walk you through four of the most important over in Forbes, including the new income-driven repayment plan that will slash monthly payments, a one-time waiver that resulted in the immediate cancellation of $39 billion in debts, and a second attempt at mass loan forgiveness using a different legal authority.

• The Biden administration’s student loan agenda suffered another legal defeat, as a federal court issued a nationwide injunction against the Borrower Defense to Repayment (BDR) rule. Congress authorized the Department of Education to write a BDR rule, which allows students defrauded by their colleges to seek loan forgiveness. However, plaintiffs in this new case argued that the BDR rule which the Biden administration actually wrote goes well beyond what Congress intended, and could lead to far more loan cancellation than is necessary. Observers should keep an eye on the case, which could signal how the courts will treat the other planks of the administration’s student loan agenda.

What I’m reading

• Few students pay the “sticker price” of college, notes Dan Currell in National Affairs, because most get large discounts marketed as financial aid or scholarships. While this is welcome news for students worried about how to pay a $60,000 tuition bill, it creates an opaque pricing dynamic that creates anxiety for families and distorts the functioning of the higher education market.

• The Gainful Employment rule is meant to save taxpayers money by kicking degree programs with low student loan repayment rates off the federal dole. But the savings will be minimal, estimate Jason Delisle and Jason Cohn of the Urban Institute. Even after the rule is implemented, the median student in 40 percent of undergraduate programs will still have debt forgiven due to low repayment rates.

• A new Idaho law will give students grants of up to $8,000 for workforce training, writes Steve Taylor in the Idaho Statesman. The policy is a major step towards reorienting postsecondary education around learning skills rather than acquiring credentials, Taylor argues.

• Flagship state universities have hiked spending by tremendous amounts over the past two decades, report Melissa Korn, Andrea Fuller, and Jennifer Forsyth in the Wall Street Journal. The increase is far more than was necessary to keep up with inflation and rising numbers of students. Institutions have—predictably—raised tuition to pay for the new spending.

• On a related note, public confidence in higher education is down 20 percentage points since 2015, according to a new Gallup poll. Faith in higher ed is down among all demographic groups, including young people.

What I’m doing

Hiking season is in full swing, and I was thrilled to claim my 26th state highpoint—Colorado’s Mount Elbert! Fun fact: at 14,440 feet above sea level, the summit of Mount Elbert is the highest point in the United States where dogs are allowed to go. That makes it the true national highpoint in my mind (sorry, Denali!).

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