Higher Education Myth (7/6/2011)
My daughter is 15, just finished her freshman year of high school. Like many parents with a high school student I am carefully watching her grades and doing everything I can to ensure she will make it to college. Over the last four decades the number of students going to college has increased, and so have the costs. I was the first in my family to attend college, earning my way on a scholarship and understanding the path in front of me: attend school, work hard, get good grades, and graduate expecting to find a good paying job. Even in the 1980s I was puzzled by the choice of major some would make, possibly liberal arts related and then wonder why they could not find a job. As an Engineer I was showered with job offers and an excellent starting salary (nearly $39,000 in 1990).
Today it appears college has become an entitlement program, fueled by readily available public financing and a willing consumer unqualified to receive a “real education.” In 2011 the average public university cost will be $20,000 per year, and a private school twice that much. Assume your son or daughter is following their passion into liberal arts and a 4-year degree will approach $160,000 with income prospects of $25-30,000 per year; if they are lucky. Sadly, there is an assumption these students are qualified for education, and more so entitled to a job at graduation. I recently heard this anecdote, “Just because you have a fishing license does not mean you know how to catch a fish, or will catch a fish. College degrees are the same, a piece of sheepskin will not guarantee success.”
College debt in America is now $800 billion and less than 54% of graduates in 2010 were able to find work. The Washington Post reported 85% of college graduates will be returning home. As a father, I must weigh what advice I would give my children and truly wonder, unless tuition is covered by a scholarship, whether college is worth the liability (note, I did not say investment) created. Like the housing crisis and shoddy loans, college degrees are being handed out to unqualified and undeserving students with no prospects of work, but fully guaranteed by the U.S. taxpayer. We must remember a fishing license will not cause fish to jump in the boat, nor will a college degree cause paychecks to fall from the sky.
1 comment:
We did an interesting study on the explosion of growth of education in my last year or school (MBA). It was a year long look at the long-term economics of current education trends.
It boils down to we are screwed.
The vast super-majority of the debt being accrued for school is being footed by the American Taxpayer in the form of USDoE loans and grants.
Since more and more people are unable to pay their loans anymore because the economy or a degree in Butterflies, that debt accumulates unpaid.
Current estimates from Harvard state that by 2018 the national debt crisis just from the Dept of Edu, will be greater than the housing collapse we are experiencing now.
Much of it attributed to for-profit schools. After a year of researching them, I can say with some authority that they are a scam. They badly need some kind of oversight or regulation.
Over 50% of Student loan debt now comes from those schools, despite the fact that they are a very tiny part of the market. University of Phoenix graduates have a 89% default rate on loans, while traditional students hover between 30-60.
Scary
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