Just say no to college 'pedigree'

WorldnetDaily ( FINANCIAL PEACE COLUMN) ^ | April 15,2008 | Dave Ramsey

[SeekAndFind]

Dear Dave,

My son is a sophomore at a local college, and he wants to transfer to a very prestigious university. If he did this he would incur more than $100,000 in student loan debt, and that's with us picking up half of the cost. What do you think I should tell him?

Will

Dear Will,

I'd have a hard time telling anybody that one school is $100,000 more valuable than another one. The fact is that unless he has $100,000 lying around somewhere, he shouldn't go to that other school for one very simple reason – he can't afford it!

We hire people every week at my company, and where they attended college is a very minor blip on the radar screen. There will always be a few corporate types out there who play games and try to turn the office into some kind of snooty country club, but the fact is most employers don't care where you went to college.

Here's the deal, Will. It's what you learn and being able to use that knowledge in the marketplace that's really valuable. Knowledge is king, and we live in a knowledge-based economy. If you can't retain and apply what they're teaching, then the only thing more worthless than a college degree is a college pedigree.

This is a kid who needs guidance from his dad. Step up and explain it to him. Letting him walk out of school with a six-figure debt around his neck would be a huge mistake!

Dave

[wastedyears]

I’m content with not having attended college. I’d probably be kicked out for my Conservative activism, and beating up guys that take advantage of drunk women anyway.

[devere]

For law or business it might be worth going to the prestige school, because in those fields it’s who you know that counts.
For example, it was worth billions to Steve Ballmer to have been Bill Gates roommate at Harvard.

[FightThePower!]

I heard Dave tell someone not to take a paid medical fellowship that paid $50,000 a year until he paid his loan off. The guy was an Internal Medicine doctor making $150,000 and he had $100,000 in student loans. The guy was going to be a cardiologist after the 4 year fellowship and be making $400,000 at current market rates. Seems like bad advise.

[dawn53]

I’m not familiar with “Dave” but we encouraged our son to fast track it through college, and now grad school. He hasn’t paid a dime in tuition. Dual credit took care of his AA so he graduated high school and got his AA at the same time, state merit scholarship paid for the remaining of his BA credits, and grad school tuition is paid for by a Graduate Assistantship (which you can secure if you score high enough on the GMAT.) The undergrad degree was from a state U, the grad school is a private U. He’ll be 21 when he’s finished with his Master’s. Education can be achieved without going deeply into debt, and our advice was to get it and press through till you finish.

Life has a way of throwing up roadblocks, and it becomes much harder to go back and earn your degree or further your education once you have family responsibilities. Sure you may choose a profession where you don’t need one, but what if later on you find you do need a degree or a higher degree to “go” where you want to in your career. Been there done that, and we were glad to find that there were opportunities to be had which allowed one to pursue an education and not be saddled with debt when they finished.

[Hyzenthlay]

Honestly, the kid should look into other opportunities, like a slightly less prestigious college, or if his family earns less than 100k per year, Stanford would be tuition-free for him. There’s also things like scholarships or the military - ROTC programs carry some of the best education benefits I’ve ever seen - and internship experience is really valuable as well.

[pnh102]

The guy was going to be a cardiologist after the 4 year fellowship and be making $400,000 at current market rates. Seems like bad advise.

But the vast majority of people who graduate from college won't start out with a six figure income, especially if they are not doctors. Saddling them with a six figure debt from the git-go is just asking for trouble. This kid should be so lucky that his parents would be willing to spend up to $50K for his education to begin with.

[dodger]

Finances aside, if your kid wants to attend an ‘elite’ college the application would be greatly strengthened with such as the ‘Founding President - Multiracial Atheist Transgendered Alien Marxist Parolee Immigrant Society’ (dba MATAMPIS).

[Raebie]

I was just talking to my husband about this today and said the exact same thing. Employers don’t care what college you attended.

Now I have to explain that to my 17 year old who wants to go to Northwestern for 40K a year versus our state university for 14K.

[pnh102]

Now I have to explain that to my 17 year old who wants to go to Northwestern for 40K a year versus our state university for 14K.

My dad made it dead simple for me... I had to go to whatever school he chose to pay for. If I wanted something else, I would have to pay for it myself. However, he also made me understand that student loans were not a "free ride" like so many students seem to think they are.

[pnh102]

... the application would be greatly strengthened with such as the ‘Founding President - Multiracial Atheist Transgendered Alien Marxist Parolee Immigrant Society’ (dba MATAMPIS).

Sounds a lot like Super High Intensity Training.

[Raebie]

Oh yeah. That conversation is on the horizon, to be sure.

[Thrownatbirth]

Good for you. I went college at night with a fulltime day job, so I missed all the frivolity. In the end, it was my enlisted service, not my degree, that really help me succeed.

[SeekAndFind]

But the vast majority of people who graduate from college won't start out with a six figure income, especially if they are not doctors. Saddling them with a six figure debt from the git-go is just asking for trouble. This kid should be so lucky that his parents would be willing to spend up to $50K for his education to begin with.

Agree with you there. Also, why do you need to pay hundreds of thousands of dollars in tuition to be a doctor when you can pay less than that by attending a state university ?

Here in NY, I know lots of highly paid Doctors who went to SUNY at STONY BROOK. They're not getting paid any less than those who paid their tuition at say, Columbia University.

[SeekAndFind]

My dad made it dead simple for me... I had to go to whatever school he chose to pay for. If I wanted something else, I would have to pay for it myself. However, he also made me understand that student loans were not a "free ride" like so many students seem to think they are.

I gather you took his advise and are the better for it financially today ?

[SeekAndFind]

Now I have to explain that to my 17 year old who wants to go to Northwestern for 40K a year versus our state university for 14K.

Unless of course Northwestern agrees to give him tuition aid that competes with the state university's.

[Raebie]

Yep, we’re gonna bust our butts for scholarships & aid.
We’ll see where we end up. Her SATs placed her in the top 50,000 out of 1.5 million tested...so I figure she has a shot at some assistance. Plus, she’s hurling the softball at around 60 mph for her varsity team, which is currently 8th in the state.

Come on, scholarhips.

[pnh102]

I gather you took his advise and are the better for it financially today ?

I did... Although I did take out loans to pay for graduate school, I owed a lot less than many of my peers and paid off my debt a lot sooner than most. Even when I paid down the debt it was a very minor expense most of the time and not really terribly stressful at all.

My dad is no longer with us, as his own life was cut short, but I try to thank him every day for doing everything he could to teach me so much.

[Arguendo]

For law I think undergraduate school is surprisingly unimportant, but law school prestige is critical for many jobs (and there’s a huge salary difference between the good law jobs, the mediocre law jobs, and the bad law jobs—though at bad schools students are lucky to get any jobs). The best bet for this may well be to get a cheap undergraduate degree, provided the education is decent, and then go to a good law school if possible given grades and test scores (and if it’s not possible, probably avoid law school at all).

[kaboom]

why do you need to pay hundreds of thousands of dollars in tuition to be a doctor when you can pay less than that by attending a state university ?

At some schools, it's not just the education, it's the networking that is a goal. It doesn't matter where you go for many of the jobs out there today, but it is very difficult to penetrate certain circles of society unless you have the right connections. I can't see where transferring to a "pedigree" school would pay off just for the education unless there was a chance to build relationships with the other students.

[pankot]

Perhaps being a plumber will make a lot more money—and take less crap—than being a college grad.

[ken21]

is this the same dave ramsey that recommended

bear stearns to his audience?

[Raebie]

Being a plummer is not high on her list of career aspirations at the moment.

[SeekAndFind]

I can't see where transferring to a "pedigree" school would pay off just for the education unless there was a chance to build relationships with the other students.

Aren't we over-hyping this "connection" thing ?

Any college you go to gives you the opportunity to network with other people. I highly doubt that going to Harvard automatically gives you the chance to be close friends with a Kennedy or a Bill Gates.

I looked at the names of numerous CEO's at large and small companies in the USA and there is not "rule" that says that most of them are Ivy League grads. In fact, a significant number of them are graduates of state universities and small colleges.

I think the question to ask is this -- how much is this "connection" worth ? Is it worth $50,000 a year for 4 years ? Or can you get something similar for much less than that ?

[SeekAndFind]

is this the same dave ramsey that recommended bear stearns to his audience?

Did he ? Could you kindly show us the source or link for this ?

[Arguendo]

I looked at the names of numerous CEO's at large and small companies in the USA and there is not "rule" that says that most of them are Ivy League grads.

It's far less true for jobs like CEO, since they frequently work their way up from entry-level management positions that hire from a wide range of schools. But it's definitely true in industries like finance and consulting, where it's rare to even break in in the first place from non-elite schools. And those are best far the best-paying entry-level jobs most college grads can get.

[Dilbert56]

I've listened to Dave Ramsey's CDs, read two of his books, and watched dozens of his shows on the Fox Business Channel. Never saw him recommend specific stocks or brokerage houses. His advice is to get with a financial advisor who will teach you about investments, not sell them to you. One of his cardinal rules is to never invest in anything you don't fully understand (and can explain to someone else). It would be totally out of character for him to endorse a brokerage house.

Regarding mutual funds, he says to research their histories and make sure they've got a prolonged record of success. He invests in one mutual fund that has never had a down year in over seventy years. That's a track record.

[fleagle]

Back in the day I wanted to attend Princeton so badly I cried for days (literally) when my parents crunched the numbers and saw that sending me there would be perhaps a twenty year budget-buster. So I went to a state school in Pennsy (Temple) and received a terrific education from excellent teachers at an incredibly affordable cost. No regrets and no student loans. Win-win.

[SeekAndFind]

But it's definitely true in industries like finance and consulting, where it's rare to even break in in the first place from non-elite schools. And those are best far the best-paying entry-level jobs most college grads can get.

Hmmm... let's see if this is true...Let's look at the undergrad degrees of the head of some prominent finance companies in the USA...

Frank Zarb --- Former president of the NASDAQ Stock Market Inc, and later Chairman of AIG. Graduate of Hofstra University ( is that "elite" ?)

Gary Crittenden : Chief financial officer of Citigroup. BS degree in management from Brigham Young University ( State University ).

Richard Severin Fuld, Jr., currently the Chairman and Chief Executive Officer of Lehman Brothers Holdings Inc., One of The USA largest brokerage and investment banks. Fuld, received his B.S. from the University of Colorado in 1969 ( A State University).

G. Kennedy "Ken" Thompson, chairman, president, and CEO of Wachovia Corporation. He holds a B.A. in American Studies, University of North Carolina at Chapel Hill (a state school)

Jack Welch, former CEO of GE, Graduated with a degree in Chemical Engineering at the University of Massachusetts, Amherst ( A State University ).

Samuel A. DiPiazza, Jr., CEO of PricewaterhouseCoopers, One of the world's largest consulting companies. He received dual degrees in accounting and economics from the University of Alabama ( A State University ).

Kenneth D. Lewis, the current Chairman, CEO, and President of Bank of America, one of the largest banks in the United States. He is a graduate of Georgia State University, where he earned a bachelor of arts degree in finance.

Gary D. Cohn is President and COO of Goldman Sachs. Graduated with a major in finance at American University.

I could go on and on and on.

While there is an argument to show that most Ivy League grads do well, it is not necessarily true that you have to spend a fortune in your undergrad to get the Ivy League "connections" to climb the corporate ladder.

A better strategy is this -- if you don't have the money, don't bankrupt yourself in order to go to an Ivy League school if they don't give you sufficient aid.... go to a good state school and do well. Then, find employment in a good company while enrolling for your graduate studies ( either at an elite Ivy School or a good non-Ivy ). You can use your salary to pay for the grad school tuition or maybe your company has educational benefits for its employees. At any rate, it isn't a good idea to be in debt by over a hundred thousand dollars before you earn your first salary when just as good an alternative exists.

[SeekAndFind]

He invests in one mutual fund that has never had a down year in over seventy years. That's a track record.

Could you be so kind as to share the name of the mutual fund with us ? Hope it's still open to new investors.

[Dilbert56]

Unfortunately, he's never given the name of that fund, or any other one he's in. He says you can expect 12%(net 8% after inflation) from a good mix of mutual funds, long term. In the absence of any other information, he recommends a mix of large cap, agressive growth, international and mid-cap funds with roughly 25% in each.

That's a bit too risky for people who are really nervous about their money. Someone who is checking their balance every day and panics when the market has a setback shouldn't be in anything that volatile. Good finances but too much emotional stress.

[Arguendo]

Oh, of course there are exceptions (though note that many, such as Fuld and Crittenden, have MBAs from top B-schools), and there are probably very few jobs in the country where you absolutely must have a degree from a top university (president of a top university might be one of them). Given how many more students graduate from average/state schools, there will always be a fair number in any field, but in the fields I named Ivy league grads still dominate, and if you really want a career in one of those fields you'd almost certainly be better off going to a top school. But with what those fields pay, the debt wouldn't be so unbearable.

Personally, I went to a smaller undergrad and graduated with very little debt. It did limit my career options considerably, but didn't hurt my law school applications, so I decided to go with a top law school depsite the debt.

[SeekAndFind]

Oh, of course there are exceptions (though note that many, such as Fuld and Crittenden, have MBAs from top B-schools)

My argument is that EVEN in Finance and Management Consulting, these examples I cited are NOT EXCEPTIONS. The examples of successful people who graduated from non-Ivies are so numerous that making a case for going to huge debt in order to land a great job in these fields after graduation does not pass the cost/benefit analysis test.

As for having MBAs in top B-schools, my advise is to take it AFTER you find a job and pay for the MBA tuition either with your salary or through a company sponsored tuition aid ( this is a benefit which most Wall Street companies have ).

The point of the article is not that you shouldn't go to a name school. Its larger point is this --- IF YOU DO NOT HAVE THE MONEY, DO NOT KILL YOURSELF GETTING INTO HUMONGOUS DEBT TO GO TO A "NAME" SCHOOL WHEN THERE ARE GOOD STATE SCHOOLS THAT WILL GET YOU THE SAME DEGREE AND ACCEPTANCE.