College costs could impact big U.S. companies.

Escalating costs of a college education could begin having an impact on companies seeking qualified employees needed to replace aging baby boomers, according to John Challenger, CEO of outplacement firm Challenger, Gray & Christmas. "Soon, employers will not be able to pick from the cream of the crop," says Challenger. "A four-year degree is required in a growing number of jobs, but more and more are unable to afford the level of education needed to compete for these jobs. The employers lose out because they will have fewer candidates from which to recruit."

One year of college costs at a public institution jumped 6.3 percent last year, to about $13,000, while private institutions now cost $30,367, up almost 6 percent. "Making matters worse is the fact that state and federal funding to public schools is shrinking as is spending on Pell Grants, the biggest source of federal aid to lower income students," says Challenger.

The median amount of student loan debt held by graduates is now $19,000, but that does not include credit card debt, which is also increasing.

"A high amount of debt is going to influence what type of job you would consider, where you decide to live after college, how soon you get married and buy a house," says Challenger. "Small business, non-profit organizations, civil services, schools and health services are going to suffer greatly, as graduates try to find more lucrative positions that will allow them to pay down their loans."

Growing costs of college education are reducing the share of the workforce with a college degree. Between 1980 and 2000 "the share of workers with post-high school education increased 19 percent," says Challenger. "Between now and 2020, the share of these workers will grow just 4 percent."

The college graduation rate continues to drop, from 48 percent in 1998 to 41 percent in 2002. "Within 10 years, a 33 percent shortfall in graduates with four-year or higher degrees is expected," says Challenger.

As the number of college graduates declines, "companies will have far fewer candidates available for positions that require higher and higher skill levels," he adds. "Soon, employers will not be able to pick from the cream of the crop. They will be limited to hiring those who were able to afford college. Unfortunately, having money is not an indicator of workplace success."