Unfortunately, the world we currently live in puts so much importance on higher education, as it was such an important thing when our parents and possibly grandparents grew up. But the fact that everybody these days has a university or college undergraduate (bachelors) degree, makes many pursue a graduate (Masters or PhD) degree in order to stand out from the crowd. But the biggest problem in this day and age is the cost of such degrees, with students taking on huge student loans in order to get the degree, which they then have to pay off over many years. And if that wasn’t bad enough, the costs seem to be increasing every year, so when the National Inflation Association [NIA] (aka Inflation US) came out with their latest documentary about it, I decided its about time to do a write up about my thoughts, so enjoy.
After watching the documentary, I remembered the student riots in the UK at the end of last year because they decided to triple university tuition (top up fees) from 3 thousand to 9 thousand pounds, as well as the credit card documentaries (In Debt We Trust, Maxed Out) I’ve watched over the years showing how much credit card debt university students were on the hook for after graduating, and the interview Peter Schiff did with Kelli Space, a 23-year old woman with a $200,000 student loan debt for a bachelors degree in sociology. So for me, when I hear people say “everybody needs to go to university”, I say “no”, because having that piece of paper doesn’t necessarily mean your going to get a better job. You could easily take courses and get a certificate in order to get a number of jobs, which wouldn’t require you to go to university. You could take an internship in a company that you would like to work for and learn hands on what type of work you wanted to get into. And if that piece of paper is going to have you in debt for years or is being shouldered by your parents who had to either save up for years or have taken on a loan for it, I’d have to ask you to think hard whether the cost outweighs the benefits.
The other issue that I have a problem with is the notion that as soon as a student finishes high school, they should jump straight to university. The student just went through 12 or more years of education, why not take a break and figure what you want to do with your life, as so many people dont know what they want to be when they get into university, and go there to discover themselves. It was refreshing to stumble upon a Yahoo Finances’ Tech Ticker program where they interviewed a guy who wrote a blog post entitled ‘8 Alternatives to College’. What also comes to mind is Robert Kiyosaki statements that they don’t teach you any real financial education during your schooling years or in university, as it highly unlikely your going to get it from your parents. I believe that’s why so many students get racked up with credit card debt, as they haven’t even learnt how money works in the real world, where by institutions (banks, etc) lend you money in order to get a whole lot more money back from you (interest/riba). Robert also states that we have been brainwashed to think we should go to school and get a safe cozy job, rather than starting your own business and being an entrepreneur.
Unfortunately, college has become a lifestyle change for high school graduates as they move away from home and are learning to be independent, but with so little financial educational experience they are doomed to fall into more debt. That’s why I like financial education talk show hosts like Dave Ramsey and Suze Orman who attempts to help people with their radio and TV shows, though I don’t always agree with whatever they say which includes gold and insurance.
As an ending, I’ll give you what my favourite economists/investor Peter Schiff recently said on the May 13th episode of his show [70:46-72:30] “By the time your oldest is going to college 9 or 10 years from now, we might not have this problem. The whole educational bubble might have already burst. Hopefully it will have. I think that kids should go to college who have the aptitude for it and who will really benefit from the knowledge and experience. Right now everybody goes to college whether your smart, whether you will benefit from it and so we have had to dumb down the curriculum so that everybody can go and now that everybody goes, and everybody gets a degree, the degree is meaningless. If we get the government out of education, 1] the price will collapse, but 2] not as many people will go to college even though its less expensive and that is a good thing. Because they will do something more productive with their time and i think they will end up making more money because they learned a trade than with a college degree. … I think people will benefit from not going to college who never should have gone and I think the people who do go will get more out of that degree because a] it will be a more valuable degree because not everyone would have one and b] the curriculum would be harder and more challenging, they will learn more, so they will be better prepared for whatever career they are pursuing.” For more of Peter’s opinion on this subject, you can check out his May 17th [54:10-57:50] (internship, certificates, corrupt education system) and May 18th [63:10-67:23] (scam of college textbooks) episodes of his show. Below is a video I stumbled upon while writing this blog post, and it could have easily been used as the main video for this post entitled ‘Price of Admission: America’s College Debt Crisis’.
Videos
Russia Today [RT] Videos – I Majored in Debt [Jul 2010], Student debt bubble about to explode [Sep 2010], US students helpless to pay off education [Sep 2010], US college nightmare – [Oct 2010], American colleges – useless? [Feb 2011]
Peter Schiff Videos – Why College Tuitions Are So Expensive [May 2009], Let the Schools and Universities go Banckrupt [Jun 2009], How government programs drive up college tuitions [Oct 2009]
TV Report Videos – College Tuition Rising As Economy Sinks – AP [Dec 2008], ABC 20/20 – College is a Rip Off [Jan 2009]
Financial Show Videos – The Suze Show – Student Loans, Dave Ramsey – Consequences of Student Debt
Default: the Student Loan Documentary – [5 mins] Trailer for a 27-minute documentary (2009) about the stories of borrowers from different backgrounds affected by the student lending industry and their struggles to change the system. Check out their website and blog.
15 year old Tells Establishment to Stick it – [5 mins] Young boy expresses his thoughts of the first demonstration he attended in London.
Does America Really Need More College Grads? – [3 mins] – George Leef (John William Pope Center for Higher Education Policy) discusses some common misconceptions about the need for increased numbers of college graduates.
College Graduates in Shock, Regarding Sudden Disappearance of Good Jobs – [3 min] NIA’s George talks with a recent college grad experiencing shock and awe with regards to the current job climate in California (August 2010).
College Conspiracy: The Knowledge Based Revolution is On – [3 min] NIA’s George reviews NIA’s College Conspiracy
Why College Tuition has Doubled Inflation / Facts + Economic Science = Common Sense – [4 min] Discusses how the government is involved in the college tuition bubble, female with 250k student loan, and college staff/facility expansions.
The Higher Education Bubble [Yt] – [1 hr 23 mins] The Clemson Institute for the Study of Capitalism presents the Fall 2010 Pope Lecture: The Higher Education Bubble and What Comes Next by Glenn Harlan Reynolds, Professor of Law at the University of Tennessee.
Other Videos – College Debt Story, Student Debt: Denying the American Dream, Student Loan Debt Surpasses Credit Card Debt Via CBS Channel 4, Student Loan Debt Exceeds Credit Card Debt Nationwide, Valedictorian Speaks Out Against School, A Worthless College Degree (comedy skit)
Articles
College Bubble Set to Burst in 2011 – Inflation.US – Jan 12, 2011
“The National Inflation Association believes that the United States has a college education bubble that is set to burst beginning in mid-2011. This bursting bubble will have effects that are even more far-reaching than the bursting of the Real Estate bubble in 2006. College education could possibly be the largest scam in U.S. history.”
University of California students protest 32 percent tuition increase – CNN – Nov 19, 2009
“Angry students at the Davis, California, branch of the University of California refused to vacate the school’s administration building Thursday evening in a show of defiance and protest over a 32-percent undergraduate tuition hike instituted by the California Board of Regents earlier in the day.”
Books
The Student Loan Scam: The Most Oppressive Debt in U.S. History and How We Can Fight Back – Alan Collinge [184 pages]
“Think credit-card debt is a problem? Take a look at the lives ruined through the corporate thug tactics, usurious fees and vicious harassment employed by some of the nation’s largest student-loan providers”
College Is For Suckers: The FIRST College Guide You Should Read – April Norhanian [352 pages]
“reveals colleges to be profit-obsessed businesses best approached with the wariness reserved for used-car salesmen. … it shows how universities trap students into high costs and unmanageable debt.”
Websites
CollegeIsForSuckers.com, MyDebtStory.com, StudentLoanJustice.org, CollegeDebtCrisis.CNBC.com
In my opinion we should differentiate between warning against issues related to education these days and not warn against the education itself, you contradict yourself when you say “the fact that everybody these days has a university or college undergraduate (bachelors) degree, makes many pursue a graduate (Masters or PhD) degree in order to stand out from the crowd”, and on the other hand you say “having that piece of paper doesn’t necessarily mean your going to get a better job. You could easily take courses and get a certificate in order to get a number of jobs, which wouldn’t require you to go to university”. I think we all would love to believe the fantasy that universities are irrelevant but the reality is that companies want different kind of employees with different sort of talents and the only way for those companies to know that you do have these talents is that piece of paper. The system is corrupt for sure, just like everything else that deals with money.
In regard to high school students going directly to the university or taking some time off, well in my opinion the only place were you can have a chance to discover what you want to major in is in fact the first year of the university, going on vacation is not a bad idea, but lets not act as if it is the solution for an undecided high school student to know what career to dive into.
In the end i believe that the most important thing is financial self education to avoid getting trapped.
I think this is a great article. I have many friends (and family members) who even as middle-aged individuals frequently revert back to “I should go back to school” as their default mentality. It’s a frustrating thing to watch, with the infinite number of resources available to avail yourself of some of the finest educators in the world for free (e.g. iTunes U, etc.). Why not start a business? Learn something on your own? Read some books? Learn to invest!
Schools teach people to be ‘compliant workers‘ (as stated by Seth Godin). We don’t need compliant workers, we need workers who can think for themselves and build things that add value to peoples lives, not more people with $200K of student load debt to end up with a sociology degree so you can live on food stamps.
So true, thats why i always remember kiyosaki saying that education is teaching people to be workers (aka slaves) rather than entrepreneurs (aka masters/bosses). There are so many good online educational resources like khan academy, islamic online university, MIT, and university of the people, that are free or close to free, that one can expand their knowledge without forking over thousands of dollars.