Lately there has been a shift in public opinion regarding the investment in a college education and a lot of debate has been sparked up in the media regarding the ROI of a formal four year college education and the alternatives that are out there.
One of the more popular movements is a $100k fellowship offered by Peter Thiel that was detailed last night on 60 minutes. The $100k offer is made to what Peter thinks are innovative and entrepreneurial students. He basically persuaded them to drop out of college for the money and opportunity to develop their ideas.
Another comparison that has been made is that there are vocational careers such as plumber, electrician, or air traffic controller that pay as much as a physician or dentist but require much less formal education.
Even here on WSO we see arguments such as target vs. non-target for undergrad, and I have seen several postings that stated that MBA programs that are not top ten on the rankings are not worth going to, especially when you factor in the cost, both monetary and opportunity, that is required of you.
To share a personal story, someone very close to me has graduated from a top art and design school and has an offer to work as a 3d animator for a large company (think pixar, dreamworks etc.) The starting salary is between 40-50k in a mid-sized city where the cost of living is much less than we are used to here in the financial center cities. However, when accounting for the 110k of student loans that this person has accrued, the monthly payments that kick in after the 6 month deferment period are about $1,500 a month . So with a after tax and benefit monthly income of approximately $2,200 how is this person supposed to pay off the student loan without getting a second job or receiving outside support? Seems like a tough task to me. Unfortunately this is the reality of most of today’s students in their 20s.
Let’s take this one step further. I have mentioned in previous blog posts that during my four years of undergrad as a finance major at a non-target university I learned quite a bit about the inner workings of capital markets, how deals are put together, and how different financial instruments work. This is all great, but while doing the first two levels of the CFA program, I feel that I have already covered everything that I learned during undergrad and then some. Most importantly the CFA fees so far with all of the third party study packages that I have bought are still under $3,000 which is just under what one semester costs at a state school. Just something to think about, although, I do fully acknowledge that without a Bachelor’s degree, I would have never had a chance to interview with a BB bank.
The discussion is this: will companies ever take seriously any credentials that do not have a Bachelor’s degree attached to them (remember, only a century ago it was normal for bankers and other professionals to have successful careers based on experience and not some formal degree)? Will we have to see the trillion dollar student loan bubble burst before any actionable discussion starts around this topic among our policymakers?
What baffles me is the ability for these people to get accepted to the best universities in the world, yet they don't have the slightest sense of financial literacy or clue on how to make the most important decision of their life. That is, what they are going to make of their career. To the people who think that money doesn't matter and only do what makes you happy: Stop bitching and moaning when you are poor and in debt up to your ears because you studied Psychology, History, Art, Philosophy, etc. You would be much better off going to a vocational school and becoming a plumber. If you can't handle a career that is stressful, but pays well, please move to Mexico. At least illegal immigrants don't complain or broach any sense of entitlement.
Higher education = Biggest ponzi scheme scam ever perpetrated on humanity. End federal student loan programs yesterday.
Depends on what you study, I guess. Some degrees (e.g. BA in sexual inequality) are not worth $50K a year.
I think the main reason for a college degree (in the Wall Street professions, at least) is to be a vetting process for employers - i.e., a threshold that can be used to screen potential applicants. Most of those four years will be wasted on irrelevant subjects, useless book knowledge, etc., but it's much more likely that someone who has put in four years of work into postsecondary education will be an intelligent and industrious employee than someone who didn't make that effort.
Other than this, undergraduate degrees in business seem absolutely useless to me. You can make the argument that you learn outside of the classroom in those four years, but if that's where the value is, aren't there a million different things you could do with your life for that time period that could teach you much more?
I would love to see the modern world go back to the apprenticeship model that humanity has used for most of modern history.
College is a joke dawg.
To be a GREAT banker, you need 3 accounting courses, 3 finance, 3 econs, 2 poli-sci, 1 marketing, 1 sales, and 1 strategy.
And that's to be the best banker in the WORLD.
For 150k and 4 years, you could visit 150 countries, learn 5 languages, learn computer programming, become an Iron Chef competitor, a scratch golfer, start an on-line business, and fuck 15 shades of prostitute - all the colours of the rainbow.
AND, you could learn more about history, politics, and whatever the fug else you want between masturbating and fuggin' prostitutes.
Why don't a bunch of kids rent a bit of space, buy some bean bag chairs, and call it a University. I bet they'd learn more than I did in UNI.
And I went to a Target! Go figure
Fuggin' nuts
I went to an out off state school, it cost 100k+. I worked in a bar for four years and cleared a lot of money in tips on a weekly basis. This involved a lot of 60+ hour weeks of working, but at times I was clearing 1g a week on tips (and lets be real, bartending in college is just getting paid to party). I graduated college with 15k worth of debt.
The problem is loan money is easy to secure but the people securing it are lazy and unwilling to offset the negative side of a student loan.
Ya, it really sucked having to leave. I actually made less when I graduated due to taxed wages and having to pay back loans. Problem is, you can't be a bartender forever and if you choose that path, you won't live long.
I think there are only a handful of jobs that require higher education. Of the top of my head, Medicine, Engineering, Architecture. For finance I'd say that with 2 months of good training and then learning on the job anyone who's average smart can do the job perfectly fine.
Medicine you really only need to take O Chem, Gen Chem, Phsyics and Bio, + Calc. A lot of people do this in 1 year for a post bacc program, so while you do need higher education, you don't need 4 years of it. Architecture I know is a 5 year track in many places and I can't vouch for engineering.
Sorry, I was referring to med school and residency, more than the 4 years of college. My bad. Engineering in Europe is generally 5 or 6 years, and you can't skip much of that if you really want to work as an engineer. Same goes for Architecture.
Education is one of those things that will be gloriously mispriced because of the insurance-like features of it--even if the regulatory environment changes the way companies can make money, fundamental knowledge about how the world works in a certain way can never be forcibly taken away from you in a society that values free thinking. In addition to the difficulty in pricing insurance-like structures in general, the other main issue is relative valuation between branches of knowledge--to assign certain values on a dollar basis to certain majors at the undergraduate level is offensive to many, but the job market clearly says on a dollar basis what certain branches are worth.
Hopefully we will never be socialist enough as a country to say that "every degree should earn the same amount" coming out of college. It's also rather presumptuous that the main entity that grants loans for the pursuit of a degree should/shouldn't extend credit on the basis of what degree you choose to pursue, because that means the government is implicitly betting on what branches of knowledge are worth pursuing, and there are so many things wrong with that (imagine if Carl Levin had his way with it). Yes, being a slave to market reality if you're truly interested in something that isn't readily monetizable like Gender Studies does indeed suck if you care about money, but this is the harsh flip side of a society that rewards innovation as it sees fit.
The only way out of this massive mess is to hope that people become cognizant of the implicit costs of pursuing certain degrees (they aren't), and hope employers stop overvaluing entire universities and degrees on a shaky basis. You can't really regulate either. I hope people become smarter and stop paying 200k to go to shitty universities that can't pay off their debt--the advertising that college degrees are the solution to all your financial woes really needs to stop, or at least attached with a shitload of asterisks.
If employers stopped requiring 4-year degrees, then demand for college degrees would lower significantly. The only reason employers don't do this already is 1. lack of a degree signals incompetence (because traditionally the "smart" kids go to college) 2. fear of change. The only benefit college provides to most students from a career perspective is as that of a signaling mechanism.
Yes college needs to be reformed. But as long as employers require their employees to have college degrees, college is always going to be a necessity.
Tldr: Both education and the workplace need to be reformed. College degrees will always be necessary as long as employers demand them.
Speaking of reform, 2-4 years experience is not entry level.
too many dumbfux going to college, for starters. not everyone is college material.
the govt loan guarantees for education have only inflated the hell out of tuition, as it did for medical care.
how many jazz history majors do we need? if everyone had a degree, we'd still need people to make the fries and scrub the floors.
people have to live with the consequences of their stupid actions. fuck em all. the guys can pick up a mop and the girls can register with a sugar daddy dating site. uncle melvvvar is waiting.
Problem is, Peter Thiel will do these fellowships, and they may work, and then some asshole politician will want tax dollars to give these $100k fellowships to the people who aren't college material. "I'm an entrepreneur too!" etc.
If that happens he can take them all on his fucking flotilla/waterworld libertopia.
Realize this isn't your main point, but your friend/family member should definitely look into the Income-Based Repayment plan, assuming the loans are federal, rather than private. Really lifesaving program. http://www.ibrinfo.org/
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