Skip to comments.College is a scam ó so letís make money off it (skyrocketing student-loan debt)
Posted on 05/29/2011 6:55:00 AM PDT by TigerLikesRooster
College is a scam so lets make money off it
Commentary: Debt creates generation of indentured servants
By James Altucher
NEW YORK (MarketWatch) We cant deny it anymore: College is a scam and a bubble and the reasons why appear below. But Ill be the first to admit its going to take years for that bubble to burst. And while college tuitions are still skyrocketing and student-loan debt is creating a generation of indentured servants, we might as well benefit from it.
Many stocks will continue to go up from the multidecade college bubble, even as it eventually bursts.
The Washington Post Co. (NYSE:WPO) , which owns Stanley Kaplan, gets all of its earnings from the education side of its business, while Blackboard (NASDAQ:BBBB) is the firepower underneath online course management. Google (NASDAQ:GOOG) has all the knowledge in the world at your fingertips and also is trying to get into the online course management game. And Apples (NASDAQ:AAPL) increasing MacBook Air sales are due to colleges buying them for their labs. Then thered probably be a basket of the cheaper online education schools like Apollo Group (NASDAQ:APOL) , etc.
Student-loan debt is now greater than credit-card debt for the first time ever. After the huge debt crisis we experienced in 2008 and the financial bust in housing that ruined so many lives, you would think we would be having more of a national discussion on this but we just arent.
As a result, for the first time ever, we are graduating a generation of indentured servants rather than the entrepreneurs, innovators, artists and inventors that America is known for (I have no self-interest in this Im obviously not shorting colleges, as thats impossible I just hate seeing American go down the drain.)
(Excerpt) Read more at marketwatch.com ...
The trouble is, the main way to get to the middle class is a diploma. What is the alternative?
This was talked about on Coast-2-coast AM friday night
Drop out of the government indoctrination centers, start your own business. Even if it’s mowing lawns.
People can make a good living engaging in skilled trades without having to go through the hassle and expense of a college degree. The idea that "everyone should go to college" is of course absurd. Some people just aren't meant for it... if we were still exposing high school students to skilled trades, then maybe more of them would realize they could have a nice life without the hassle of paying back college loans.
There are ways to get through college without racking up a ton of debt. The most important factor IMO is choosing a useful major. We see so many "horror stories" of people with degrees in glorified basket-weaving with a minor in afro-womynistic studies not being able to get jobs (at least not jobs for which they need their degree) even though they did well academically.
Then there's the living arrangements. Unless you get a scholarship to some high-end out of state school, why go out of state for an education? If my plans work out as I hope they do, my children, should they choose to go to college, will be living at home, since I am already paying once for their room and board here. Why should they pay more to live on campus?
Depending on where a student lives, it is entirely possible for them to hold down some sort of part time job while they are in college. Of course this works better if you go to school in a major metro area as opposed to one in the middle of nowhere.
Kaplan is flush with cash. I know. I’ve been consulting with Kaplan Prep Test and Admissions (business software development) for over two years. And, it’s funny. You would think with all the dough and university access they would attract the best and the brightest. Nope. Not even close. All it reminds me of the the dot com bubble where html script kiddies were billing at $125 per hour. Education IS a bubble.
I had a professor friend who hated the teaching part. She took sabbatical whenever she was eligible. Professors get huge salaries and great perks. Teaching, for many teachers, is no longer a noble profession, it is a really cushy job. Now, before all you teachers flame me, I am not talking about ALL teachers. My professor (former) friends were all Libs. That is who is mostly teaching at the college level.
The trouble is, the main way to get to the middle class is a diploma. What is the alternative?
(Emphasis on the first item on that list).
Let’s take the BILLIONS that our government gives to third-world rathole nations and use it to knock down the student loan problem, starting with those who have been saddled with it for over 20 years AND whose yearly income is BELOW how much is owed.
WE CAN DO THIS!
Credentials. This entire system is built around the power to control who gains credentials. And who controls that game but a claque of hardened socialists committed to destroying the foundations of Western Civilization! With all that cost, all that work, and all that time spent for a rotten product, do they provide a guarantee?
There is a very simple solution to this problem, one that could bring the entire edifice crashing to its knees: A competitive system of private credentials.
Envision a small shop in a strip mall: "We Test." We Test tests, and how. We Test tests are no joke, indeed; they're hard. REALLY hard. We Test guarantees that any person who can pass their tests can perform as specified with an insured guarantee. If the person you hire fails to perform to those specifications within the term of the guarantee, We Test pays the cost of hiring and training a replacement.
Any human then could use any means imaginable to acquire the necessary knowledge to pass We Test tests. Any school would do, no accreditation required. The Internet is loaded with coursework and curricula, libraries and lab-simulators. Any human with the drive and intelligence to learn on their own could then qualify for a job. No saving for decades, no brainwashing, completely transferable work, at any pace one can withstand. Any employer could then simply select from a menu of We Test specifications instead of a diploma, at any level. We Test tests.
One would think that this should have happened a long time ago, but in fact there is one thing standing in the way that makes the realization of this seeming inevitability a matter of now or never.
State licensing requires degreed credentials obtainable only at said profligate, bureaucratic and unaccountable institutions charging outrageous fees and demanding excessive time as only a State monopoly could command. Why not just amend the legislation specifying education for state licensure by adding the simple words, "or equivalent"?
As an example of how little it would take, consider my wife. She just passed her board certification exam as a Clinical Nurse Specialist in the Newborn Intensive Care Unit. She walked into H&R Block, sat at a computer, took a three-hour exam harder than anything she'd endured in her Masters' Program at Cal State San Francisco, and within five minutes after completion had her passing grade. If the private system can handle a test that specialized, why can't it test arithmetic, algebra, US history, or college chemistry? Instead of bricks and mortar, it would be e-books in quarters. Why not?
See post 12.
Huh? I have three nephews in their early 20’s that are making over 70k a year and they only work 6 or 7 months out of the year, if that much. One is a certified diver and underwater welder. Another is a master mechanic/welder and the other is a certified explosives specialist. No college degree for either of them. They could likely not pass a college entrance exam but they don’t lose any sleep over that. They always have an abundance of job offers to choose from and have benefits that are astounding and they don’t depend on some damned union, college degree or government agency. Not that it matters but they have women beating down their doors because they are not wimped down college grads.
Too late did I learn the truth in your screed. Becoming a teacher is about accepting union socialism - not educating children.
I tell students this all the time, in more simplistic terms of course. I will ask them "What if McDonald's ran the schools?" They understand that schools would probably be more fun. A cheap trick but it makes them think.
“The way to cut college costs is to cut the professor’s salaries and do away with tenure”
You are approaching this problem from the wrong side. Tenure is terrible but it exists because of the fundamental structure of financing education.
As usual, government has subsidized a product and the price has gone way up. There are few market forces in place to control college spending.
You have to take away the free flow of cash to the colleges to make them responsive. They will never change if they get subsidized student loans, government grants and alumni contributions. Why should they?
Here’s a short plan:
1. Education loans should be at market rates
2. Get the Feds out of the student loan business
3. Stop the worthless research from the Feds
4. Encourage alumni to ask for change before they donate to colleges
5. And most importantly, allow students to default on student loans
There are two basic myths being peddled by academia in an effort to encourage more students to pay through the nose to attend their schools:
Myth 1: A college degree is key to financial affluence and employment stability.
Fact 1: College is an opportunity, not a guarantee. If the student takes advantage of it wisely, then he could be in a position to do well. Spenign $100,000 on a degree with no marketable skill is not an example of wisely taking advantage of college.
Myth 2: Only with a college degree will someone be able to do well.
Fact 2: College may be an opportunity, but it is not the only opportunity. There are many very wealthy and well off people who never went to college. Anyone who doubts this should inquire what a skilled welder makes.
Years ago, I remember a graph showing the net worth of high school grads vs college grads over a lifetime. Obviously, the HS grads pulled ahead at the beginning, but the college grads picked up in their late 20’s and never looked back. Given the spectacular increase in college debt, I’d like to see what this graph looks like today - if any honest organization would dare to produce it.
Hard to believe, that so many college grads are starting out of the gate wearing chains that many will never escape.
I have read that kids in their early 20’s now check out their dates to see how much debt they have - sort of a “reverse dowry” effect.
Used to be a *trade* was a ticket to the American dream; GIs returning home after the war, went into business [tool & die/ small manufacturing] and supported the fantastic wheel of US industry. They could afford to pay their mortgage, have car, mom stayed at home and family could go on a vacation/summer camp. Sadly, we how longer have a middle class, indie manufacturing base.
In my state, vocational/technical schools were closed and consolidated. A shame and very short-sighted.
A few disciplines require college, not because of the wallpaper, but because of the knowledge and instruction in the field. College should not be discouraged for any child who gets excited by medicine, science, engineering, etc.
College Degrees are like sex: It’s ONLY important when you don’t have it.
“Huh? I have three nephews in their early 20s that are making over 70k a year and they only work 6 or 7 months out of the year, if that much. One is a certified diver and underwater welder. Another is a master mechanic/welder and the other is a certified explosives specialist. No college degree for either of them.”
YOU LIE!! Big College has more than made it clear that they are the ONLY ticket to a strong income and employment stability. Sure you rack up a few debts going to Big College, but you come out WAY AHEAD.
Yep, that’s what they tell us...Unfortunately most adults believe that, and if their kid actually works for a living (i.e. diver, welder, explosives handler - instead of playing with a computer all day) they will have a HORRIBLE LIFE of servitude. Yep, that is what Big College tells us.
6. Get the feds out of the grant business.
7. All college aid be scholarship, not need based.
I think that the problem is that some Americans have a real hard time doing a cost/benefit/risk analysis. I also think that many young people are betting that the US taxpayer will be forced to bail them out of their education debt. Why not? The US taxpayer bailed out the greedy old people in the savings and loan debacle. The US taxpayer bailed out the auto workers union employees. The US taxpayer bailed out huge financial firms. Eat, drink, drugs, sex and be merry for on the morrow, the US taxpayer will pick up the tab.
For college to be other than a scam, it would have to educate. So, yeah. :’) Thanks TigerLikesRooster.
Charles Murray has a **great** idea! Private qualifying exams!
Think about it. How many jobs in the U.S. could be done by people with the solid eight grade educations of my parent's generation? Very very few jobs require a college education. A privately administered qualifying exam could prove to the employer that the applicant was, indeed, well enough educated to do a job.
We could begin by awarding an official high school diploma from the local high school to any child of **any** age who passed the GED or similar private exam. ( Private would be better.) This would immediately open up post high school scholarship aid to the child and make entry into the military more straight forward. Eventually, the high school diploma should be made ( by law) unnecessary for the military and scholarships and the exam results alone should be ruled completely sufficient.
Qualifying exams could start in the first grade. Once a child proved he had mastered a level of a specific subject he could immediately move on to the next level. Ambitious children could complete eight grade or high school **years** sooner. Those children who were not hard working or not as bright would smack their noses against the hard reality that they did not know the material.
And... Large parts of the education could even be **free** to the student. Nearly all of the lectures and written material could be presented on-line. The producers of outstanding material, and highly reliable and certifiable testing centers, could become very rich if they accepted advertising.
Homeschoolers have proved that children can finish their elementary and secondary educations many years ahead of the expected lock-step schedule. By starting their careers years ahead they can accumulate hundreds of thousands of dollars more in wealth than their peers who are institutionalized for their educations. They can buy a home, marry, and start families. They are not locked into this emotionally (and spiritually) unhealthy and semi-adolescent educational wonderland of graduate school degrees, schooling debt, hanging-out, and hooking-up, that entangles so many in their late 20s and early 30s.
Also, if qualifying exams could start in the first grade it would encourage a vigorous private tutoring industry. Parents would also begin to take more responsibility for educating their own children. And....Think of the savings to the tax payer for every year that a child does not spend in the government schools.
As a former owner and doctor in a health clinic I testify that a high school diploma is utterly worthless in determining if an applicant for a job is literate or numerate. If an applicant had passed a well respected and private qualifying exam that would have had real value for me. I wasted far too much time interviewing high school graduates who simply could not read or do the most basic 4th grade arithmetic. Towards the end of my career, even though nearly all the work done in my clinic could have been done by those with an eight grade education, I would only interview applicants that had at least some community college.
The alternative is WalMart U. Get your degree over the internet. Let Wal Mart market it.
No real need for buildings, dorms or commie lib indoctrinating profs.
The student loan takeover by the feds was 100% political as the result is that just four private companies were given the entire loan program to service for profit.
Both student-loans and credit-card debt are voluntary loans, requested by the student. If you accept the money, then you have an obligation to pay it back.
More than one successful person worked their way through college without using student loans.
This is because these loans are federal and guaranteed by the taxpayer. This is the current credit bubble. Without it, lending would be negative in growth.
PhD--the P should stand for Parasite.
>>What is the alternative?
Learning to use the tools that are available...
i am trying to learn something. Why is it important students be allowed to default on their loans? Seems like the exact opposite of what we should want
The main way to get to poverty is student loans...the kind that cannot be discharged in bankruptcy and will take 30 years to pay off...
Learn a trade...they can’t export that overseas...
Find something you like to do. I found electroplating and printed wiring board manufacturing. Learn every last thing there is to know about the subject, and if you're not sick of it at that point, work your butt off and prove you're valuable. I went far in that field without anything but my HS diploma and some math and science classes in night school.
Since the 1970s college tuition has outpaced the cost of living by a factor of 3:
Note that that number is inflation-adjusted, folks.
In nominal dollar-terms, it's even worse: which means (given the wage stagnation of the last decade) college is close to unaffordable.
And for law school, it's been even worse:
Inflation-Adjusted Law School Tuition: $1,550 (Public), $3,418 (Private)
Brian Tamanaha (Washington U.), Information About Law Schools, Circa 1960: The Cost of Attending:
The AALS produced a comprehensive study of law schools in the late 1950s, sending detailed surveys to 129 law schools, with a 90% response rate. Here are a few interesting tidbits about the cost of attending law school:
Median annual tuition and fees at private law schools was $475 (range $50-$1050); adjusted for inflation, that's $3,419 in 2011 dollars. The median for public law schools was $204 (range $50 - $692), or $1,550 in 2011 dollars.
In contrast, here are the current tuition and fees at the top-ranked private (Harvard: $48,786; Stanford: $47,460; Yale: $52,525) and public (resident) (Michigan: $44,600; UC-Berkeley: $44,245; Virginia: $44,600) law schools.
Compounding the problem is the diabolical commitment to "diworseity" at the University, and the "Tiger Mom" mentality -- where top schools won't even look at you unless you've climbed Mt. Everest on your hands, unaided, at the age of seven.
And done it blindfolded at the age of eight.
One has the "hourglass" distribution of attendance similar to the "hourglass" of wealth -- the superacheivers, the kids who have no business being there, and nobody in between.
Fortunately, if one chooses carefully, one can get just as good an education at a good flagship State University at a fraction of the price.
Unfortunately, with the networking available at the elite schools, the practice of "credentialism", and the dumbing down / Marxism crap even at the elite schools (saving only the math and science), for most kids, it makes no difference.
Very few of the wealthy got there as a result of their education. It was just plain old hard work.
But they can import guys from overseas who will do the trade for half of what you can.
Ask any construction worker.
I would think most kids could get everything they need from their local community college with perhaps a few courses at the watering holes close to the better universities to get Linkedin. A few years ago I would have included military service in the stack but I couldn’t see myself serving under a communist CinC and sleeping in a room filled with queers.
Liberal elites run colleges. Liberal elites are scammers. College is a scam...
Credentials are worthless if they aren't backed up with knowledge and/or experience.
What kind of idealized dream world do you live in? I have two words that can prove absolutely that credentials alone can have great worth, absolutely lacking any reasonable degree of competence:
Personnel departments, nationwide, are now so cowed by lawyers that they'll make that incompetent hire no matter what just to fill a slot, but only as long as the applicant possesses appropriate credentials. Therefore, credentials indeed have worth, any influence of reality notwithstanding.
Would you accept someone who just passed the test as sufficient?
Let’s look at some of these “students” that are in debt too. Many of the diploma mills will accept homeless people.
No, but when you think about it, that's all the educrats do. I said there should be a guarantee too. Nobody does a good job of verification unless they've got a stake in the outcome.
Yes, more companies should hire high school dropouts, because they’re all exactly like Bill Gates who dropped out of college himself. The last thing an employer needs is some lazy good for nothing kid who spent four or more years trying learn something useful.
One word: Money. Degrees aren't created equal. My brother is an educated man with a masters in his field, but all from state U. His daughter went to an Ivy League school, and only has a BA. At 34 she was already a VP in a multinational. In his own words, "She lives a lifestyle that I could never afford to become accustomed to."
I didn't read it online, so I probably doesn't count, but the WSJ did a study and found that Ivy League grads could expect to earn close to 50% more in their lifetimes than those with comparable degrees from state universities.