I’m not sure that a college education is worth it anymore.
Don’t misunderstand me, I believe in higher education and know without any doubt it has tremendous value. The question for me now is whether the value one extracts from it is any longer worth the price you pay to obtain it.
For a couple generations now, we have driven our children to view post-secondary education as a foregone conclusion. Statistics about future earnings potential coupled with the more complex world we live in have convinced millions that the true and only pathway to success in life is receiving a college education.
For many, that is indeed true. But increasingly, universities are packed with listless, immature teenagers not prepared to be on their own, with no specific field of study, going to college simply because it was expected of them.
In my time at the University of Maine, I knew many such people. Friends and acquaintances who didn’t figure out what they wanted to do until they were juniors or even seniors and struggled academically. Many of these people simply didn’t belong in college, at least at the time.
And it is okay to not go to college. Employers care about skills, industry experience, work ethic, and personality traits. Many people are finding, myself included, that once they enter the workforce, prospective employers are not even asking about their undergraduate years. Yes, in some fields where a degree is akin to professional certification, asking is necessary, but in most industries it happens far less than you think.
And with good reason. I have hired some of the most fabulously successful academic achievers you will ever meet who, it turns out, could barely turn on a computer, and I have brought on people with no college education who are among the most driven, successful people you will ever know.
That is why you have seen people like Peter Thiel, the co-founder of Paypal, create fellowships that would pay dozens of students $100,000 not to attend college for two years, and instead work on scientific and technical innovations with a team of mentors.
It is apprenticeship that is the true driver of competence for so many of us, and that happens after college.
But even those who belong in college are participants in a broken system.
We are currently living through an exponentially inflating higher education bubble, which (like the housing bubble) is driven by a destruction of the market and an overabundance of free and never-ending credit.
Functioning markets are quite simple. Supply and demand create a general equilibrium whereby price is set by consumer choice. Limited resources among consumers mean that they will be mindful of cost, and suppliers will have to respond and compete.
In higher education, limited resources used to be driven by difficulty affording college. Given the societal importance we have placed on continuing our education, policymakers, with the absolute best of intentions, have sought to make the experience of going to college easier by subsidizing schools and expanding access to loans. A noble goal.
Unfortunately for us, the education market has now been perverted and no longer resembles a market at all. Those shopping for an education — students — do not have to suffer through limited resources as they decide what college to attend anymore and are free to make economically mindless decisions. It is only after they leave college that a student’s limited resources come into play.
Credit is so available to young people today that when presented two schools that are tens of thousands of dollars apart in tuition (or more) a student can feel secure in picking whichever one had the better football team and can worry about paying it back later.
Without limited resources causing students to be highly selective and demand lower costs, educational institutions feel no pressure to deliver lower costs or compete with one another.
There is no incentive to not build the new $5 million building on campus. No incentive to spend 10 percent less on faculty salaries. No incentive to innovate to provide more value for less cost. Downward pressure on price therefore becomes virtually non-existent, and naturally, they rise.
In a report for the Federal Reserve Bank of New York, economists David Lucca, Taylor Nadauld, and Karen Shen discovered that for every additional dollar spent on Direct Subsidized Loans, tuition increases by 65 cents.
And who are the losers in the situation? College students, who now hold tens, if not hundreds, of thousands of dollars of debt after being promised that going into that debt would lead to a better life.
Sadly, nothing will truly change in the system until a college education simply becomes so expensive that it is so obviously not worth it that consumer behavior changes and colleges start to see declining enrollment and pickier consumers.
But that moment is coming — and coming quickly.