23 Dec 2012
Colleges across the United States have ratcheted up tuition over the past decade at rates that far outstrip inflation and wage increases. The result is that millions of young people are facing a conflict between society’s convention that nearly requires them to earn a four-year degree from a respectable college, and the economics of attaining that degree. The reality is that when I went to college at Bethany Nazarene University, which is now Southern Nazarene University, the incremental benefit of a degree more than paid for the costs of my education in just a few short years. Now the average cost of public education, including personal expenses, easily eclipses $100,000 over four years. Assuming that students partially abate this expense by working, many students still exit public universities with more than $50,000 of debt. In an age where indebtedness is a new normal, this may not seem like a lot of money, but given the prospect of most young people who expect to pay down this debt with proceeds from the current job market, $50,000 of debt at a common interest rate of 7.9% will take nearly a decade to pay off. Students who attend private schools routinely accumulate debt loads that can be 2x – 3x higher.
I believe that the role of higher education in our society has changed fundamentally. A century ago, if you wanted to learn about physics, or astronomy, or engineering, there were only a select number of schools whose faculty were experienced in those disciplines. Schools such as those in the Ivy League were prestigious because they employed faculty that had rarified expertise. The internet has altered the balance of information in society and universities are no longer the hubs of knowledge. If someone wants to learn every single bit of information that a medical student has to learn in order to pass the USMLE, they could do so without enrolling in medical school. If someone wanted to learn every bit of information that a law student has to learn in order to pass the bar exam, they could do so without enrolling in law school. California now even permits online law school graduates to be admitted to the bar.
Higher education in the United States is no longer about knowledge, its about signaling power. Getting into a prestigious university is probably more valuable than mastering the curriculum. If you disagree with me, consider the fact that many schools teach classes with more than 100 students in a class. The professor will likely never get to know, or even interact with, even a small fraction of the class. Students merely listen to parts of lectures and read books in order to prepare for exams. The professor isn’t investing in, mentoring, or personally developing the students.
If college’s aren’t teaching students unique information, and the primary value of college is merely a signal that a student was adequate enough to pass a threshold in order to gain acceptance, then is there value in higher education at all?
Yes and no.
If you are counseling children on their choice of college, my simple advice is the following; if your child has the ability to get into a great school (read: a school that is widely recognized and credible – there are probably less than 30 of them in the entire country), and they plan to study a degree that will provide actual utility (the degree will be perceived to have value in a job market), then getting the ‘education’ will probably be a valuable experience. If however, you child wants to go to college for the ‘experience’ and the credential, but they aren’t able to secure entrance into a preeminent university, counsel them on the economics of junior college + 2-years at a public school. Sadly, the cost of going to college is substantially higher today than it was in the past. Even though Disney, MTV and magazines praise students who pursue their ‘passions’ and earn degrees in arts and humanities, the returns on those degrees simply aren’t favorable. One of my son’s friends attended NYU to study music and she is currently 8 years removed from school, unable to buy a home, and struggling with student loan debt that resulted in interest payments of more than $700 per month. How does a music teacher, earning $35,000 per year, pay off a $100,000 loan, when $8,000+ per year is required just to keep the loan from escalating?!?
The bottom line is that college isn’t what it used to be. Its now a very expensive stamp on a resume. If your son or daughter plan to pursue a competitive career in medicine, law, finance or engineering, and they have the grades and ambition to support those pursuits, then the tuition at nearly any public or private school will probably be a good investment. If however your son or daughter has no clue what they want to do, or they are interested in arts, civics or humanities, don’t waste money on going to a ‘good’ private or expensive public school because the tuition will be just that – a waste. I love art, I love civics and… I am human, but there are better and more economically efficient ways for me to learn about these subject than to pay $100,000 to a university that processes students like GM manufactures cars.