The Many College-Related Decisions

College is on my mind a lot these days. Several of my friends have kids in college or just entering, and my own children are a few years away from going to college (should they choose to do so.)

In the past, it was pretty clear that going to college gave the average worker a huge advantage in the workplace. The college-educated worker earned more than the non-college-worker and, while hard to prove, I'm guessing he had better job satisfaction as well. But that was generally the case and in the past. Under this scenario, the common advice was "just get a degree no matter the cost and it will all work out." And it usually did.

This is the way it was for me. I got both undergraduate and graduate degrees in the "glory days" of the 1980's. While based on a lot of factors, I list getting a graduate degree (MBA) as the main reason for my financial success. And I have written that my college education was a $5,000 investment that made me millions.

Then the cost of a college education started to skyrocket. Years and years of 6% to 10% gains in the cost of college took their toll. The result is that college is still often a good deal, but you have to be much more careful -- attending a college at the right cost and being sure it delivers a job for you that pays a wage you can live on. And those people who try the old advice of "just getting a degree no matter the cost" are leaving schools with $50,000 or more in debt and a degree that's relatively worthless.

As I've been considering the right potential college choices for my children, I had a recent post where many of the college issues I'm considering came up in the comments. Apex made several comments that I found thought-provoking. Since I know not everyone reads the comments here at FMF, I am reprinting some of them today for all to see.

Let's begin with Apex's response to a poster's comment on sending kids to college:

This comment is not to pick on you. This comment is actually not for you, it is for everyone. You just said the magic words in quotes below that I hear so many repeat so it is the catalyst for this comment:

"I'd like them to be able to go to any school they want"

I hear this phrase repeated often. Our govt's financial aid program is based on exactly this idea that a student should be able to attend any college they want.

I would like to ask people to reconsider that statement and think about it to see if that broad statement makes sense. I think it is not often given much thought and often is just taken as a given fact that needs little thinking.

Consider the following:

• I would like my child to be able to own any car they want (Ferrari?)
• I would like my child to be able to live in any home they want (10 million dollar mansion in Beverly Hills?)
• I would like my child to be able to have any and as many friends as they want (drug dealers and gang members?)

We don't usually throw around what a child wants quite this flippantly. So why do we talk this way about college? What does "want" have to do with it and since when is our highest aspiration for our kids simply what they want, especially when you are talking about a life changing decision being made by a 17 year old based primarily on what they want.

I would encourage parents to get more directly involved in their kids post secondary education choices. Your kids are not mature enough, smart enough, wise enough, or have enough discernment and experience to make this decision. You may feel you do not either and you are probably right, but your kids certainly do not and worse yet, they often think they do. The only thing worse than ignorance is ignorance that is confident it is not ignorant. You and your kids both need to work together to educate yourself on the choices and make a wise decision that balances their desires with some real world facts. This includes both desires about which institution to attend as well as what to study while there. I am also not suggesting you should make your child become a doctor because you think that has the best prospects. What they want to do has to be a component. But it cannot be the only component or we would have 5 million professional sports athletes, or music majors who intend to start the next Beatles as it were. Or even potentially high paying careers like doctors may not be a good fit or provide good prospects for your child even if they want to do that they simply may be a poor fit for that field. Have they honestly considered what it will take to make it. 8 years of school (if they stay on task otherwise 10), 5 years of residency -- at a pitiful level of pay with 70-80 hour weeks (that's 13-15 years from now before they see any real money or quality of life from their choice). Do they know what they are signing up for? Do they have the ability and work ethic to stick with it and do what it takes? As I said, they are 17, they are not equipped to make this decision on their own.

Now I am not saying there are not very good reasons to go to Harvard or Stanford, or Columbia or whatever the college may be. But wanting to go there is not one of them. Wanting to have a prestigious name on your diploma is not a good reason. They have a cool or inviting campus is not a good reason.

So I would submit that the phrase should be changed to I want my kid to be able to afford to go to the college that has the best overall offerings that fit with their goals and future career path options after considering all the ramifications of cost/quality/connections/recruiting/reputation/etc. A top prestige school is often not the best answer to balance all those factors but the assumption is often made that it is.

If college was a no-brainer decision that you could hardly go wrong on this wouldn't be that important. 2 generations ago that used to be true. 1 generation ago it was more true than not. Today it is not true.

USA Today: Study: Nearly half are overqualified for their jobs

The link above is from a USA Today article on a study just from just last week that showed that there were currently 41 million people in the USA with a college degree but only 28 million jobs that required one. That is 13 million people with a degree for which there is no employer who even desires that you have one. That is 1/3 of all people with degrees who cannot even get a job that requires a degree. Not just can't get a job in the field of their degree. Can't even get a job that matters that you have any degree at all. Where is the promise of a higher paying job from college with those kinds of stats. In the article it pointed out that 15% of taxi drivers have a bachelor’s degree. 25% of retail sales clerks have a bachelor’s degree.

The goal of this post is simply to get parents to get heavily involved in helping their kids with this monumental decision. I have so many neighbors who I asked them about why their kid wants to go to this or that school and these are the kinds of answers I have gotten: they like the campus, or they like the east coast, or they are really smart and can get into these schools, etc. You will notice that none of those answers address a reason that involves making a choice that is best for their future or about why this college is a really good fit for the path they plan to pursue. I almost never hear an answer like that. And it's seems to be because its coming from checked out parents who think this is their kids decision or who are unwilling to get heavily involved in working through the decision with their kids beyond a subtle nudge.

1st, if you are providing money, it is not exclusively their decision.

2nd, even if you are not, do you not try to offer advice and council to your kid even if they have reached legal age now. Granted you can't force them to do anything once they leave home but I think too many parents at this stage feel it's their kid's decision and there is little say that they have.

My hope is that some parents would reconsider that kind of thinking. Most 17 year old kids in the 21st century are simply not equipped to make this decision properly. If you don't help them, they are on a tight rope with no net. It may not end well.

I too am amazed at the number of people who let their kids go to any college the kids want. I have this sort of conversation quite frequently with friends and acquaintances:

Them: My son, Bill, is going to XYZ college.

Me: What is he going to study?

Them: (Fill in the blank -- could be anything from business to education to sports marketing and on and on.)

Me: Does XYZ have a good record of placing graduates in that field?

Them: Hmmmm. I don't know.

Me: Does XYZ offer good support in helping graduates find jobs?

Them: Hmmmm. I don't know.

Me: Do you know what percent of people in Bill's major have a job offer when they graduate from XYZ?

Them: No. I guess all of these would have been good questions to ask when we were considering schools.

Uh, yeah. They would have been GREAT questions to ask.

Then as I ask why Bill liked XYZ over other schools it often comes down to "fit", location, his friends were going there, or some other reason that, while potentially making the experience a bit more fun and easy, has little to do with actually getting a job at the end of four years -- the same sorts of reactions Apex gets from his friends.

I agree with Apex that parents should help their children select a college. Parents are older and (theoretically) wiser and will be able to add perspective to a 17-year-old decision-making. But I would say that parents need to first educate themselves on the how's and why's of selecting a college. Otherwise, it's the blind leading the blind.

Apex went on in another post to discuss an issue that I've been grappling with: is college even right for my kids? I'm not sure at this point, but he makes a great argument that way too many young adults are going to college for absolutely no reason:

I do not agree with the statement that a college education is EXTREMELY important. I made two long posts on the previous profile for CA about exactly this topic so I won't rehash them here but the article above shows how there are 41 million people with degrees and only 28 million jobs that require any kind of degree at all.

College makes huge sense for many people but we are past saturation point and so we actually have too many people getting degrees right now based on the numbers from the study in the article I listed here. It is not enough to simply get a degree. Millions of people getting degrees right now are literally wasting their time and money doing so.

It is also bad analysis to use group statistics such as comparing unemployment for college grads versus non-grads like those two groups are monolithic. The 13 million more people who have degrees than there are jobs that require one are not being helped by their degree. Those statistics are not any comfort to them. Just because Doctors can get employed at 99.8% rate doesn't help the liberal arts majors who can't find work in their field at rates easily into the double digits.

The same can be said for salaries. Tell the retail sales clerks with a college degree about average salaries for college degrees and see how much better that makes them feel when they are getting paid no better than the high school dropout working next to them. The article above points out that 25% of retail sales clerks have a college degree.

For the record I have never put a single dime into a 529 college fund nor do I ever intend to. I am not saying it’s a bad choice to do so, I just don't like how it hamstrings my money and I currently prefer to have other options for that money. I suspect the odds are pretty high that my kids will go to college but I am not certain of it. I consider it at least a viable option that there may be better choices than college for my kids when the time comes.

These are the exact points I am considering/weighing as I think about college for my kids. Will they actually benefit from going to college? Will they be better off than the alternative (for example, taking the money and starting a business)? I'm not so sure.

As for 529s, I do have them for our kids, but more on that in a bit. Someone responded to Apex and asked:

I'm wondering if you could expand on your analysis of why you chose not to use 529s for your children. I understand the penalties if they choose to not go to college, but if the likelihood is very high (say 80%), why not at least drop in a portion, like $10-20K per child that would be enough to cover costs at a very inexpensive college.

The response from Apex:

I would be happy to.

1. Uncertainty. As I discussed above, the fact that this money is allocated for one very specific purpose that is not certain to happen with penalties for using it for anything else. I also find the value of college to be getting less and less all the time with the exception of very specific degrees. That is to say that 40 years ago I think any degree was a benefit. Today I think only some are. I believe a good number of them are not worth the paper they are printed on. Many more are worth something but not nearly as much as the promoters are all making them out to be. And then there is a class of degrees that are worth a ton if you are able to perform well enough to get a good job with that degree. And then if you have 20,30,40K sitting in a 529 what are you going to do with it? Well go to college of course. But wait a minute, is that the right choice? Well it’s nearly free, I mean, there sits the money. We saved for this. College has to be the right choice. I think it can circumvent the critical thinking about price and value the same way HMO health insurance does for medical care. If it feels nearly free, critical thinking about value goes right out the window. Of course it's not free, but the fact that money was pre-allocated kind of makes it feel like it’s already spent for that.

2. Minimal tax benefits. I believe the benefits of the 529 are overblown. 401k is better because the majority of taxes are federal and 529's are not deductible for federal income taxes. Some states offer state tax deductions but mine doesn't even do that (MN). So all you get is tax free growth and the last decade there hasn't been much of that and there isn't even much time left for growth now for my kids.

3. Extra expenses and limited investment choices. I can't say for sure about this one because I have not explored it in the least because I have no interest in using one but I have heard that the fees can be somewhat higher than you might like and the investment choices often are more limited. Perhaps that just requires more diligence on the user’s part to find a better plan. Which brings me to the next reason.

4. Simplicity. Given the minimal benefits I see I don't really care to have more plans that I have to deal with understanding and setting up and then figuring out what paperwork I need to file to get the money out of the plan at the right time to use for the right reasons. In addition this is dedicated money with a shorter withdrawal period. That means you have to do quicker risk re-balancing in these accounts. If you follow the same time frame of advice you get for retirement you would need to be moving to very conservative and safe investments about 5 years before entering college to protect from a large loss of principle. I prefer to do that kind of risk management over my entire portfolio but in this case you would need to do it in the microcosm of the 529 because that is where the money is all going to be drawn from in a few short years when you get to that stage. The savings here are not going to be life changing. I prefer to avoid complexity unless it comes with large benefits. I don't believe 529's do.

5. Versatility. I have enough money tied up in tax deferred retirement plans the way it is. I want access to a decent amount of my money. I do not want to put all my spare money into various dedicated vehicles that tie all the money up. As someone who invests in real estate I need a lot of cash. My real estate is my education plan and my expectation is that I will be money ahead by using that money on real estate rather than putting it in a 529.

That sums up the big reasons I avoid 529s. I want to be careful to state that I don't think 529s are dumb or that people who use them are dumb. There are clearly benefits to them. They can save you money and for many people they are probably a good option. On the whole the drawbacks and extra hassle just makes the benefits not worth it to ME PERSONALLY.

Here's my take on those issues:

1. Uncertainty. Financial planning is full of uncertainty. You have to take your best guess, make a plan, and plow ahead, adjusting as need be. I would still say that college is a better plan for the majority of kids, so the odds are in your favor that you will use 529 plan money for the intended purposes.

2. Minimal tax benefits. This depends on the state. My state does allow a tax deduction. And since I fully fund my 401k, it's not like I'm re-directing money that would have gone into it into 529s. As for tax free growth, the benefit of it is yet to be determined. Yes, you can look back and see that it wasn't a stellar option over the past couple decades. But let's say you started in 2009. How's your growth since then? Probably pretty good.

3. Extra expenses and limited investment choices. This is why you need to select a good plan. There seems to be far too many ho-hum plans out there, and picking a good one can help keep expenses to a minimum. As for minimal choices, I don't mind them -- as long as they have the right options available.

4. Simplicity. 529s do add another account to take care of, but I don't believe that the paperwork is an undue burden.

5. Versatility. This is a viable reason IMO. Does it outweigh the benefits? As Apex says, it's a personal decision. And as for being locked into spending the money on education, there are a whole host of ways you can get the money out without penalty: transfer from one child to another (or to a parent), withdraw the amount of scholarships you child receives from the 529 (yes, they make allowances for this), send the child to graduate school, transfer ownership to a grandchild (I believe this can be done), and on and on. And even if you have to take the money out and pay the penalty, it's only on the EARNINGS in the account, not the original investment. From Saving for College:

Federal law imposes a 10% penalty on earnings for non-qualified distributions beginning in 2002. The penalty is not assessed on principal. (Distributions are allocated between principal and earnings on a pro-rata basis.) An exception to the penalty can be claimed if you terminate the account because the beneficiary has died or is disabled, or if you withdraw funds not needed for college because the beneficiary has received a scholarship.

As I said, I have 529s for each child. Will they turn out to be good options for us? That remains to be seen. If I had to guess at this point, I would say they will likely be a wash when weighed against the advantages of other options (mostly due to the poor performance of the investments during the life of our 529s). But time will tell whether they are better or worse than my expectations. In the end, I think they are likely good options for some and not so good for others, just like Apex said.

So, what's your take on these college issues? Please, jump in and offer your thoughts to the discussion.

Comments

[Mark]

I think Apex's comments on the issue nailed it. Just. Totally. NAILED IT!

[Mrs. Pop @ Planting Our Pennies]

My parents' lack of planning when it came to college savings was a powerful lesson for me. I had to pick a school knowing that I was responsible for all of the costs - so I chose based on fit, academic programs, and scholarship offers and affordability.
I ended up taking about $6K in loans for undergrad, though had they been unsubsidized I would have been able to pay them as I went because I worked every summer.
If we have kids, I would definitely consider not locking anything away for college because I'd want them to be value investors in their education. And when they're spending someone else's money, they're a lot less likely to look for the best value.

[Nick]

One thing that it is important to note, you can ask a school or program about the success of their graduates but the vast majority of the time the data they will give you is skewed to the point that it is worthless. Colleges and universities do not have any way to track students once they graduate and the majority of the time the data they get back is based on students who they have good contact information for (typically alumni who are already heavily invested in the college) and who are motivated to respond (often because they want to brag about their success). How to Lie with Statistics by Darrell Huff was published in 1954 and covers this exact phenomenon in chapter 1. The realities of the data haven't changed significantly in 50 years.

[CW]

Thanks FMF and Apex. This article has made me rethink our parenting style when it comes to our kids education.

[Jane]

We were among those who saved nothing for our childrens' educations. It wasn't lack of love, but lack of stretching the dollar far enough after saving for our retirement and meeting current needs on one income, as I was a stay-at-home Mom. Likely we didn't prioritize college savings very highly as neither of us went to college. Our experience:
Our eldest son graduated from high school in 1998. He disliked traditional classes and was an indifferent student, except for mechanical classes where he excelled. He took a sheet metal class (a few weeks) and got a job at a local aircraft plant. He worked there during the day and went to A&P (Airframe and Powerplant, to become an aircraft mechanic) school at night. He paid for this schooling (three years, 5 hrs/evening, 5 days a wk) himself out of his day job wages. He lived with us and had no life outside of these two full time endeavors. He got his certification, worked his way up with an aircraft company locally, is now a manager at an aircraft service station. He made a little over $100,000 in 2012.

Our second son (graduated 2000) was mostly interested in computers while in school. He took primarily college prep courses, made about a 3.0. He chose to attend a local college, applied for no scholarships or loans, and got his BS degree in about five years. He lived with us and flipped burgers at night, which paid his costs for the state school in our hometown and left him little extra for recreational spending, but he graduated with no debt. He currently works as a Business Analyst for a local small company and makes about $50,000 a year.

Our youngest son (graduated 2005) liked school and did well. He was a National Merit Scholar, so was offered free college at many places. He got a degree in Aerospace Engineering and currently is working on a masters. At the time he graduated from college (2009) local aircraft company engineering openings dried completely up, so he continued working at the nonprofit engineering research company where he worked part time while in college. He makes about $60,000 a year. His wife, who went to private college with loans, is a teacher and makes about $50,000 per year. They are currently working on paying off her student loans.

My takeaway thought from this is that - at least in our family - there is not necessarily always a correlation between college/no college and income (although oldest son has been told that he will rise no farther within his company without a degree, he is actually the first person to get his current position without one) and that even in fairly modern times (my experience spans the last 15 years) it is fully possible to get a degree without help from parents OR loans. Which is not to say that if I had it to do over I don't wish we'd put something back for their education, because the first two did have to work hard to pay for school while in school. On the other hand, I am very, very proud of the men they've become. They didn't just get older in those years, they really grew up. Whose to say that working their own way through wasn't really for the best?

[FMF]

Jane -

You have a lot to be proud of.

Looking back, it all seems to have worked out for the best. I'm wondering though, did you feel a bit (or a lot) of uncertainty as you were going through it?

[08graduate]

I certainly agree that too many people go to college, and that it's depressingly common to overpay for mediocre degrees. All the statistics Apex cited prove that.

However, when he says "a top prestige school is often not the best answer...", I have to disagree, or at least ask for more evidence. If you're admitted to one of the few dozen really elite colleges or universities, you're probably a top-performing high schooler. You are more likely than the average 17-year-old to have a coherent plan for your future, and to make the most of the opportunities a top college can provide. For such teenagers, I think turning down Harvard/Stanford/Columbia/MIT/etc (or their smaller counterparts Williams/Pomona/Carleton/Harvey Mudd/etc) in favor of the full-ride merit scholarship at State U tends to be pound-foolish. If I have children someday, I would hate to tempt them to make to make this trade; so, like the person Apex is critiquing, I'll save enough to send them to whatever school they want.

I went to a top college, and so did almost all of my acquaintances. We graduated on the eve of the great recession. Here's what I see among them: A lot of people in top Ph.D. programs with full funding, on their way to great professorships or research careers. A lot of people (like me) who got technical degrees, went into industry, and earn six figures doing interesting work we love. A lot of people who got non-technical degrees and have solid five-figure jobs doing what _they_ love in publishing, politics, education, business, or social work. Some people in medical school/residency. A few people living on a shoestring to focus on a charitable cause, or on traveling the world. No retail sales clerks or taxi drivers.

You could say we all would have been equally well off with a less prestigious school, and you might be right, but can you prove it? For four years, we had the benefit of highly personalized education, with the world's most talented professors, on resource-rich campuses, among a highly ambitious peer group. Also, yes, we have a brand name and alumni network that opens doors. I think all that has a huge impact, both to future income and to future career satisfaction.

[Bill]

I agree with most of the conclusions in this post both the appropriateness and value of college as well as the attractiveness of 529s in general as a savings vehicle. I got into a similar discussion with Apex on my reader profile recently as well.

I went to a technical college that routinely flirts with #1 international rankings, I got a degree in a hard science (physics), and I paid nothing for the education. From this side of the fence I have to say I'm not sure my education would have been worth it if I had to pay for it. If I had gone on to grad school and an academic career it would be the best path. For my present work in finance it was unnecessary. My first employer specifically avoided recruiting from my school because it's graduates are too academically focused.

I plan on sending my children to private K-12 schools, the absolute costs are much much lower than secondary education and in my view the benefits are much much greater. When they get to college we'll play it by ear.

I think an interesting solution to the problem of overpriced secondary education would be to introduce risk based pricing for student loans. Engineering degrees would carry some of the lowest rates, creative writing degrees would require an additional spread to compensate for the increased risk of the borrower and so on.

The only part of Apex's comments I disagree with is this statement "Your kids are not mature enough, smart enough, wise enough, or have enough discernment and experience to make this decision." I don't think this is true. It may be in some (most) cases but that should not be the norm. It's a bit of a chicken and the egg problem, is an 18 year old immature and thus unable to make a wise decision about college or is his inability to make decisions the cause of his immaturity? I submit that the idea of paying hundreds of thousands of dollars to send your child to any school of their "choice" is just the last in a long series of well intentioned but ultimately harmful parenting practices. How can you expect a child to make a mature wise decision about college when the parent is themselves making an unwise immature decision? This certainly gets away from finance but it's something to consider. Unfortunately most school aged children I know are not being taught good decision making skills in regard to work/life/finance balance. It's no surprise that they make poor decisions as 18 year olds when they haven't been shown how to do so wisely as children.

[Jane]

FMF - I don't remember feeling uncertainty about saving for college back when we SHOULD have been but weren't...I expect this is because of our own situation (as I said, neither of us went to college, and in fact our own children who did were the first in both families to get degrees) which mainly revolved around the fear that we wouldn't have sufficiently saved for retirement. We both had parents who did not, so that required some help from us and caused us a lot of worry on their behalfs. At the time if someone had told us we should carve off a portion of the money we were saving for our own old age and set it aside for our childrens' educations, we probably would have said that we ARE doing this for our children. We want them to know that we are going to be all right for money and they need not worry for us when we are older. To us THAT seems like a gift, but as I said that perhaps is more important to us because of our situation.

I do want to say, though, that even though we didn't have the money to help them, they all knew they were welcome to live at home while in school (though there were still rules, somewhat more lax than high school but not completely lacking, and they were expected to help out around the house when they had some free time) and we were fortunate to live in a city large enough to have three universities (one state, two private) from which to choose. The bottom line is that although all three knew that we weren't going to be providing for college for them, every kind of moral and emotional support would always be there and they all grew up knowing fully that we were wildly proud of each of them for every accomplishment and were behind them to make sure they wouldn't fall. I like to think that we gave them the support that made it possible for them to go out and do the hard things that turned them into the adults they are.

[FMF]

Jane -

There is certainly a lot to be said for having young adults work hard for their education. I think they value it more. I know I did.

[Bill]

@08graduate

You are making the classic mistake of analyzing the value of college education. You said "If you're admitted to one of the few dozen really elite colleges or universities, you're probably a top-performing high schooler. You are more likely than the average 17-year-old to have a coherent plan for your future". This is likely true.

Your experience tells you that this set of people generally end up being successful in their chosen field, academia, industry, or wherever, again likely true.

You are making the inference that a prestigious college education has a causal effect on their success. This is not supported at all by your experience. I'm not saying your wrong I'm just saying you can't possibly make this conclusion given your information. You can't compare the average outcome of 17 year olds with gifted 17 year olds who go to elite schools and make any statement about the value of elite schools. You need to compare gifted 17 year olds who go to elite schools with gifted 17 year olds admitted to elite schools that choose not to go. This data is notoriously difficult to gather I have yet to see a study that does it well in my opinion.

[Adam - HireMeHigherEd]

This last statement is a game changer for me" or if you withdraw funds not needed for college because the beneficiary has received a scholarship." I have often worried about whether I will save all of this money, and then not need it because my child received more than enough scholarships to cover their costs.

Is this essentially saying that you can withdraw the 529 funds in equivalent amounts to what your child received in scholarships? if so, that would be incredible!

[FMF]

Adam -

Yes, I believe you can withdraw amounts equal to scholarships received.

[Old Limey]

This discussion shows me that in spite of all the progress that has been made since my youth (the 50's) that it is getting harder and harder for many young people to obtain the education they would like than it was in my days.

My father was a fireman and my mother never worked, they never had any investments, as we know it. They never owned a home, and died with just enough to cover their final expenses.

However in 1951, at the age of 17, I graduated from high school and became an aircraft apprentice with a major company. This 5 year indentured apprenticeship put on a path to obtain the British equivalent of a BSc degree in aeronautical engineering at no cost as well as getting paid, and rotating through most of the departments in the company.

This degree and my 5 year's experience then easily got me a job in Canada in 1956 working for their major aircraft company. From there I easily moved to the USA and obtained a job with a US maker of aircraft escape capsules in 1958. It was then that I realized that I needed to get an MS degree if I was to get into the kind of work that I wanted to. That's when in 1960 I sent out my resume to Lockheed Aircraft in Burbank CA, Lockheed Aircraft in Sunnyvale, CA, and Boeing Aircraft in Seattle, WA. Within a few days I received three offers of employment at competitive salaries. I chose Lockheed, Sunnyvale because the brochure they sent me contained a detailed description of the Santa Clara Valley (now Silicon Valley) and I was impressed with the climate and everything that the location offered. Lockheed also offered to pay for me to get an MS degree at a fine university at their expense. I had to make up the time I was at class and ended up getting my MS degree in 1963 at the age of 29. The tuition cost was $30/semester unit at a private Jesuit university.

These two degrees cost me nothing and enabled me to have a very enjoyable and well paid career until I retired in 1992.

Just try to duplicate my experience in today's world.

[Rich Uncle EL]

This is a great post that strikes a nerve with many parents. I battle from time to time on saving for education as well. I look forward to helping out my kids when that time comes for each of them to attend a college or university, but I will not pay for the entire bill. When a responsible older teenager invests their own money and time for education they will feel more obligated to do well in class.

[Apex]

@Bill,

I do agree with you that today's 17 year olds are less mature than they were a few generations ago due to their upbringing. This is both the fault of parents but also of a society that is difficult to combat as they are with "society" in general more than they are with their parents.

However, recent research has shown that the area of the brain that are most responsible for planing, decision making, and risk analysis, namely the prefrontal cortex does not fully develop until at least age 25. I have seen articles other than the one I am posting here that say even to age 30.

http://www.npr.org/templates/story/story.php?storyId=141164708

This is really kind of a shocking discovery as we think of an 18 year old as fully developed but mentally they are not. I often hear people in middle age talk about how they used to be so daring but they have gotten chicken in their "old age." I think most people have had that experience or know people who have. The truth is they have not gotten chicken. Their brain actually fully functions now and they are able to make better decisions about what they are going to do. What used to look like bravery, was actually simply recklessness. They can now assess the risks and make better decisions. Before the brain simply was not factoring in the downside properly but only what looks like the immediate upside and even that upside was probably being over-exaggerated.

Not able to properly assess the downside and over-exaggerating the immediate upside? Kind of sounds like a 17 year old thinking about college doesn't it?

[Apex]

I want to say one more thing on the brain development that I think wasn't clear in my comment. This is not talking about learning. Obviously a 17 year old has much to learn. It is not even talking about maturity as people often don't "grow up" until their 30s or 40s or until they have a kid sometimes. Sometimes never unfortunately.

It is talking about the physical development of the brain. The research isn't showing that it takes time for the person to learn what they need to learn. It is showing something far more fundamental and profound than that. An 18 year old brain is not capable of performing certain assessments that a 30 year old brain is. The 18 year old brain (while it thinks it is superior), is actually an inferior cognitive device to a 30 year old brain. It's like a v-6 engine that is only firing on 4 cylinders. No matter how hard you push it, it can't do what the v-6 can do. It is simply, physically, incapable of measuring up.

This is what is the shocking part. We can't expect a 17 year old to make a fully informed, fully wise decision. His/her brain is not physically capable of doing so yet.

I recall a teacher I had in high school that I absolutely hated. I do not know what prompted this exchange but one day in class he told us all that we were only 16 and we didn't know a thing. He said we wouldn't know a "damn" thing until age 25 and then we wouldn't know much. In my 16 year old wisdom I thought he was a pompous "donkey." I recall the statement he made that day often and with fondness. I wish I had the ability to appreciate it at the time.

[Apex]

@FMF,

I didn't know you were going to post this but thanks for giving this front page exposure. The right decision is different for everyone, but if this can cause some people to think about the topic a little more purposefully then I think that will be of great benefit to them.

[Mike Hunt]

@ Apex- just a comment back to yours... if the brain development only happens by 25 or 30 then why are we putting immature brains behind the wheel, or behind the bar, or in the armed forces. How about voting...?

-Mike

[Old Limey]

Some other comments that you may find interesting.
When I decided to leave high school it was required that I go to see the headmaster of the Boy's Public Grammar school that I attended. My headmaster had an MA from Oxford University. He first asked me what I had planned for a career. I told him that I planned on becoming an engineer. His comment to me was "Why would you ever want to drive a train?". He then went on to encourage me to seek employment in the Civil Service, telling me that I would have a fine career in one of the British Colonies.
He strode around the school in his Cap and Gown and always conducted the Morning Assembly at which any Jews or Catholics waited outside until the morning prayers and hymns were finished. If there had been a troublemaker the day before he would then march the boy in question up onto the platform, in front of the whole school, striking him across the legs with his cane, as he walked down the aisle, and then totally chastizing him for whatever infraction he was guilty of - maybe a school prefect (i.e. upper classman) had caught him smoking in the lavatories. The usual punishment was administered on the hand or the behind using a bamboo cane. The demographics of our school was 1000 boys, 997 Church of England, 2 Catholics, and 1 Jew. People of color didn't exist in my schooldays in England. However it is very different these days since when England gave up its colonies after WWII there was a flood of immigrants from all over the world.

[Mike Hunt]

I think parents ought to be more involved in the decision process to pick a college. I believe paying for a very top tier school may be a worthwhile gamble since attending such a school will open the student up to some great peer connections.

But the second tier schools that charge just as much for a degree with a low track record for job placement... I don't think so.

-Mike

[BH]

We're struggling with the same issue now. My parents paid for college and law school. It was such a huge life advantage for me to start working a high paying job without any student loan debt and I feel like I should pass along that advantage to our child. In addition to a 529 plan, since my husband owns his own business, he pays our son $5000/year for modeling in ads and then puts that amount in a Roth IRA for our son that can be used by him to pay for college.

Anyways, for us, it is less a question of whether to fund a college plan, but how much? I'm curious what other amount other people are committed to paying 100% of college costs are saving per kid.

[Mr. Everyday Dollar]

Great post. I was responsible for bearing the cost of my college education so I chose a school that was good, not great, but good and also affordable.

I had the option to go to various schools and chose the least expensive one (after financial aid) that both fit me personally and had the academic programs I was most interested in.

I wound up with $4,500 in school loans when I graduated and was able to repay that money fairly quickly.

This put me financially ahead of many friends, still paying off tens of thousands in school loans, because I was able to save and invest out of the gate, taking advantage of compounding!

If I have kids, I'm not sure if I'll sock money away in a 529 for them. What I witnessed were college friends on their parents dime took their education less seriously.

[Apex]

@08graduate

Two excerpts below from your comment:

"If you're admitted to one of the few dozen really elite colleges or universities, you're probably a top-performing high schooler. You are more likely than the average 17-year-old to have a coherent plan for your future, and to make the most of the opportunities a top college can provide. For such teenagers, I think turning down Harvard/Stanford/Columbia/MIT/etc (or their smaller counterparts Williams/Pomona/Carleton/Harvey Mudd/etc) in favor of the full-ride merit scholarship at State U tends to be pound-foolish."

"You could say we all would have been equally well off with a less prestigious school, and you might be right, but can you prove it?"

Someone already did the research and basically did prove it:

http://economix.blogs.nytimes.com/2011/02/21/revisiting-the-value-of-elite-colleges/

You are correct that someone who can get admitted to an elite school is a top performer who is taking their education and future prospects very seriously. The research in the link I posted controlled for exactly that. Rather than looking just at test scores they examined students who applied to and got accepted at top elite schools but then choose not to go there but rather to attend a less prestigious school instead.

What they found was that after controlling for the ability to get accepted at an elite school, the advantages of an elite school completely disappeared. If you were good enough to get accepted that's all that mattered, actually going no longer made a difference. Any school that you now went to and applied yourself to would result in the same outcomes over your life as the students who did go to the elite schools.

And actually it went even further than that. If you were ambitious enough to apply to elite schools and think you might be able to get in but got turned down, that was still enough to make your outcomes just as good as the people who actually attended an elite school.

There are certain career paths that to my understanding are only possible if you attend certain top elite schools because all the companies recruit almost exclusively from those schools. In those cases the elite school means everything. It would seem if that is not the case then the elite school is mostly just bragging rights. That's what the research seems to show anyway.

[Apex]

@Mike,

Hey now, you are talking controversial stuff there. :) But I don't disagree. The more I know about brain development the more is scares me to death to put my kids behind the wheel.

I will let you draw your own conclusions on youth voting.

As far as the armed forces it could certainly be argued that they are not fully understanding what they are signing up for. I suspect that is true. It probably also helps the armed forces too though. There is a reason they want 18-25 year olds in the infantry. Yes they are the most physically capable. But they are also the ones most willing to charge ahead into battle and take risks that older men might be a little more reserved about.

I certainly do not want to disparage any older military personnel who might read that the wrong way. I am sure the training and the devotion to the country and to your fellow soldiers is a far more powerful than anything else. But I think it is the case that an 18 year old's lack of risk assessment ability makes him on average a better soldier than a 40 year old. It would make him a horrible General, but a good soldier.

[08graduate]

@Apex That's interesting research, thanks for the link. This part seems like an important caveat, though:

'From my perspective, the main limitation of the paper is that even its less elite colleges, like Penn State, are relatively elite. (A full list of the colleges whose graduates were part of the study appears below.) That doesn’t call into question the findings of the paper. It’s still deeply surprising that choosing to go to, say, Xavier instead of Columbia may not affect your future earnings.'

[08graduate]

@Bill

You are making the inference that a prestigious college education has a causal effect on their success. This is not supported at all by your experience.'

I agree. I was intending to say that in the absence of hard evidence, my personal experience strongly suggests a causal link. The research Apex mentioned may trump that. I'm going to read the original paper tonight to get a better idea.

[Apex]

@08graduate,

Yes that is a good point. I certainly don't think all universities are created equal nor was I trying to suggest that. There must be some differences in quality between some of them. The real question is when comparing schools is #1 or #3 way better than #50 or #100. And is private elite way better than a known good public school. And the answer appears to be that the differences there are negligible.

The other thing that I think matters is peers and networking. The elite schools are going to have a network of very successful people. Even other top public universities are not going to have nearly as rich a network of success. Success can both rub off on you and you can leverage your contacts after graduation if you are good at the networking affect.

The reverse could also be true at a really weak university. When so many people are going there and just going through the motions, it would be much easier to get their failure dragging you down as you are surrounded by it.

So I certainly don't dismiss those affects. To be honest with you it is surprising that when compared to less elite schools that the peer effect and the networking effect seemed to have no measurable impact after controlling for applying to an elite school.

I think the take away for me would be go to a very good school for the field you want to study. It doesn't have to be private. It doesn't have to be top elite. It doesn't have to be expensive. It just needs to be good. But if you go to a poor or mediocre school, well expect mediocre results.

[Tim]

Allow me to offer some perspective from the trenches.

My daughter is a sophomore in an engineering discipline at a top ranked engineering school (state school, but out of state for me). My son is a high school senior interested in studying engineering also. I have visited TOO MANY colleges in the past few years.

I have expressed to each of my children that the goal of going to college is not "find themselves" or to "have the college experience" but simply to better prepare themselves to become a productive member of society. They should choose a major in which they have an interest, and hopefully, a passion but one that can support them after they graduate.

We committed long ago to paying 100% of our children's tuition. We managed to save roughly 50% of that for each child in 529 plans. I think that was a reasonable goal. We cash flowed my daughter's first two years and will rely on the 529 for the last two (while we pay my son's first two). No, we are not wealthy; just committed to our children starting life debt free. They understand this and appreciate our sacrifice.

I agree with most of APEX's comments. While I agree also that most high achieving children will become high acieving adults, there is something to be said for a strong career services department and an alumni network.

Find out from the school how many and which companies recruited there last year. Were there Major specific career fairs? How hands on are the department heads? Do they know their students? How many students in their proposed major received internships/Co-ops? Good schools can answer these questions. My daughter had an internship offer her freshman year and multiple offers this year.

My son is currently torn between going to the same school as his sister where the engineering program he wants is highly ranked, focused on student placement and has a vibrant alumni network or to a small, private, lesser known school with a good local reputation. Because of scholarships the private school will cost about $6000 less per year. I am pushing him to the larger University because I think it will present better opportunities now and in the future.

[Mc]

I totally agree with Apex's comments. The biggest mistakes are families thinking that they must pay for an elite school, and that graduating from an elite school will translate into automatic success. Another big mistake is parents not encouraging young women students to study and work towards a viable career path.

[jim]

Lots of good points from Apex.

I think for the elite schools such as Harvard it depends on what the actual situation is.
First I agree that the cost of an elite private school like Harvard isn't necessarily 'better' enough to warrant spending a lot more than a very good public school. e.g. On a pure ROI basis I'd absolutely pick Berkeley over Harvard.
99% of us can't get into those schools so its not really worth spending too much time debating it. For the 1% of people who do get accepted then it depends on the situation. First, whats the financial situation? Ivy level schools generally have VERY generous aid if you aren't high income. Its easy to get a free ride at those schools if you have financial need. If you're rich and smart then you may be faced with the choice of going to an elite ivy and paying a little more but you're rich so you can afford to do it if you want. Of course you want to pick the right school for your intended career. Engineers should probably go to MIT over Harvard and future politicians might prefer Harvard over MIT.
I'm hard pressed to think of a situation where turning down Harvard makes sense. Whats that scenario??

I think its more important to discuss public versus private in general. Theres a lot of kids going to relatively obscure medium quality private schools and spending 2-3 times as much as what they'd spend at a similar quality public school. That happens a lot more often than people deciding to go to Harvard or not. I know people in my own life who did just that. A friend thought that if he went to the local private school that people would just throw jobs at him because he went to such a great school. Nope.

[jim]

Old Limey said : "it is getting harder and harder for many young people to obtain the education they would like than it was in my days."

About 5 times as many people have college degrees now compared to the 1950's.

It doesn't appear harder to get education now than it was in your day at all.

Most today kids do go to college. 68% of the high school graduates for 2011 were enrolled in college in 2011. Many will drop out but around 60% of them will have degrees by '17. That would result in 40% of the 2011 high school grads getting bachelors in short term. A small % more will obtain degrees later in life.

[jim]

Couple other reasons 529's can be bad :

1. theres generally better tax incentives from tax credits. The American Opportunity Tax credit pays up to $2500 credit right now.
2. Having money in a 529 hurts you more on financial aid application. That money is considered an asset and they expect you to use it to pay for college. If you put the same amount in a 401k it would not be considered in the financial aid application.

[FMF]

Jim -

#2 assumes you do one or the other. Personally, we max out my 401k and contribute to a 529 in addition to that.

[Retire By 40]

I also prioritize 401k over the 529. If we can't max out the 401k, then we'll skip contributing to the 529 that year.
Our college degrees are the reason why we are relative well off today. For that reason alone, I would push my child to attend a university.
However, I would hesitate for him to go into a big debt to attend an Ivy league college. There are many alternatives and Apex is right. Kids usually choose college for the wrong reasons. We'll work with him when the time come. If we have to, he can go to a local college for two years while living at home.
I still think a degree is essential, but the particular school doesn't really matter much to me. I'll have to do more research in 16 years or so.

[Matt]

These are random thoughts and my observations and what I have learned about college.

Not only are 17 year olds not equipped to make college decisions, sometimes the parents are even more ignorant. We have a friend who nephew is spending some of his college money to play hockey on a minor league team and his parents do not see anything wrong with this. When I told them it was illegal and he could be fined $20k they gave me a dumb look of really? If you use your college loans or grant money for anything other than college you are in violation of the loan and grant agreement.

College IS a big business and run like that. They market, recruit , incentive and persuade you to go there. Ever since the government and lending institutions got into the act the cost of college skyrocketed. They all believe in giving little Johnny and Susie a chance at the big college but not the resources to succeed so they fail and are in debt. Little Johnny and Suzie should have went to community college and built there skillset, in some cases matured a little and then attended university when they are serious.

Harvard will no longer be accepting AP classes from high schools. Why? Because they are losing money. What a surprize!!!. When Harvard starts this I suspect other colleges will follow Harvard. Enjoy those AP credits now. My son took AP Calculus and got a 5 on the exam and placed out of Calculus 1 in college.( saving me 4 credit hours of tuition) My son was in AP Physics but switched it was too hard and after talking to the college admissions they said the AP Physics would not count for his program even if he passed with a 5 because it would not have been Calculus based Physics.( I have to take Calculus based Physics in college and we did not use a stich of Calculus in the class) I am glad he did not waste his time and our money taking the AP test.

Colleges are also getting smart in that they making the curriculum dependent on other classes. In order for you to take C you first have to have A which is offered at a Community College but you still have to take B which is offered only at their college. Prior you could take A and go directly into C but the college still wants to get its money. In some degrees going to 2 years at Community college will not shave off two years of your 4 year degree. It may shave off one , maybe one and a half.

You can get plenty of college money but the current rates are 3.4% for subsidized and 6.8% for unsubsidized. Ummm yeah. I can get a new car loan for 1.74% through my credit union and college loans are UNFORGIVABLE DEBT in which bankruptcy will not get rid of it.

As for the people who have college degrees and have jobs unrelated to their degree if you talk to the college it is there fault. Where does a college think like this? Most people are not marketers and sellers they are good cogs in a machine. The people who know how to market themselves and their degree and land a job in their field of study are the winners. People who don’t know how to market themselves are the people who take any job they can get because they are in sooo much debt and there degree is rendered useless. Hence my term "useless degree"

People who don't have to do this quite so aggressively are people in the Science and Research, Technology, Engineers, Medical. Humm aren’t these the fields the media is talking about growing and in high demand and maybe because there field of study is so specific and narrower while that communications, business or humanities degree is too broad. Maybe that is why they are the ones having issues finding jobs? Not specific enough.

[Old Limey]

@Jim
Instead of saying "It's harder and harder for many young people to obtain the education they desire", it would have been more accurate for me to say that "It's getting more and more expensive for them to obtain the education they desire".

A recent statistic from Bloomberg News Service states:

The cost of a college degree in the United States has increased "12 fold" over the past 30 years, far outpacing the price inflation of consumer goods, medical expenses and food.

“Soaring tuition and shrinking incomes are making college less and less affordable,” Sen. Tom Harkin (D-IA), chairman of the Senate Health, Education, Labor and Pensions Committee, told Bloomberg. “For millions of young people, rising college costs are putting the American dream on hold, or out of reach.” Indeed, as tuition costs continue to rise and the national student loan debt hits $1 trillion, some people have been left wondering if college is even worth it anymore.

My daughter obtained her Business degree from our local California State University while living at home between 1978 and 1981 and paid all of the expenses for her books, tuition, and sorority membership out of her earnings at a car wash and from housecleaning jobs. She also bought an old Honda Civic from me with a zero interest loan and never missed a payment. She is now 52 and I just checked her two Fidelity accounts that I manage for her and as of today they are worth $2,916,797.

[Mike Hunt]

@Apex: I enjoy reading your replies, they are very logical and you make very convincing arguments.

-Mike

[08graduate]

@Apex

The link the NYT provides doesn't work, but the paper can be found here:

http://www.econstor.eu/bitstream/10419/51889/1/664668143.pdf

I've skimmed it, and while I could rattle off a few quibbles, I basically think it's sound within its scope.

As the authors and the journalist acknowledge, though, that's a big limitation. Everyone in this study population went to a top or near-top school, with lots of resources, quality professors, strong networks, and relatively high tuition. It doesn't tell us anything about the potential downsides of minimizing costs more dramatically. You and I seem to be in agreement that those downsides might be large, especially for high-caliber students, which was my original point.

[Kevin]

Wow, great post and great comments. Thanks for the insight here. We have two very young kids (9 mos and 4 years old) and I have 529s for both. After maxing out 401k's, this makes sense for us since my state (Indiana) offers a tax CREDIT of 20% (up to $1,000). So I look at it as a guaranteed 20% gain on what I put in every year ($2500 for each kid). If the state did away with that credit, I would significantly decrease contributions. Given that I started the plan for our 4 year old in 2008, that account has done quite well so far.

Thanks again for all the insight.

[Apex]

@Mike Hunt

Aw shucks [blush].

Thank you for the compliment. I do appreciate it.

[Apex]

@08graduate,

I agree that the school selection in the study was somewhat limited. It would have been nice to have a more expansive study. However I looked up some of the tuition rates of some of the schools in the study.

Penn State: 15.5K in state
University of Michigan: 20.5K in state
Miami University: 13K in state

University of Pennsylvania: 43.5K
Northwestern University: 43.5K

That is a huge disparity.

The thing is You can replace Penn State or Miami University with University of Wisconsin, University of Minnesota or a whole host of very good public universities from various states and I would expect the exact same results as we see here for Penn State, Miami U etc (In fact U of Minnesota and U of Wisconsin are generally rated better schools than those two in most areas).

So while the study results are limited they sample some schools that are representative of top public schools from a whole host of states and they find that top students who choose these universities do just as well and it looks like it's at about 1/3 the cost for tuition.

So while I do agree that going down the quality scale could cost you, I do not agree with your other assessment about the downsides of minimizing costs.

Cost is a poor assessment of school quality because public schools are highly subsidized by the states they reside in for in state residents. And many public universities are highly rated. A resident of those states choosing to go to say U of Penn rather than penn state simply because of the name is spending an extra 28K per year (112K extra in 4) than they need to in order to get the same end results according to this study.

Cost always matters.

Here is an interesting thought exercise. What are the two areas that in the last few decades we have reached a general mindset in this country that cost doesn't matter. That we must pay any cost to get the best service no matter what? ..... Education and Health Care. What are the two areas of the economy that have the highest inflation and have continued to have it for the last few decades? ..... Education and Health Care.

It's not a coicidence. Not even remotely so. Cost always matters. If we act like it doesn't, then the economics quit working and we get the inflation we have now in both of those fields.

Education is beyond the saturation point. We have too many people getting college degrees. The study I pointed to in my original comment that FMF started this post with shows that. 41 million college degrees fighting for 28 million jobs that require college degrees.

And we lament the high costs of Education and the most common solution proposed is more aid for education.

This results in a couple things:

1. A greater amount of money and demand for degrees - Econ 101 = higher cost of a degree.
2. A greater supply of degree holders for a job pool that does not demand the greater supply of degrees. This means more qualified people to choose from per available job - Econ 101 = lower pay for the job.

Response: This is problem. This is cutting off the American dream (see Old Limey's quote of Senator Harkin above). We need to increase aid for education.

Lather, rinse, repeat.

Cost always matters. I can't do anything about the government screwing up the cost curve in education. But if they are going to screw it up I can at least choose good public schools that are bending the cost curve in my direction.

[08graduate]

@Apex

If you look at out-of-state tuition, that gap shrinks or vanishes. The University of Michigan costs more than 50K! For people who live in a state with an Ann Arbor or a Miami or a Madison, yes, the price is pretty compelling. When you say these are representative of flagship public universities around the country, though, I'm not convinced.

Another thing to consider, also called out by Dale and Krueger, is that education is not one-size-fits-all. It could be that students in this study are generally pretty good at selecting the school that will provide the most value for them. You have to agree that Bryn Mawr and Penn State are very different experiences. If you sent the people who went to Bryn Mawr to Penn State instead, or vice versa, they might do much worse. In that case, the Bryn Mawr students are still getting a good value even though they're paying 3x as much for "the same" results (regressed against the model). The study wouldn't show us that.

As for the rest of your post, I completely agree that too many people are getting degrees, in part due to subsidies. I also agree that cost matters, and that excessive demand is driving cost growth in education. None of that seems pertinent to the conversation I think we've been having, which is about value.

[Old Limey]

Just in my lifetime in the USA, 1960 and onwards, there have been very dramatic changes in the goods that America manufactures. We used to have a textile industry - that's gone completely as have many other fields that employed millions of workers. Where I live in California we used to have a gigantic General Motors plant and a large Ford Motors plant. The Hi-Tech industry used to employ thousands of workers in high paid jobs in clean rooms in the semiconducter field - they're gone.

The consequence is that the young people see no alternative to having a well paying job during their lifetime than getting a college degree, even though many of them really aren't college material and pick majors that aren't sought after by employers. Meanwhile I see large numbers of well educated and very smart Indian workers and their families that have come to this area under the H1B visa program to grab loads of the top jobs. Even Apple computer with its fantastic recent successes doesn't manufacture their products here as they used to. Now they are all made in Taiwan at the huge FOXCONN installation, along with the hi-tech products of many other US companies.

If I had just arrived here rather than arriving in 1960 there's no way I would have had a successful life. For one thing the Cold War has been over for well over 20 years and the plant that I used to work in, that made nuclear missiles and satellite systems has shrunk from over 35,000 workers at the peak to about 5,000 today.

One's success or failure in life is very much a factor of timing. If you are in the right place, at the right time, with the right qualifications everything can turn out "peachy" for you. However, change one of those requirements and you can be one of the many unemployed facing a dismal future. A friend of my wife has a son-in-law that was recently laid off from his Hi-Tech manager's job at the age of 50. He thought he was helping his company when they asked him to start training a much younger person to do the kind of work that he did. He even took the young man on his business trips overseas to show him the ropes. He has now sent out over 200 resumes and is still out of work. Being middle aged with a high salary these days can be a deadly combination.

[Apex]

@Old Limey,

I think that is some very astute analysis. You have seen a lot in your lifetime and the glory days of USA employment and productivity are in the past. I don't know if we can get them back or not but it currently does not look promising.

Given that, it is not surprising as you say that people see minimal prospects and thus they chase the college promise. But college degrees don't create jobs that require them simply because the degrees exist and thus the promise cannot be fulfilled.

The competition from out-sourced labor and bringing labor in via H1-B visas creates a difficult employment picture for many.

Unfortunately while I can see the problem pretty clearly, I don't know what the solution should be. Unfortunately I only know what it will not be. It will not be more students going to get degrees for which there are not any extra jobs. It will not be more aid for students to go get such degrees. And it will not be simply going to an expensive school or grad school to get a pedigree.

In a global world where borders and boundaries are being ripped down at an amazing rate, America's competitive advantage has been minimized. We can no longer justify wages that vastly exceed those of the rest of the world. As such I think our middle class will continue to struggle because we aren't worth what we used to be.

Crowd sourcing is a classic example. I can get anyone in the world to build me a complete website for a few hundred bucks and it will be better than I could build myself, and I am an IT person.

It is in this kind of world where the college degree is worth less (not worthless) and costs more every year that its value continues to be more questionable. The choices are very big and very difficult and a poor choice could be disastrous. It is a bit frightening how crucial it is that this choice be made well and very sad and tragic how many are not choosing well.

[Apex]

@Old Limey,

I think that is some very astute analysis. You have seen a lot in your lifetime and the glory days of USA employment and productivity are in the past. I don't know if we can get them back or not but it currently does not look promising.

Given that, it is not surprising as you say that people see minimal prospects and thus they chase the college promise. But college degrees don't create jobs that require them simply because the degrees exist and thus the promise cannot be fulfilled.

The competition from out-sourced labor and bringing labor in via H1-B visas creates a difficult employment picture for many.

Unfortunately while I can see the problem pretty clearly, I don't know what the solution should be. Unfortunately I only know what it will not be. It will not be more students going to get degrees for which there are not any extra jobs. It will not be more aid for students to go get such degrees. And it will not be simply going to an expensive school or grad school to get a pedigree.

In a global world where borders and boundaries are being ripped down at an amazing rate, America's competitive advantage has been minimized. We can no longer justify wages that vastly exceed those of the rest of the world. As such I think our middle class will continue to struggle because we aren't worth what we used to be.

Crowd sourcing is a classic example. I can get anyone in the world to build me a complete website for a few hundred bucks and it will be better than I could build myself, and I am an IT person.

It is in this kind of world where the college degree is worth less (not worthless) and costs more every year that its value continues to be more questionable. The choices are very big and very difficult and a poor choice could be disastrous. It is a bit frightening how crucial it is that this choice be made well and very sad and tragic how many are not choosing well.

[Apex]

oops, I guess a hung browser can still submit a comment.

[jim]

Limey, Yes college is certainly more and more expensive. But I don't think it really results in it being 'harder' to get a degree. Its harder to pay off the debt after the fact.

I do think the college debt levels aren't the national tragedy that some people act like. Average debts are in the $25-30k range and thats similar to buying a new car. I think the bigger problem is all the people getting useless degrees.

Yes its also very unforutnate that the turn the American economy has taken in the past 30 years. Our nation is seeing the middle class dying and our social mobility is poor compared to other industrial nations.

[Apex]

@Jim,

If you have a good degree in a good field and are good enough to get a good job then I agree that 30K in college debt is very manageable. It would be nice not to have it but all things being equal it is easily "good debt"

I also agree that the useless degrees are a much bigger problem. Unfortunately the two are often combined and often times the useless degree is actually combined with 50K+ of college debt especially if they went to an expensive private school thinking that was more important than the degree. When you combine all the people with useless degrees that have 25-50K of college debt on top of it, that is a growing problem that we should try to prevent from getting worse rather than offering more aid and lower interest on students loans which will only encourage more of the exact thing that we don't want.

The person with 25K college debt and a 75K job you don't hear about because that debt is not at all a problem for them. The thousands you hear about are usually the ones with the useless degrees and the big debts.

Which is more cruel, to deny a student the opportunity to fund such a degree with debt or to allow them to get the degree and then suffer with the debt that they will have no means to pay back?

Every thing in our society and aid system says the former is a tragedy and that is the real problem. Until that is fixed the latter will continue to get worse.

[Bill]

@Matt

I think you are wrong about the reasoning for Harvard not accepting AP credits. They are not charging by credit hour and they aren't going to make any more in the end by requiring students to take freshmen level courses at their university.

When I went to school 12 years ago they did not except any AP courses for credit. The reason was that the AP courses are simply not as thorough or well taught as the college basic level courses. From my experience I agree with that, my AP courses did not compare with what I got at school. I'm actually surprised that Harvard was still giving credit at all for AP.