To the baby boom generation, a college degree was almost a mystical amulet, and just possessing it meant that your life would be improved in mystical ways. Thus, a college degree was something to be quested for, like a hero from Greek or Norse mythology.
Unfortunately, college is a horrible investment. Actually, I need to amend that; nothing is a horrible investment in-and-of itself. This is true for stocks and bonds, houses, and even college. Overpaying for these things – defined as paying more than is reasonable compared to the returns – makes them bad investments, and if you are attending a four-year college, you are almost certainly overpaying.
The United States has more unemployed college graduates right now than we have ever had before. We also have fewer job openings, fewer businesses and fewer homes to clean for extra cash.
Meanwhile, college tuition is going through the roof. A four-year private school now averages out at about $30,000 per year in tuition, board and related costs. That is $120,000.00 for a degree that might not be worth the paper itâ€™s printed on, let alone the same money as two German luxury sedans.
State schools are going up even faster, but since they were significantly cheaper anyway, they are still significantly cheaper than private schools, but they are still overpriced considering what you get out of them.
What do you get out of them? A pile-up of unemployed or seriously underemployed college graduates living with their parents and working 15 hours a week at a big box retailer. The depressed economy has only made the situation worse, as more people spend more money on more useless tickets to nowhere; because according to our Educator/Job Creator-in-Chief, the solution to unemployed college graduates is â€œNew degrees.â€
The government is the main culprit, by the way. First of all, you have the president pushing the idea of using higher education as a mechanism for fighting unemployment – not so much as a means of developing a highly skilled workforce, but because full-time students donâ€™t count as â€œemployedâ€ in the Labor Department statistics.
Then there is the toxic root of the problem: Government-backed student loans. Remember the sub-prime loans crisis? Well, student loans are the ultimate â€œsub-primeâ€ loan; most of the students entering college this fall will be funding their educations at least partially with student loans, and those with student loans are unlikely to have much in terms of income or assets, because anybody can get a student loan.
Welcome to the world of federally-funded lending programs. We had Fannie Mae and the FHA for the housing market (which was slaughtered), and we have Stafford loans, the Department of Education and Sallie Mae (now private but with special laws bought with special money) for education.
Student loans are sometimes referred to as â€œgood debt,â€ because you are â€œinvesting in yourself.â€ This is truly, truly stupid. The truth is that student loans are the single most toxic and destructive type of debt that you could possibly take on.
When you buy a house with a mortgage, and then donâ€™t pay, they can foreclose on the house, and generally that is the end of it. They can repossess cars. If you go into debt with credit cards or with business loans, you can declare bankruptcy as a last resort, and wash the debts away. None of these things are possible with student loans.
In fact, the next big thing for young American college graduates is â€œdebt exile,â€ or hiding from student loan companies in Europe, where they are harder to find and where wage garnishments are often prohibited. This allows the â€œeducated young talent that is our futureâ€ to escape the debts they acquired in search of a better future, as long as they never come home.
Student loans are also what is making college so expensive. Without these government-backed loans, few students would be able to afford college at the current prices, which leads me to the biggest point I want to make: If you get rid of the loans, the prices will have to fall.
Look at housing. The sub-prime loan industry ran up an enormous bubble in the real estate market by giving bad loans to people who couldnâ€™t pay. Then they ran out of buyers, and then a bunch of the loans went bad. The bubble burst, and now housing is falling. Prices went so high they ran out of buyers, and prices started falling. Colleges are running prices up, knowing that their students can just go get another loan. When that stops, colleges will run short of buyers, and prices will have to fall to try and find new ones.
College tuitions will fall, and with the added bonus that most colleges will be forced to actually teach things that are educational, instead of offering majors in such critical fields as Conflicts Resolution and Sociology. Unemployed college professors can offer their services as freelance consultants in how to grow beards that conceal incompetence. Tenure will finally be phased out, and professors will be paid to teach classes, instead of writing articles for academic journals that nobody reads.
In the meantime, instead of attacking me for leading your child astray or trying to destroy your future by arguing for the abolition of federal student loans, ask yourself what will happen to all of those college graduates with thousands of dollars in loans and no job? You thought that college was the path that would lead to a better life; in actuality, it was a path to utter, hopeless serfdom.
If you insist on getting formal education immediately, start part-time at a community college. You can often take whatever courses you want (I recommend math and/or welding – this sounds like a wise-mouth comment but I am dead serious), and they are pretty reasonably priced.
But, can you really put a price on education? Is school simply a means of job training? Is not education its own reward?
Yes. No. Yes. And to those ends, at the age of eight I walked into a public library and paid 50 cents for a laminated card that allowed me to access all the education – real education – that I wanted. Howâ€™s that for a high-yield investment?