Yet another tobacco lawsuit settlement resulted in a recent court order requiring the three largest cigarette manufacturers to pay $100 million in damages in the state of Florida. The reason, their marketing misled consumers. Sound familiar? Remember the $206 Billion Master Tobacco Settlement of 1998? So much for Caveat Emptor.
My thought process is admittedly strange, but reading about that case got me thinking that there were similarities between the multitude of tobacco lawsuits and the trillion dollars of college loan debt, namely false advertising. Here in the U.S. ProjectonStudentDebt.org says that the average college graduate takes on $29,400 of debt while obtaining a degree. I wonder how many of our indebted and/or underemployed population were influenced by the claim colleges have been making for years – that a college graduate will make $1 million-dollars more than a non-graduate over a working lifetime (40 years)? Mike Schneider, vice president of the American Institute for Research politely calls it, “The million-dollar misunderstanding.” Misunderstanding!? I don’t think tobacco companies could use such a defense.
One would think that the boldly touted marketing statement made by so many academic institutions would have statistically sophisticated research behind that number. In reality it is deceptively simplistic – according to US Census data, college grads earn on average $57,500 per year compared to non-grads’ average of $31,600. When multiplied over a 40 year work lifetime then voila’, the total difference equals $1,036,000.
What the $1 million-dollar doesn’t factor in is the major course of study (technical vs. liberal arts, etc.) nor the cost of tuition, fees, books, room and board at a public school and $99,900 at a private one – even after financial aid, scholarships and grants. Throw in lost wages during the four years of schooling, an average college graduate will not catch up with their non-grad counterpart until age 33 (College Board), which is a huge concern since many of life’s critical decisions are made between ages 21 and 33.
Like tobacco companies, college recruiters should be made to tell the truth – since 2000 the wages of college educated workers have stagnated—and even declined in the years since the Great Recession, but the wages of high school graduates have fallen even more.* How’s that for positive motivation?
*Federal Reserve Bank of New York’s Research and Statistics Group