Every story needs a villain. We still haven’t made up our mind who we will make the official villain for the recent financial meltdown—will it be the Ivy League elites who manipulated the markets from their glass and steel towers, craven bureaucrats at the Fed who knew they were creating false prosperity or the grubby mortgage specialists operating out of bucket shops in down-at-the-heels strip malls? History is still counting the votes.
So, since the voting is still open, is it too late to nominate someone else?
How about cynical university presidents and their lazy academic posses, who have sold millions of kids worthless degrees at inflated rates, and convinced them to take on crippling debt loads to finance them?
Whoa, Sambo. That seems a little harsh (and perhaps a little foolhardy, since many readers of this blog are academicians.) I don’t think it is harsh. I have a stack of e-resumes from kids asking me for help in getting them a job, and it breaks my heart to tell them I just can’t find anything for them. And I have any number of friends who will be mailing checks from the nursing home to pay down their kid’s student debt. I know many more people who have been harmed by student loans than by sub-prime mortgages.
Undergraduate institutions provide a “product.” (I know not everyone is comfortable with the idea of higher education as a product, but that’s the way the for-profits in the field think about it, e.g., Kaplan, UOP, and they compete directly with not-for-profits.) The product has three components.
- First, of course, is erudition.
- Second, universities sell what are essentially extended packaged holidays. That is, they provide opportunities for young people to mature away from home, complete with luxury gym facilities, maid service in the dorm, prepared meals, discounted tickets to sporting events, and chaperoned excursions (semesters abroad.)
- And finally, they sell degrees, which are distinct from education and are primarily designed to facilitate career progression.
All three of these components have genuine value. The question, though, is “how much value” and “is that value worth what educational institutions are charging?”
The specific problem is that a college education has become a huge purchase, one that can put families in debt for decades. When parents, particularly middle class parents, are making the decision to invest in college, they are encouraged to make the purchase based on the argument that a purchase is an investment that they will recoup. Each year the College Board does a study, which is widely repeated and trumpeted by academic institutions, touting the value of a degree. This year’s study said, “those with bachelor’s degrees suffer less from unemployment, earn enough to pay off debt by age 33, live healthier lives.” Wow. Healthier lives, too?
Those statistics are undoubtedly true. On average. The problem is those stats comingle degrees in engineering and accounting with degrees in Sports Marketing and Recreational Therapy. Anyone you know with a degree in Sports Marketing got a job in sports marketing? I didn’t think so. Many of the degrees that institutions now sell are junk, and the odds of ever recouping the costs of those degrees are not good. And the institutions selling those degrees know it, but hide behind the blatantly untrue assertion that degrees always pay for themselves. Other studies by the Board have put the value of a college degree at $800,000.
Mind you, I went to University of Chicago. I have no problem with selling whatever the market wants and for whatever price you can get. If a “for profit” university can sell a sociology degree for a million dollars, great.
(Even better if they can sell it to rich parents, since fleecing the children of the rich is an essential part of the economic cycle. Smart person gets rich. Marries beautiful but dumb person. Has dumb kids. Some smart poor kid takes their money away. Balance is restored in the economic eco-system. Since we don’t have inheritance taxes, we need mechanisms to pry the money out of trust funds and get it back into the system. In that regard movie financing, Gucci handbags, cocaine and liberal arts degrees fill the same function.)
But when a not-for-profit institution sells a sociology degree for a hundred thousand dollars and helps finance it, I think it is predatory in the same way sub-prime lending is predatory. Parents tend not to be educated purchasers of the product. They are emotionally vulnerable because they want so badly to provide for their children and because of the insecurity attendant with not being able to give their kids the best possible start. And they trust not-for-profits. When academic institutions sell junk degrees to people who can’t afford them, they are taking advantage of the ignorant and the vulnerable.
When I say this to my friends in academia, they sniff and mumble something about the “value of education.” And they are correct, education is a wonderful and valuable thing. However, it is irresponsible to sell education if it creates a crippling economic burden on the purchaser without warning them of that risk. Also, you don’t need to buy a degree and a vacation to get an education. What about the library or community colleges? Have the degree discussion up front. Advise parents on alternatives. Show them a chart with the placement rates and starting salaries for each degree they offer.
But they don’t do that. Instead they give a tour and then send wide-eyed kids and confused parents into a room with the financial aid officer. There’s no difference in that and the realtor who shows a lower middle income family a McMansion in a new development and ushers them into the back room to talk to a mortgage broker. Wait, there is a difference. The mortgage broker is obliged by law to warn you of the risk of your purchase. The financial aid officer isn’t. In other words, we expect better behavior out of a mortgage broker than we do an academic institution.
People trust universities. It is wrong of them not to live up to this trust in every dimension.
For the record, I have two kids. My wife and I paid for their undergraduate education without loans. Both got what I would consider “junk” degrees, but I am OK with it because I knew that going in