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A college degree is a lousy investment

an economical alternative to today's overpriced lubish indoctrination college degree:



I love that clip. A couple of years ago, I embedded it in a presentation I gave to a client who’d hired us to make some changes and implement some new technology within their Learning and Development environment. They laughed their asses off.
 
That’s extremely optimistic.

The more likely takeaway is elite colleges are so valuable, wealthy Americans are willing to pay several times the sticker price for it. And once you understand that, basic market economics will tell you the sticker price is actually too low.

The only way for everyone else to keep up is to compete for financial aid funded by our benevolent full price overlords and to take out absurd loans.

But let’s take it a step further. What if more talented people forgo college or go to more affordable community colleges and public universities? Will that teach the elite universities a lesson?

No. That will just open more spots for less academically inclined rich kids who will get passed through to a degree. And the same employers who only consider job candidates from elite schools will continue to do the same. So now you have a smarter, harder working middle class and small business class and a less skilled upper class still surviving on inherited wealth and reputation.
 
I agree, we definitely see the barbell effect with the rich at one end of the barbell paying full price (and then some, it seems) to subsidize the poor, the other end of the barbell. Of course, how many poor kids a school takes depends on the school and its mission. Some enroll fewer poor kids so they can add amenities for the rich kids, such as food quality. Malcolm Gladwell did a podcast on that: http://revisionisthistory.com/seasons?selected=season-1 (Food Fight ep 5). Episodes 4-6 are on higher ed.

The situation in your last paragraph would be a hollowing out of the brain capital of the elite schools. Eventually, they would lose their reputation for having the best and brightest and captains of industry. They will always need the truly brilliant to maintain their brain capital. Harvard needs the next Facebook founder to come from Harvard. Of course, one cannot know which whiz kid that will be, so you admit as many as possible to hedge your bets. If they're rich, there is no tension for the university. The tension comes from balancing school mission, hedging bets by admitting poor smart kids, and the upfront money of legacies/mega-donors/full price+ payers. Undoubtedly, they have done the math and know the exact mix of kids that can maximize their profitability.

My two main problems with the education bubble is that school loans are not discharge-able in bankruptcy - school's have no skin in the game there. The second main problem is that the elite schools raise the cost disproportionately. We see this in pro sports where an elite player gets a huge contract, and lesser players get more just to be in the ballpark with the elite player. In reality, schools and athletes are on an exponential curve, but the pricing is more like a straight line.
 
I don’t think elite schools would lose their reputation. There would be enough legitimate smart rich kids to prop up the rest. The kids who paid their way in without merit still have two of the main things we equate with intelligence. Money and getting into elite schools. They’ll still get good jobs and prop up the stats.
 
I agree, we definitely see the barbell effect with the rich at one end of the barbell paying full price (and then some, it seems) to subsidize the poor, the other end of the barbell.

I don't have the link offhand, but I saw an interesting study that showed its not quite a barbell anymore. Yes, there is still a bump up at the rich end of the scale, and the other bump comes towards the poor side, but its not actually at the end. Acceptances are clustered right below the cutoff for the Pell Grant, so schools get credit for accepting those students, but because they are at the "rich" end of the "poor", there's less money the schools have to give in additional financial aid.

Edit: Here's one graph that illustrates the concept:

hoxby_turner.jpg
 
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This is yet another symptom of income equality. Anything we do about student loans or increasing endowments or whatever is just a bandaid.
 
Mike Rowe basically sums up this thread...with a little more emphasis on being debt averse
 
It seems that Mike Rowe's biggest fans are people who don't work jobs that Mike Rowe promotes
 
It seems that Mike Rowe's biggest fans are people who don't work jobs that Mike Rowe promotes

I've worked plenty of blue collar jobs in my life to know that I didn't want to do that forever. Fortunately, I had opportunities to go in a different direction.
 
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