Most Kids Should Not Go to College

There are a few recurring themes here at BMA that arose unplanned. One of them is college, specifically the wisdom of paying so much for it. I have asked Is a College Degree Worth Anything? and followed-up with Is a Fake College Degree Worth Anything? I mused on the big picture with Why Go to College? and Does it Matter Which College You Attend?

The answers to those titular questions were yes, college degrees are generally economically valuable, and even fake ones have their uses. Which is why most high school graduates should go to college. And it matters which one you go to, sometimes a lot.

However, my advice to the generic 18 year-old, that he or she should go to the best college he or she can get into (where “best” considers cost) is in conflict with my broader society-wide view. Way too many of us go to college.

In 1940, there were 1700 institutions of higher learning in the US and 1.1% of the population was enrolled in college. 5% of the US population over 25 then had a bachelors degree or better.

In the years since, college enrolment has ballooned. We now have 4100 institutions teaching 6.9% of the population. Just over half of those aged 18-21 are currently in college. And those “college age” Americans make up only 43% of those enrolled in post-secondary education. 28% of the US population over 25 now has a college degree and that number grows every year.

Of course, along with the growing number of college grads is the growing number of young people with the heavy burden of student loans. Sending all these students to college is not free, and in fact it has been getting progressively more expensive. Even as volumes have increased, prices have escalated. Over the past 30 years, college tuition has tripled in real inflation-adjusted terms.

In 2007 the US spent 3.1% of GDP on higher education, twice the OECD average. (Canada was the runner-up at 2.6%. The EU averaged 1.3%. Note that these figures do not include lost wages from students not working.) But leading on college spending does not mean we are at the top of the league tables for education overall. We spent just 3.7% of GDP on grade and high school.

It is my belief that we devote entirely too much of our resources to higher education. Put another way, I think that substantially fewer of us should be going to college.

That sounds like a terrible thing to say, particularly from a person who got to go to an uber-elite Ivy League school. But this is not about elitism. The top 100 colleges and their graduates will always have the same place in society whether or not there are 1600 other schools or 4000 of them.

The problem is that for what might be called the normally above average high school grad, college has become a wasteful bidding war.

Imagine, for the sake of argument, an 18-year-old who is at the 75% percentile of talent and ability, which is to say that in some abstract sense the teenager is more able than 3 out of 4 people. In 1940 this person could graduate high school and happily enter the workforce without stigma or student loans. Today, with more than half of young people attending college, not going would signal to the world that the poor kid was well below average. So he or she goes to college, takes on considerable debt, and delays working for several years.

There is the argument in favor of college that it trains students for a career. To a certain extent, that is true, but as a whole our institutions of higher learning do a poor and inefficient job of this. Truly vocational training in such fields as accounting, nursing, or engineering is more exception than rule. And even when it does exist, it is questionable if this form of career training is cost effective relative to potential alternatives such as learning on-the-job, a vocational high school, or a more specialized and shorter post-secondary program.

Further, it needs to be pointed out, the higher professions such as law, medicine, and even business management all require graduate degrees. And those professional graduate schools generally expect that their incoming students will have learned little of practical use as undergrads.

Are our new high school graduates ready to start working rather than go to college? That is a good question. Most high schools today measure their success by how well they get their students into college, not by how well they are prepared for the real world.

We need better high schools. It is even possible that we need to spend more on them. Relative to the nearly implausible resources devoted to higher education in the US, secondary education is on a starvation diet.

This disparity may partly be due to the way the two types of education are paid for. Grade and high schools are generally public, paid for by local governments out of local taxes. Higher education is generally paid for by the student, with substantial subsidies from government. Naturally, individuals are more willing to spend on their own educations than communities are willing to spend on their neighbor’s kids.

In most of those other OECD countries, the ones that spend far less on higher education, the government pays for college too. And in those places far fewer young people go to college, hence the savings. As I do not think that our politicians are likely to reduce the number of college students, I do not think that having the government pick up the tab here would work.

But do we need to subsidize it so much? Politicians who proudly tout their efforts to expand student loan programs and point to the success of increased college enrollment remind me of when basically the same bunch pushed for expansions of Fannie and Freddie and pointed to the higher percentages of Americans who owned their homes. And how did that work out?

[Photo – Kit]

College, Government | Frank Curmudgeon | May 29, 2012 11:59 am

No Comments

By Neil, May 30, 2012 @ 11:10 am

There’s many things where the individually rational choice – go to college – and the collectively rational choice – have only a small number of people go to college – don’t match up.

And without harsh government control or supply restriction, I don’t think that’s going to happen. And it’s hard to figure out what the appropriate level of education is. Certainly, where I live there are too many people with degrees, and the wage scale is inverted so that for the majority of graduates, they earn less than they could by joining a trade or lifting heavy things for a living. The education just gets us inside out of the cold during winter, which is worth a lot.

But our economy is fundamentally different than it was 60 years ago, with more complex educational requirements than existed at that time. And those changes will keep happening, so it’s hard to say what the appropriate rate of education is.
By Daniel, May 30, 2012 @ 11:39 am

As a 20 year old who recently completed one year of college at a middling (and that’s probably too kind an adjective) state school, I could not agree with this post more.

Something that doesn’t get mentioned often is the complete lack of a framework for young people who don’t go to college. Putting aside that it is likely that their parents expect them to go -even if they can’t pay for it- starting life at 18 is quite challenging, and the extended adolescence allowed by college has made it so.

For instance, when do you move out? You can probably move in with some like minded friends while working a minimum wage job, but where is that going to lead? When do you decide that you are now living your life and this is it? Society has set this marker at graduation from college. Obviously the levelheaded thing to do when deciding not to go to school is to make alternate plans, such as picking up a vocation. It is a very odd thing to articulate, but because many kids spend their whole life being told that college is their only path, that many find themselves unable to work outside it. So at 22 they’re in roughly the same place they were at 18.

A lot of them end up desperate to do anything to feel like they’re making progress in their life. I’ve seen this manifest itself in joining the army, or simply choosing to take up school later on. It is certainly not impossible to make a great life for yourself without school, but you really have to be willing to work outside the box.

At 18 I washed out of community college after one month, and spent a good year as one of the aforementioned types. I disliked college for many of the reasons you listed and thought I could make it on my own. In the end, though I was working I felt overwhelmingly stagnant and like my peer group was leaving me behind and progressing with their lives. I decided to go to a real school and put my best foot forward. I was going to make it work.

While I got good grades and enjoyed some of the classes, the things that you’re talking about hit home for me in a huge way. I saved up $6,000 to pay for two semesters, but I was in an extreme minority of people who were not taking out loans. The fulltime nature of school made it difficult for me to work. If I had not been able to commute from my parent’s house, I would have had to take on loans.

The return on investment with college has to be very poor, barring some exceptions in STEM fields. Even the so called “higher” professions are no longer a guarantee. I came across a blog (http://bit.ly/dkjjww/) when I was researching possibly going to law school (because hey, this undergraduate degree is going to be worthless right?) and it is what ultimately made me decide to stop attending college.

I think college is great. I enjoyed studying the humanities and feel like a more rounded person because of it. The harsh reality is that unless your parents/scholarships are footing the bill or you know for a fact that you’re going to get a job and can pay back school, you probably shouldn’t be in college. The best metaphor I can think of is a factory line where the box at the end has been taken away and the finished product is just falling on the floor. I think that what you have to do is carve your own trail these days, in college or out of it. You have to have a very specific idea of what you want to do that is grounded in reality. Going to college to “figure it all out” is a waste of money. At least figure it out in community college.

But all of that is only sort of related to the topic of this blog (sorry, but I thought you might find it interesting.) The federal student loan system has made college into the monstrosity that it is. It dissociated the cost of college with the ability of students to attend (thus crippling any incentive against raising cost) and additionally has saddled an entire upcoming generation with massive amounts of debt.

I’m not a Harvard grad economist, but thinking about the effect that that’s going to have on our economy and society is extremely disconcerting. It is no longer something that is going to take 3-5 years to pay off.

Anyways, this whole subject should be a gold mine for you. The absurdity behind the for profit school system is possibly the worst thing about this whole situation. I saw a good article in Salon about it a few days ago: http://www.salon.com/2012/05/29/mitts_for_profit_school_mess/

Also, you are very correct about college doing a piss poor job of preparing for highly skilled fields. This is a seminal article published about how most Comp Sci grads can’t even write one line of code: http://www.codinghorror.com/blog/2007/02/why-cant-programmers-program.html
By Frank Curmudgeon, May 30, 2012 @ 5:14 pm

Daniel:

Thanks for your post-length comment. It is reassuring to hear that the ramblings of this middle-aged guy make sense to somebody for whom this is a first-hand problem.

I am particularly taken by your observations that there are not a lot of obvious alternatives to the college path for somebody in your shoes. I am pretty sure that there used to be and in any case there really ought to be. In European countries, where college attendance is more like 10% than 50%, there are elaborate systems of apprenticeships and internships, although they are not universally popular. If I were king, the government would stop subsidizing student loans and start subsidizing these sorts of programs.
By Owen, June 1, 2012 @ 12:38 am

I’ll be 32 in a couple of weeks. I went to college from 1998-2005, full time for 3 years and then part time for 4 to finish my Bachelor’s. I was in the same degree program for most of that time, and when I switched to part time I had the same professors, but my cost to attend school dropped dramatically – maybe to 1/8th the full time cost. I got a full time job (at a software company, true, but I was “only” earning $35k a year) and paid the rest of my own way through school. I consider myself hugely fortunate to have been able to strike this balance.

My dad mentioned in passing the other day that a friend had told him that undergraduate tuition at Drexel University is currently $57,000 a year (assuming no financial aid). I was aghast. I looked up my alma mater, Northeastern: $53,000. Yow. I could have spent over $200,000 to get a degree in English? What are people thinking?

My wife is Australian, and although we live in San Francisco at the moment, it’s likely that we will move to Melbourne in the next couple of years. We’re expecting our first child, and this has definitely put the idea of “planning for the future” into a whole new perspective. Many things in Australia cost more than in America. My favorite example is the KitchenAid stand mixer. $300 on Amazon.com here; $799 in an Australian department store. Tuition at Melbourne University, ranked number 1 in the country and number 37 in the world? $5,000-10,000 a year depending on degree program. Sign me (or rather, my kids) up.

On the subject of apprenticeship programs and the like that Frank alluded to above, I note that Mike Rowe, the host of the Discovery Channel show Dirty Jobs, has been promoting exactly this idea for some time now. I was surprised to learn that there’s a huge lack of skilled laborers in many parts of this country – plumbers, welders, electricians, you name it. Check out Rowe’s testimony before Congress (http://www.youtube.com/watch?v=3h_pp8CHEQ0) for more, it’s really interesting.
By Ryan, June 1, 2012 @ 12:59 am

You make some very good points. Unfortunately many job markets require some sort of advanced degree and even though it costs a lot, a bachelors degree is in many ways equivalent to a high school diploma 30 years ago. But it doesn’t have to put you in debt up to your eyeballs. By following some traditional money advice and start at a community college, apply for scholarships and grants it can be much more affordable.
By Frugal Investor, June 2, 2012 @ 7:51 am

I completely agree with this article also. Just some background. I’m 32 years old, I am a self starter and I work in the IT field. I am also very entrepreneurial. I’ve taught myself almost everything that I know, just from the fact that I was always playing around with computers as a kid. I was also generally a bad student in school because I get bored easily and would rather be learning hands-on. I had a good paying job in my field after graduating high school, and worked part time when I decided to go to college for computer science. The problem was, I was already making good money at my job (more than most college grads were making at the time) and my classes in college were so entry-level and boring that I didn’t feel like I was learning anything and I decided that going to school was a waste of money. I’ve always been very frugal and try to be wise with my money. I stopped going after one year. I got an early start in the job market and a big head start on my peers. I have a lot more experience and I am earning much more than my peers now, without having any debt from college.

For many kids, I think that college is the next logical step, ESPECIALLY if they don’t have a clear direction of what they want to do. I think that college has its place in society, but only for people who are sure about what they want to study and aren’t able to learn those skills on their own or on the job. (think doctors and lawyers)

I know my situation may be an unusual one, but I knew exactly what I wanted and what field I wanted to go into when I graduated high school and I already had a job in that field. Even though it is a technical field, I have always been very driven and there are so many resources now on the internet and in books to teach yourself all of these skills for almost no cost. I have never been unemployed, and I have switched jobs a couple times. In interviews, I was always able to sell myself and was able to highlight my lack of a degree as a positive by explaining to my prospective employer exactly what I have explained in this comment. Not having a degree has never held me back for a second and I feel it has helped me in a lot of ways to show people how ambitious I have been to learn everything on my own and also not having any debt has been a huge advantage.

I remember my parents being upset when I dropped out, just because they expected me to get a degree and they pressured me to go back. When I talk about it today, they freely admit that they were wrong about pressuring me and they are proud of what I have achieved in my life. Even now, I meet people that seem shocked when I tell them I don’t have a degree and their response is to say things like “well, it’s not too late for you to go back and finish your degree”. As if they feel bad for me or look down on me for not having one. In reality, that is the last thing on my mind because I am earning a six figure income now and I earn more than every one of my friends. I am very frugal and very savvy with investments which has ensured that I will have an early retirement and I have never had to worry about money anytime in my adult life. I see friends my own age that went to college still struggling and unsure of what they want to do with their lives.

I’m not trying to brag about myself and hope this isn’t coming off the wrong way. I just wanted to provide some experiences from my own life to show that there is another way other than the standard path that is not working for most people. I wish that there was a way kids could see they can be successful without going to college. I feel that the entire higher education system is broken and the sooner kids stop paying these ridiculous prices and getting loans, the sooner it will force the system to adapt and become more reasonable.
By JT, June 2, 2012 @ 12:46 pm

I agree with you, mostly because returns are abysmal in the aggregate. College is, for many majors, a networking event.

In effect, we’ve created a mechanism through which individuals can spend hand over fist to be part of a group that is perhaps more motivated and potentially more intelligent than the median person. Resources used for anything other than this networking event are…well, wasted.

That said, I am a college student. I’m majoring in finance with the hope to eventually complete a CFA. A CFA means that I need a 4-year degree first in any study. So off to college I go. There is extreme redundancy in completing a 4-year finance degree then proving that you retained the information with a CFA. Alas, I don’t think the requirements will change any time soon.

We do need better high schools, but that is a completely different (though equally serious) structural problem.
By jim, June 23, 2012 @ 2:06 pm

Yes, fewer kids should go to college. Today around 30-40% of those who start drop out. Plus we have far too many kids getting degrees that are in little demand.

I think that we need better alternatives. More apprenticeship or training programs and more emphasis on associates degrees and certificate programs. High school is doing a poor job right now and people only see college as the solution.

On one side government is paying less and less for college. Public universities get lower subsidies from tax dollars now than 30 years ago. Often the rate is cut in half. U. Texas got 50% of its money from the state in the 80′s and only 25% today. On the other side we keep trying to improve college financial aid with tax breaks and more talk of better grants and trying to improve terms for student loans. Overall this is OK, though it seems odd. The MSRP goes up so those who can afford it pay more but then we help out the low income folks with aid and more aid makes everyone feel like the government is helping, even though its the government cutting back on spending that in large part causes the tuition hikes in the first place. I think we should shift more costs to the students then use that money to beef up vocational training or 2 year schools and throw some financial aid back at the families that really need it.
By Frank Curmudgeon, June 27, 2012 @ 9:57 pm

Jim:

I think we are on the same page here. Are public universities really getting less (state and local) tax money or is it just a lower proportion of the overall budget than it used to be? Without knowing the answer I’m betting on the latter.