Is College Becoming a Ripoff?

To try and answer the above question, we have to answer the question of what is the value in a good college education. 

I think there are two main camps here.  One is that college can (or at least should) provide the graduate with the way to make a living that would justify the cost of the education.  But there is a much less utilitarian view that college (at least should) provide a balanced and broad education that fosters an appreciation of the humanities along with critical thinking skills.  In this view, college is seen a preparation for life with specific job skills taking a secondary meaning, 

Certainly going back a few generations ago, the second camp seemed to have it right.  College graduates were relatively rare and employers hired them based on the assumption that they had a brain on their shoulders and could be trained to do the specific tasks an employer wanted. 

But today, things are so much different. With well-paying jobs becoming more scarce, employers have become far more selective, often asking for a college education for jobs that previously did not require one.  As a result, many more people feel they need to go to college to get a well-paying job.  But with all of the college graduates we are turning out, employers now are raising the bar by now demanding graduate degrees in many fields meaning more time spent getting a degree instead of earning a living along with more money spent.  But worst of all, employers have become much more selective in what degrees they will accept for their positions. 

The result can all too often be a college education that can produce a load of debt and not a good enough job to pay off that debt and enter the middle class.  Ripoff!  

It doesn’t have to be this way.  Making the right choices of a college and major can eliminate many of the pitfalls. But making the right choices can be difficult if the information is not presented in a transparent way.  So I am advocating 3 statistical measures that each college should present for each of the degrees they offer to make it easier for prospective student to make informed decisions.  

1. What is the 4-year graduation rate for each undergraduate degree offered?

No college can have a 100% graduation rate in any field.  People sometimes just change majors because they decide they don’t like what they are taking.  But a low graduation rate should be a red flag.  Most notable are the for-profit colleges like the University of Phoenix which only has an overall graduation rate of about 16%.  

When calculated using the standards set by the Department of Education, the university's overall graduation rate is 16 percent, which, when compared to the national average of 55 percent, is among the nation's lowest. The federal standard measures graduation rates as the percentage of first-time undergraduates who obtain a degree within six years. This measurement does not take into consideration the typical University of Phoenix student who comes to the University as a dropout from another institution, so is not a first-time college student.

The university acknowledges the 16-percent graduation rate but takes exception to the standard used by the Department of Education to calculate the rate, saying that the rate is based upon criteria that apply to only seven percent of the university's student population. The university publishes a "self-calculated" graduation rate of 59 percent to account for its large population of non-traditional students.

 If so few students are making it all the way to the end, people are getting ripped off! 

In addition, there can be claims that a high percentage of their graduates either make it to graduate school or find jobs.  But this can be misleading if too many students don’t get counted as graduates. 

2. What percentage of graduates obtain a job in their chosen field within 6 months of graduation?

There are too many majors which lead to low paying job offers that don’t need a degree,  How does that person pay off their student debt?  Ripoff! 

3. What is the average starting salary of those graduates who get a job in their chosen field?

Let’s face it, some fields are just low paying ones.  Why pay good money for a degree that will lead to poverty wages?  But some people do pursue careers in low paying fields simply to do what they love.  That’s OK as long as they have the facts up front to make an informed decision. 

This would also answer another question on whether colleges that charge higher tuitions result in starting salary offers that justify the extra cost of one’s education.  

But while we are at it, we need to take a look at why college tuitions are growing like wildfire.  It certainly can’t be because of what they are paying professors who more and more are working as adjuncts for poverty wages.

You’ve probably heard the old stereotypes about professors in their ivory tower lecturing about Kafka while clad in a tweed jacket. But for many professors today, the reality is quite different: being so poorly paid and treated, that they’re more likely to be found bargain-hunting at day-old bread stores. This is academia in 2014.

 

So where does the money they save on faculty expenses go? 

The most telling …words are “the school as a business.” Colleges across the country have transitioned from bastions of intellectual enlightenment to resort hotels prizing amenities above academics. Case in point: The ludicrously extravagant gyms in America’s larger universities are home to rock climbing walls, corkscrew tracks, rooftop gardens, and a lazy river. Schools have billions to invest in housing and other on-campus projects. Schools have millions (or in some cases “mere” hundreds of thousands) to pay administrators.  Yet schools can’t find the money to hire more full-time professors. If one follows the money, it’s clear that colleges view education as tertiary. The rigor of a university’s courses doesn’t attract the awe of doe-eyed high school seniors. Lavish dorms and other luxuries do.

Maybe colleges are charging what they do simply because they can.  And one of the reasons is that student loan debt cannot be discharged through bankruptcy.  

In a business startup where the loan can be discharged through bankruptcy, the bank wants to see a business plan to make sure the borrower can make enough money to pay off the loan. 

But there are no such restrictions for student loans.  Banks have no such reason to question whether a tuition is too high or whether the student is likely to make enough to pay back the loan.  Why?  With no possibility of bankruptcy, the banks know they will eventually get their money repaid even if it means a ball and chain debt load for much of the graduate’s adult life. 

This is not about telling people to avoid going to college.  It is about being able to have more transparency in knowing whether obtaining a certain degree at a certain college is financially worthwhile. Many degrees are clunkers when it comes to earning enough money for a comfortable living.

Not all college degrees are created equal. According to a report by the Center on Education and the Workforce (CEW) at Georgetown University, your choice of college major substantially affects your employment prospects and earnings. 

“What you make depends a lot on what you take,” says Anthony P. Carnevale, Ph.D., director of Georgetown’s CEW. “Most young people in college take whatever interests them, without thinking what it can really do for them.”

 

Do we really expect colleges on their own to be forthright about this?  After all, they have to attract enough students in each department to keep them running. 

Of course, there are other important considerations in selecting a college, but for something that involves such a large financial investment, we shouldn’t just make selections based on guesswork!