OTR Interviews

Jobless or underemployed and buried in debt: Welcome to your bleak future, Class of 2012

With 1 out of 2 new grads either unemployed and underemployed, what does this mean for the economy, this year's graduates and beyond?

 

This is a rush transcript from "On the Record," April 23, 2012. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Now, a college degree should open doors, but the 2012 college grads may only get doors slammed in their faces. There just simply are not enough jobs. The numbers are absolutely staggering. Right now, more than half, 53 percent, of recent college graduates are either jobless or underemployed. And experts say it's a double whammy. A record number of graduates are also buried in debt.

Fox Business's Elizabeth MacDonald joins us. Nice to see you, Liz. Tell me...

ELIZABETH MACDONALD, FOX BUSINESS NETWORK: Nice to see you, Greta.

VAN SUSTEREN: ... how grim is this?

MACDONALD: It is pretty grim. The unemployment rate with college grads is at its highest in 11 years, as you just pointed out. And it's grim because these college grads are coming into a workforce where we're seeing a full unemployment rate, where so many layoffs have been -- already been hitting the U.S. economy. Full unemployment is at 15 percent.

So these college grads are taking basically jobs that will not be able to cover the cost of their tuition, which continues to soar. They're getting jobs as cashiers or bartenders or retail clerks. And this comes at time when college tuition, Greta, is up about five times since 1999, when household incomes are basically staying stagnant.

VAN SUSTEREN: You know, I always sort of wonder whether the -- I look at these numbers for college tuitions, and it's -- I mean, it's -- it's unbelievable, the cost of it. Then I look -- some of them have -- I mean, of course, a lot of the -- the universities or the old universities are big -- like Stanford, Yale, Harvard -- they have endowments in the billions and billions.

MACDONALD: Yes.

VAN SUSTEREN: I think Harvard's, like, about $25 billion to $30 billion. I mean, so they're sitting on money while they charge these exorbitant tuition rates.

MACDONALD: Yes. That's right, Greta. And you know, you're right, the endowments are the size of Wall Street hedge funds. And you know, the tuition rates are essentially gouging American families.

And what does the tuition go to cover? It goes to cover, you know, basically, Donald Trump-style real estate empires. College administrators, you know, basically, are running their colleges on a level of hotel economics. They've got -- they're paying for a five-star cafeteria or you know, college bling, like NFL-style college football stadiums, or even way more bureaucrats than are needed. The ratio of administrators to students is now around 40 to 1, whereas when it comes to teachers to students, that's just 15 to 1.

And so I think parents are reacting. The parents are starting to get the picture. They're understanding that it's not worth it, that there is a college tuition bubble and the value of the degree just isn't worth it anymore.

And when we talk about how tuition is rising, state schools -- you see it in California -- often do it in lockstep. If one school raises tuition, the rest of them will do it. If one of them builds a NFL-style college football stadium, the other will do it, and then the tuition goes up to cover those expenses.

VAN SUSTEREN: Well, I mean, we're all -- we're all terribly distressed at this 8.2 percent national unemployment rate. And then when you look at the number that -- of college BA holders under the age of 25 now who are jobless or underemployed, the number is 53.6 percent, when you look at that.

That's the young -- that's the young workforce. Those are the ones that are supposed to really rev up the economy, get going, expand it, and they're the great thinkers of the future and -- and they're simply sitting on the sidelines.

MACDONALD: Yes.

VAN SUSTEREN: They have no -- and buried in debt.

MACDONALD: Yes. That's right. And so what's happening is, as you point out, you know, the unemployment rate about 11 years ago was around 41 percent.

And right now, this is an election year issue. It's becoming an issue for the Congress and for the White House and for Republicans for both sides of the aisle because interest rates and student loans are set to double this July if the government doesn't move to stop it.

But then the argument is, you know, loan rates were so easy to come by that they basically -- students piled into these cheap loans when they maybe should not have. And what happens...

VAN SUSTEREN: Well, they couldn't get jobs!

MACDONALD: Yes, they couldn't get jobs.

VAN SUSTEREN: They might as go -- they might as well take out a loan and go to school and try to get a skill than to try to get a job because at this rate, there are no jobs. So they sit around at their parents' home hoping their parents will cash in their -- their 401(k)s early before the -- before the...

MACDONALD: Yes.

VAN SUSTEREN: ... government taxes them and takes them!

MACDONALD: But the -- but the issue is, is that here's the economics. Here's what the colleges are thinking. We're going to raise tuition, and then we'll give more aid to the student, which justifies raising tuition.

So they're in this collective flight from reality. And they've caught the American family in a vicious cycle of their own making. So this has to be broken somehow, where the marketplace -- and I'll tell you something. You're seeing the canaries in the coal mine right now for the college tuition bubble.

Already, community colleges are seeing enrollment down. We're seeing the for-profit colleges' enrollment down by 45 percent. And a spot check, you're seeing college enrollment down in some places like Ohio, Illinois, Nevada, some places of California not just because of the economic downturn, because they're deferring going to college because it's so expensive, or you know, they're just choosing not to enroll.

VAN SUSTEREN: Well, I -- I mean, I -- do you blame them? (INAUDIBLE) 53 percent, you know, with all of our -- not 53, but a huge unemployment rate, I'm not sure it makes a lot of sense to go spend a lot of money on college just to be unemployed with a bigger debt than unemployed with no debt!

MACDONALD: Yes, that's true, Greta. And you know what? It is so unfair that colleges sit on these endowments and not do enough to lower tuition. Yes, I understand that people donate money and they want to basically buy -- you know, the donors want to buy a chair in some kind of academic line of teaching there instead of funneling that money towards lowering tuition.

But the colleges can do more. I read one statistic that only 9 percent of college endowments go toward lowering tuition. The rest goes towards all sorts of other expenses that does not help these students at these colleges and universities.

VAN SUSTEREN: Liz, thank you.

MACDONALD: Sure.