Wednesday, 4 April 2012

08:14 – I see that student loan debt has now passed $1 trillion. That’s about $3,000 for every man, woman, and child, more than automobile loans and credit-card debt. Something has to give, and soon. The average college graduate now owes $25,000 on leaving college, where many find themselves unemployed, if not effectively unemployable. We don’t need any more people with degrees in history or English or sociology, so why do we continue to produce a massive flood of them at such crippling cost?

The Big Lie is that a college degree results in lifetime earnings that are more than enough to pay the cost of that college degree. That’s true on average, but the devil is in the details. For one thing, it ignores the time value of money, not to mention the time value of time. And it ignores the fact that the value of college degree is strongly influenced by the field in which one obtains that degree. Getting a degree in English, for example, is a losing proposition. One comes out of college having wasted four years and owing $25,000 on average, not to mention the costs that student and his family have paid themselves. The reality is that that English major starts out down four years of wasted time and, conservatively, $100,000. Better to have spent those four years working and kept the $100,000 in his pocket.

Finally, there’s the huge factor that no one ever takes into account. Ability and work ethic. Those who go to college are, on average, significantly brighter and harder working than those who do not. Comparing lifetime earnings of those who were bright enough and hard-working enough to get a college degree to those who were not ignores the fact that that cohort who get college degrees would certainly have had higher lifetime earnings than the non-college cohort, even if the first group had never attended college. Smarter, harder-working people tend to be more successful in life. Attributing all of that incremental success to the college degree is ridiculous.

I’d like to see the whole concept of undergraduate education and graduate/professional education revamped. Students should not, for example, do a four-year undergraduate pre-med degree followed by med school. Instead, they should apply to med school right out of high school and do a six-year course of study leading directly to their MD. Same thing with accounting, law, engineering, the sciences, and other rigorous disciplines. Students who were not ready to declare a major could do one or two years of suitable general preparatory work before deciding to choose between, say, accounting or law or business on the one hand, or between medicine or chemistry or biology or engineering on the other. But the goal should always be to have students complete four to six years of targeted education and come out the other end fully qualified in their fields.

Nor need the student necessarily complete the full course of education. For example, a student whose goal was to obtain a graduate/professional-level certification after completing the full six-year course might not be able to cut it. Fine. That student might leave after two or three years with lower qualifications, suitable to become, say, a lab technician or a bookkeeper or a paralegal.