05/08/2012 09:30 am ET Updated Jul 07, 2012

Back to the Future: Longing for the Recession of the 1990s for Today's College Graduates

Ahhh... to think that I dream of the early 1990s when student loans averaged only $10,000 and the unemployment rate for recent college grads was a mere 3.3 percent.

Last week, I took a week off of blogging to spend time giving final lectures for my spring Health Law course at the University of California, Berkeley. As I walked the campus and saw the anxious faces of the graduating seniors, I was worried. I remembered back to my own graduation from college, nearly two decades ago (gulp!), amid a recession, with a mountain of debt and no job waiting for me. My parents had taken out a second mortgage on their home to pay for my college so there was no borrowing from Mom and Dad. I racked up credit card debt to get by and got lucky with a whole bunch of breaks mixed in with some hard work.

My peers and I struggled. Just over one-third of us had borrowed money to pay for college, and we had an average of $10,088 in student loan debt when we walked across the stage to receive our diplomas.

In reflecting on this time, I wondered whether those of us who graduated in the early 1990s ever fully recovered from starting our careers during a recession. Labor economist Lisa Kahn studied this cohort and found that my peers from the early 1990s and I suffered a wage loss of 4 percent in our first 10 years out of college, but after 10 years the disparity disappeared. She also studied college students who had graduated from college during the much worse recession of the 1980s and found that the wage loss was bigger and more persistent.

This is not good news for the class of 2012.

First, let's talk about financial prospects. Two-thirds of students graduating with bachelor's degrees this weekend will have student loan debt averaging more than $25,000. The latest government figures show the total amount of student loans in the United States is now about $870 billion, which is $177 billion more than credit card debt and $100 billion more than auto loan debt. And that student debt is likely to rise, given the battle underway in Washington over whether to keep the subsidized student loan interest rate lower for another year, at 3.4 percent. The extension is under threat because the two parties disagree over how to pay for it. If they can't find a solution, the rate doubles, to 6.8 percent, on July 1.

Second, graduates today are facing one of the most daunting economic landscapes in recent American history. When I graduated amidst a recession, we entered into a world in which only 3.3 percent of college graduates under 25 were unemployed. Today that number is 9.3 percent.

Not only does the Class of 2012 face this steep debt and high unemployment, but too many students may have gotten a diploma that will not lead to a career. According to a 2011 report by the McKinsey Global Institute: "If current trends prevail, the U.S. educational system is on course to award too many degrees in fields with low job demand and too few in high-growth fields. The result: skill mismatches."

What does that really mean? For students who labored hard for that degree in English, art history or architecture, it is going to be nearly impossible to find that killer job opportunity that reflects their area of expertise. Unemployment in those fields range from 9.4 percent to 11.1 percent for recent college grads, compared with 5.4 percent for those who studied education or health.

In fact, among the top ten fastest growing occupations, according to the Bureau of Labor Statistics, only two require a college degree -- a biomedical engineer and an event planner. And only the biomedical engineer will have a salary ($81,540 median average wage) that solidly ranks in the middle class. The other occupations -- such as personal care aide, home health aide, and carpenter -- require a high school diploma or less and pay only $20,000, maybe $25,000 a year.

It's a real problem for the country.

We're producing lots of college graduates but too few in the fields that keep the United States on the cutting edge of invention, innovation and thought leadership. Only about 16 percent of our 2012 graduates studied the STEM subjects - science, technology, engineering and math. That's where we need the superstars of tomorrow. If we are going to rebuild America's innovation economy and grow more jobs in these fields, we need superstars to rebuild this sector of our economy and workers to excel in it.

By now, the harsh realities of today's economy come as no surprise to anyone, even college graduates. A Rutgers University study on work trends last year found that only 17 percent of recent graduates believed they would do better financially than their parents. And almost half, 48 percent, said they would have considered a different major.

If Clint Eastwood is right that it is halftime in America, this is one area where we need a new playbook for the second half. Our next generation of graduates needs to pursue majors that will lead to well-paid jobs and advances for the country while our elected leaders figure out how to unshackle them from burdensome debt that slows their success.

Unfortunately, we did not live up to this commitment for the class of 2012.