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TMFBro (< 20)

Professor says that college degree may not be worth it

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March 22, 2011 – Comments (5)

Two weeks ago, I wrote on GetRichSlowly.org that college is a big, fat, hairy rip-off. Now, here's another "-off" (in this case, Dr. Laurence Kotlikoff) arguing that the price of a college diploma may exceed its value. In a video interview with TechTicker, Kotlikoff says that a plumber will have more money than a doctor, factoring in the cost of getting a medical degree. 

The problem is, according to Kotlikoff, “We have a lot of kids who are borrowing a lot of money that they can’t discharge through bankruptcy who are ending up basically in debtors prison for the rest of their life because they potentially made the wrong choice when it came to education.”

Indeed. Here's a shocker: The value of all student loan debt in America now exceeds the value of all credit card debt. Simmer in that thought for awhile. 

Yes, a college degree can be an asset, especially in a tough job market. But not at any price, and for every job. The teacher who borrowed tens of thousands of dollars to get an Ivy League degree isn't going to get paid more than the teacher who attended State U. As with all purchases, be a smart consumer.

Robert Brokamp, CFP®, is the senior advisor for the Fool's Rule Your Retirement service.

 

 

5 Comments – Post Your Own

#1) On March 22, 2011 at 3:42 PM, PeteysTired (< 20) wrote:

Great topic.  When I went to college I was "searching" for a direction.  I went through 3 majors before I settled into one.  I am guess it is getting a lot more expensive to find your way while in college. 

Maybe more kids will go to 2yr schools to find themselves?

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#2) On March 22, 2011 at 5:03 PM, lemoneater (77.65) wrote:

I have to agree that it is tragic how much debt a student can acquire by not counting the costs before starting college. Financial literacy needs to start sooner in our culture than waiting until college.

However, I don't believe that college has to be a luxury that is out of reach. I knew the chances of my getting a high paying salary was unlikely so I was thrilled to keep my debt to a manageable level. I owed $6000 when I graduated.

If a student has no idea what they want to do, perhaps they should wait out a year, save up some money and research where jobs are and what kind of education they require. Have high schools stopped giving guidance counseling? It seems like hardly anybody knows what they want to be when they grow up.(I didn't know either so I was undecided my first year and took all the basic classes every freshman took.)

I think distance education will be part of the answer to keeping costs down.

 

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#3) On March 23, 2011 at 8:15 AM, KWT8011 (< 20) wrote:

"Not at any price, and not for every job" - that should be on the FAFSA application.

lemoneater - Do you mean online, for-profit schools when you talk about distance education? I believe they're finance costs are just as high as your local university, with a much lower graduation rate. Steve Eisman has been making the case against these institutions for a little while, comparing them to subprime mortgage lenders.

If that's not what you meant, sorry for the rant :)

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#4) On March 23, 2011 at 11:50 AM, miteycasey (30.75) wrote:

"Not at any price, and not for every job" - that should be on the FAFSA application.

This is it in a nut shell. 

I've been saying for years how stupid it is to pay $100k for a job that pays $30k/yr yet people do it every year. 

You always hear how a degree will net you $1M over the life time, but at what oppertunity cost to invest that $100k in the stock market. Yes I understand that it depends on what you make, but students enrolling in college don't take that into consideration. They think, falsely, 'Oh, I get a dregree and I'll $1m more than Tom. Nevermind my salary will be $30k/yr`. It's under this false pretense that students fail before they even begin their journey. 

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#5) On March 23, 2011 at 11:57 AM, lemoneater (77.65) wrote:

KWT8011, I was thinking about how online courses can sometimes cut the amount of time a student would spend at a bricks and mortar school and that would be savings on room and board. Of course, if the student is already commuting from home to a local college that wouldn't get him ahead.

For instance, some high school seniors can take certain required courses like History of Civ for college credit from the college of their choice while they are still living at home. (But for the purposes of our argument let's assume that our student already has a good job and an inexpensive place to live, but no nearby college that offers what he wants to study. Doing what classes he can by distance and keeping his job might make a lot of sense.) 

Now I think certain courses are best taken in person like lab courses where having correct equipment and qualified immediate help is crucial to success. My husband who is a college professor wonders if some information would be "lost in translation" and be less adaptable to a distance format. Also someone like me who learns a lot from questioning the teacher directly might have done poorly in some of my subjects with less personal interaction. Hard to say. We are in the midst of a paradigm shift.

 

 

 

 

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