Saturday, October 29, 2011

Higher Education Bubble Update: Colleges and Universities Charging $50k+ Increases 25X in 3 Yrs.

2012 Mercedes E550 Coupe ($56,590) = 1 Year of College
Top 25 Colleges for Tuition and Room & Board, 2011-2012
RankCollege2011-2012 Tuition,
Room and Board
1Sarah Lawrence College $59,170
2Landmark College $57,330
3New York U. $56,787
4Columbia University $56,310
5Harvey Mudd College $56,268
6Wesleyan U. $56,006
7Claremont McKenna College $55,865
8Johns Hopkins U. $55,742
9Berklee College of Music $55,615
10Bard College $55,592
11Barnard College $55,566
12Vanderbilt U. $55,556
13Trinity College $55,450
14U. of Chicago $55,416
15Dartmouth College $55,365
16Bates College $55,300
17Stevens Institute of Technology $55,276
18Vassar College $55,135
19Washington U. in St. Louis $55,111
20Boston College $55,079
21Haverford College $55,050
22Pitzer College $54,988
23Connecticut College $54,970
24Bard College at Simon's Rock $54,960
25Bennington College $54,960

From the Chronicle of Higher Education (subscription required):

"The 50K club is getting crowded: 123 institutions now charge $50,000 or more for tuition, fees, room, and board, according to data released by the College Board. That's up from last year, when 100 colleges and universities charged that much."

MP: The table above shows the top 25 colleges for tuition, and room and board, for the current 2011-2012 academic year.   

In this related Chicago Tribune article, they point out that: a) only 58 schools charged more than $50,000 for tuition and room and board in 2009-2010 and the year before it was only five colleges, and b) an increasing number of colleges are now charging more for tuition than the average American earns per year ($42,000 according to the Social Security Administration).


53 Comments:

At 10/29/2011 11:19 PM, Blogger Don said...

Given that the added economic value of a 4 year college education to a potential employer is negligible in the vast majority of cases, the best thing to do with 2/3rds of 4 year colleges is to burn them to the ground, releasing the human resources that are being uselessly wasted in university employment. Let the potential employers provide their own education of their employees much more efficiently.

Regards, Don Lloyd

 
At 10/30/2011 5:13 AM, Blogger juandos said...

Hmmm, the colleges listed charge the equivalent of the purchase cost of a Mercedes E Class vehicle per year...

I guess I would be sending the kid to community college or a trade school instead...

 
At 10/30/2011 6:34 AM, Blogger sethstorm said...

The more reason to convert to the model that primary/secondary levels of education use - except that internationals pay full price (and gain no preference or privilege). Or get rid of the degree/etc. requirements for the job per Don's suggestion.


Don said...
Let the potential employers provide their own education of their employees much more efficiently.

I'd agree, since businesses have done so for a long while. If they keep on harping about a skills gap and do nothing about it, it seems the businesses are the ones that need to step up.

Trade schools and community colleges are only a half-effort, providing the illusion of mobility.

That said, businesses need to stop trying to find ways to not hire people in good faith.



juandos said...
I guess I would be sending the kid to community college or a trade school instead...

Community college only does the first two years, not the whole four.

 
At 10/30/2011 6:35 AM, OpenID moneyjihad said...

Colleges aren't just places of education any more. They are lifestyle fiefdoms that support big bureaucracies for the arts, sports, "community," etc. Of course that's expensive.

 
At 10/30/2011 8:22 AM, Blogger Cabodog said...

As an employer, I can tell you I no longer rely upon a college degree when hiring. I've seen folks with degrees in business who have terrible grammar and can't produce a decent spreadsheet.

 
At 10/30/2011 9:03 AM, Blogger Mark J. Perry said...

Juandos: Thanks for the comparison to a Mercedes, I just added the photo at the top of the post.

 
At 10/30/2011 10:17 AM, Blogger PeakTrader said...

If wealthy Americans and foreigners want to send their children to expensive U.S. colleges, what's the big deal?

A quality four-year degree (the field of study may be more important than the college) is worth more today than 50 or 75 years ago.

Back then, a high school diploma was equal to a college education and life spans were about 20 years shorter.

More Americans have become wealthier. In 2007, 20% of U.S. households earned at least $100,000 a year.

 
At 10/30/2011 10:31 AM, Blogger Nicolas Martin said...

Not much support for free market education in these comments.

 
At 10/30/2011 11:04 AM, Blogger bix1951 said...

aristocracy
college degree as status symbol
not really a meritocracy at some levels
"it's not what you know it's who you know."

 
At 10/30/2011 11:52 AM, Blogger DadIsInTheHouse said...

This comment has been removed by the author.

 
At 10/30/2011 11:56 AM, Blogger PeakTrader said...

It should be noted, demand seems to be increasing on a somewhat fixed supply:

University of California, Berkeley
Wikipedia

"The average unweighted GPA of admitted freshmen in 2010 was 3.93 (4.39 weighted)."

******

Study: Foreign Students Added to Economy
The New York Times
November 12, 2007

Overall, foreign students spent more than $20 billion in 2006-7, about half on tuition and fees and half on living expenses.

The report estimated that $14.5 billion came from the students’ home countries, mostly from personal and family sources.

Saudi Arabia sent more than twice as many students here in 2006-7 as it did the previous year; the number of Japanese students declined 9 percent.

The University of Southern California and Columbia University had the most foreign students last year, with New York University in third place."

 
At 10/30/2011 11:57 AM, Blogger AIG said...

Why is this "evidence" of a bubble? If a degree from Colombia University will get you a job making twice that much a year, starting salary...is the price not too cheap, in fact?

If we're moving faster and faster into a world where knowledge is the determining factor, than isn't the place where you get that knowledge going to become more critical to your economic future? And therefore, those that do a better job, become more expensive as well?

I mean...if you think you're not getting your money's worth by going to NYU or Colombia for that much money a year...than don't go. Unless you're going for some useless major, it will be worth it.

I paid over 40k a year for my engineering degree. And I'll be the first to say...I paid too little! The school should have charged more.

To me, for the upper end schools and the "productive" majors...this is markets working.

I can see the argument being made that a sociology and visual arts BA, costing what they cost, is probably indicative of a bubble in THOSE majors (since kids who shouldn't be going to college, are going for those degrees). But not Colombia or NYU.

 
At 10/30/2011 12:01 PM, Blogger AIG said...

How is someone able to afford that Mercedes you have in the picture there? How is someone going to be able to produce that much value in society, to have that kind of disposable income? Where are they going to get that knowledge? How much are they willing to sacrifice upfront to get that income?

Is 50k a year, for 4 years...worth the gigantic bump in potential earnings for the rest of your life you are a likely to get by going to some (not all) of the places on that list? Heck yeah!

 
At 10/30/2011 12:18 PM, Blogger arbitrage789 said...

Certainly one of the factors here is the availability of low-cost student loans. I'm O.K. with that as long as the loans are paid back.

But I'll be surprised if all that student debt doesn't result in another Federal bailout sooner or later.

 
At 10/30/2011 1:50 PM, Blogger juandos said...

"A quality four-year degree (the field of study may be more important than the college) is worth more today than 50 or 75 years ago"...

Well PT you raise a valid point no doubt...

Still just because a college will charge $50+K/year how does one know that will equal (field of study taken into account) a quality education?

How many of these universities are still living of their past reputations?

I don't know if they are or aren't but for that kind of money some sort of quality guarantee would be nice know about...

For instance is an MBA from university A (a relative unknown facility) actually more in demand in the jobs market than say an MBA from a well known but more expensive university B?

 
At 10/30/2011 1:54 PM, Blogger juandos said...

"Trade schools and community colleges are only a half-effort, providing the illusion of mobility"...

Well sethstorm I don't know how it is by you but locally the St. Louis county community college grads (usually two years, in a few cases a year or two more) have done quite well due to the skill sets they've picked up...

 
At 10/30/2011 1:57 PM, Blogger Buddy R Pacifico said...

Landmark College ranked #2 for tuition cost. What is Landmark College?

"The college of choice for students with learning disabilities and/or AD/HD."

Landmark College is a two-year institution, with a graduation rate of 80% for students who go on to four-year schools.

 
At 10/30/2011 1:58 PM, Blogger juandos said...

"I paid over 40k a year for my engineering degree. And I'll be the first to say...I paid too little! The school should have charged more"...

Interesting comment aig and it makes me wonder why I didn't go into 'chemical engineering' instead of going into chemistry...:-)

None the less, good that it all worked out for you...

 
At 10/30/2011 2:12 PM, Blogger Don said...

Even if college were free, and attending college resulted in wages triple those of non-attenders, this does not prove that that college contributes to an overall increase in the general standard of living, but just redistributes the standard of living as purchasing power is transferred from non-attendees to graduates.

Only if there is actual education going on which increases the supply of goods and services, can an overall increase in the standard of living be said to be occurring.

Regards, Don Lloyd

 
At 10/30/2011 3:00 PM, Blogger PeakTrader said...

Juandos, the University of Colorado, Boulder has never been top rated (although, the economics department made the top 20 one year long ago).

Yet, anyone who knows anything about education in Colorado knows it's a high quality school (like the University of Denver and Colorado School of Mines).

Also, you may have to travel about a thousand miles to find a better school.

And you don't need a high GPA or SAT score to be admitted.

In my case, my overall GPA wasn't that high. However, I received high grades in the most relevant subjects for economics.

Also, I may add, although, I took little english, the quality was high enough to know the difference between than and then (in reference to AIG's first set of comments) :)

Anyway, many, if not most, of the instructors at CU-Boulder had Ph.Ds from top schools, like instructors at top schools.

 
At 10/30/2011 3:10 PM, Blogger PeakTrader said...

I tend to believe the quality of expensive top rated U.S. schools aren't much better than cheap average U.S. schools, although below average schools may be much worse.

 
At 10/30/2011 3:22 PM, Blogger PeakTrader said...

And in reference to my own english shortcomings:

"...the quality of expensive top rated U.S. schools aren't much better than cheap average U.S. schools..."

Perhaps, I should've used "isn't" instead of "aren't," or kept "aren't" and used "quality differences" instead of "quality."

 
At 10/30/2011 5:47 PM, Blogger Don Culo said...

"Only if there is actual education going on which increases the supply of goods and services, can an overall increase in the standard of living be said to be occurring."

**********

I is a learning so much from this blog, I be taught that an eduacted society is "richer" than a non-edumacated souciety. I am "learnin" we don't need no stinkn edumaction, especially in arts, history, sociolgy, anthropology, engrish, espelling or other subjects which ain't producing goods and services.

 
At 10/30/2011 7:25 PM, OpenID Sprewell said...

Don, I'm usually the one calling for burning colleges to the ground, good to see you'll pitch in too. ;)

Peak, I agree with you that if the rich are being scammed by these colleges, who cares? As long as we make it clear to everyone else that it is a waste of money and only the dumb rich fall for the college scam, no problem.

AIG, as shown in the chart, it's Columbia University, with a "u," unless you're talking about some other foreign university in the country of Colombia. ;) Does every Columbia graduate make a starting salary of $100k/year? I've never seen a stat showing that, in fact, the stats show a median of $100k after 10 years in the workforce, meaning about half make less than that even after 10 years. A nice above-average salary to be sure, but far from the level you're hyping. The problem is that the "knowledge" you pick up at Columbia or most universities is mostly useless, so it actually hurts your chances in the information economy. It is true that university grads do tend to make more, but considering the worthless curricula, that's likely correlation not causation, ie they're simply choosing capable kids to let in, so those smart enough to get in but who choose not to go to college do just as well, witness Bill Gates or Steve Jobs. I agree that it's not worth the money but for basically every major.

I didn't pay as much as you for my engineering degree but it was in the neighborhood, and I consider it a giant waste of money. I will likely never use any of those engineering skills again, largely because I've switched to another technical field in this highly fluid economy. I'll be the first to say, I wish I'd never gone to college, as I could have put that money to much better use, but unfortunately, I wasn't aware of this when I was 16 and applying to college, nor were my parents. You try to except the "productive" majors, but the fact is they're filled with waste also. If markets are working, why do we have so much govt involvement? Let's get the govt completely out of accrediting and funding universities and student loans and see what a real market looks like. Luckily, that's what we're about to see online. What you seem to be missing is that even if you think there is some value in some degrees, they are wildly overpriced, particularly compared to online learning that is now surfacing. Who cares how much your salary is, that doesn't mean the degree isn't overpriced. That's like saying you'd pay a million dollars to access the internet, forget what it actually costs to produce.

 
At 10/30/2011 8:50 PM, Blogger Don said...

If there is no real actual learning going on that results in an increase of goods and services, then the benefits of higher wages paid to college graduates are fully equivalent to the deliberate cutting of wages for all non-graduates.

Regards, Don Lloyd

 
At 10/30/2011 10:28 PM, Blogger AIG said...

"but just redistributes the standard of living as purchasing power is transferred from non-attendees to graduates."

Thats like saying...investment just redistributes money from those not creating value, to those creating value.


"Only if there is actual education going on which increases the supply of goods and services, can an overall increase in the standard of living be said to be occurring."

And I guess thats...not happening?

"The problem is that the "knowledge" you pick up at Columbia or most universities is mostly useless, so it actually hurts your chances in the information economy."

Oh wow! Thats something new. I guess all those people hiring Columbia grads aren't aware of your facts. You have facts to back that up, right?

"It is true that university grads do tend to make more, but considering the worthless curricula,"

Worthless curricula? Well yeah...Matrix Algebra sure was a pile of s**t!

"witness Bill Gates or Steve Jobs. "

Witness the 1,000,000 Burger King employees who didn't go to college, to every Bill Gates. Good odds.

"I didn't pay as much as you for my engineering degree but it was in the neighborhood, and I consider it a giant waste of money. I will likely never use any of those engineering skills again, largely because I've switched to another technical field in this highly fluid economy. I'll be the first to say, I wish I'd never gone to college, as I could have put that money to much better use"

Well let me put it this way. What school you go to matters. How well you do, matters. What you chose to do with it, is up to you.

But lets not pretend like it doesn't matter. Someone who goes for engineering at MIT, vs someone who goes for engineering at Alfred State...I'll bet you one of those Mercedes cars in the picture that the difference between their "mid career salary" is going to be GREATER than the value of that car.

"If markets are working, why do we have so much govt involvement? "

So...markets aren't working? You lost me.

Gov get involved because gov gets involved in everything that we let it.

"Let's get the govt completely out of accrediting and funding universities and student loans and see what a real market looks like. "

Yeah lets get it out. Thats a different story. What you'll get is less people going to school for arts and crafts and finger painting and "teaching" degrees. They're the ones who are benefited by lower interest rates on their loans. Not the people going to 50K schools, or people going for degrees which will pay off the cost of the school in 2-3 years.

"Luckily, that's what we're about to see online. "

But online degrees are good for teaching useless degrees. They're not very good at teaching, lets say, medicine. I got no issue with "online" methods of delivering information...but its hardly a "revolution". if you've ever taken an online class, you'll know what horror they typically are. (cause they're usually taught by the youngest and most incompetent professor at any university)

 
At 10/30/2011 10:28 PM, Blogger AIG said...

"What you seem to be missing is that even if you think there is some value in some degrees, they are wildly overpriced, particularly compared to online learning that is now surfacing. "

Wildly overpriced? Starting salaries for lets say, an engineer with a BS, are in the neighborhood of 55k +. At least thats what I remember them being some years back. Lets assume your average engineering school charges 40k a year. Your alternative had you not gone to that engineering school, would have been in the neighborhood of 25k a year (average salary for someone starting in a technical field with no education). What do you think mid career salaries look like for these two people? Lifetime earnings? Will it be over the 200k it cost to go to that school. I'm going to take a guess and say yes.

"Who cares how much your salary is, that doesn't mean the degree isn't overpriced. "

The only important measure of what a degree is worth, is by how it will increase your worth to employers.

"That's like saying you'd pay a million dollars to access the internet, forget what it actually costs to produce."

Given that my worth to an employer is NOT increased by 1 million dollars everytime I access the internet...no I wouldn't pay a million dollars.

How much would you pay to go to Wikipedia and learn about Marginal revenue? ;) If I were the only and first person on the PLANET to have access to the internet, in its entirety...then 1 million may be a good price. Given that I'm only the 6th billion person to do so...

"If there is no real actual learning going on that results in an increase of goods and services, then the benefits of higher wages paid to college graduates are fully equivalent to the deliberate cutting of wages for all non-graduates."

??? Such a comment may have been made by a OWS socialist, or some communist "economist". The people paying the college grads do so out of their own pockets, based on the return they receive from their work. There's no mechanism for them to take it from someone who didn't go to college, and give it to those who did.

Not for WAGES there's isn't.

You confused yourself by thinking of subsidized interest on loans to GET those degrees. But if those degrees were "useless"...then obviously few employers would PAY higher wages for them.

That is in fact somewhat happening in degree fields popular with the OWS crowd; ie those degrees which load you with debt and don't provide high enough earnings.

But thats a different story. You're looking at one end of the spectrum.

 
At 10/30/2011 10:44 PM, Blogger AIG said...

For people who frequent a free market blog, some of you sure do have some wacky ideas.

Ok...so we all agree that government subsidizing of interest on loans, is not productive.

But WHY is it not productive? The answer to this question, is key. Its not productive because it LOWERS the barrier to entry into college, allowing people who otherwise should not have gone to college, to do so.

It doesn't lower the barrier to entry for people in fields which will easily pay back their investment; sciences, engineering, medicine, law etc etc...whatever the market thinks is valuable. It lowers it for those which the market doesn't think can pay back their investment: teaching degrees, art, psychology, philosophy, fingerpainting...whatever the people sleeping outside Wall Street tonight graduated in.

So you get a disproportionate graduation rates in those fields, vs "valuable" fields. And you end up with people like you who think that "college" is bad. As if "college" is a discrete point. Someone getting an MD, and someone getting a BA in fingerpainting, are both going to "college"...according to you.

Now HOW would markets address this, if there was no gov. intervention whatsoever in subsidizing interest on loans.

Well..it would likely RAISE prices on those degrees which are considered valuable in the market, but likely lower interest rates (or vice versa). it would probably do this because it would simultaneously cut back on the revenue coming from...the other degrees which today are booming due to gov. intervention...degrees which likely would start to cost less, but would have ballooning interest rates (or vice versa).

It would not fundamentally change the dynamics or relationships of the two ends of the spectrum. 50k schools are still going to be 50k schools. Its the 5k Alfred State schools...that would go bankrupt.

 
At 10/30/2011 10:45 PM, Blogger AIG said...

From the point of view of the student...what does gov. intervention on interest do?

It doesn't make attractive investment opportunities any more or less attractive. They are far above the scope of this intervention.

It makes UNATTRACTIVE investment opportunities, more attractive. And thats the point.

Yet some of you people address...ALL investment opportunities (ie where you chose to invest your time and money studying, and what)...as if they are equal. They're not.

For people frequenting the blog of an economics professor...thats disappointing.

 
At 10/31/2011 12:20 AM, Blogger Ron H. said...

AIG: "Is 50k a year, for 4 years...worth the gigantic bump in potential earnings for the rest of your life you are a likely to get by going to some (not all) of the places on that list? Heck yeah!"

Many camping at Zuccotti Park are whining about student debt, so they must not understand this.

Perhaps they are all visual arts and gender studies majors. :)

 
At 10/31/2011 2:02 AM, OpenID Sprewell said...

Don, that's actually a good point. The OWS crowd would actually have something if they protested against discrimination by college degree, where they don't get considered for higher-paying jobs unless they have a worthless college degree listed on their resume. Instead, they are too dumb to realize that and instead simply want someone else to pay for their degree.

AIG, those hiring Columbia grads are hiring for the college filter, ie those smart enough to get into college or such an Ivy and disciplined enough to stick around despite the worthless curriculum, not for what they learned. This is perfectly demonstrated when practically everyone says they never use what they learned in college on their job. Not sure what "facts" you want me to back that up with, as if it were widely accepted, we wouldn't have the stupid hiring we see now, but it is fairly widely accepted that the curricula themselves are largely worthless for the job. Yes, matrix algebra is completely worthless on the job, as that's what your computer is for. If you find yourself solving matrix equations by hand, there is something very wrong at your workplace. Actually a lot of Burger King employees did go to college. ;) And those odds are changing as people start to realize the worthlessness of college, witness the many computer programmers who never got a college degree.

I don't regret going to college because of the school, which was in the top five for my engineering discipline, or because of how I did, well enough to join grad school there too: I wish I hadn't gone to any college. Part of it may be that I didn't stay in the field, but a much bigger part is that I now realize it was way overpriced and I was forced to take a lot of classes so they could pad the degree out to four years and scam more money off my family. Yes, the MIT grad will tend to afford that Mercedes easier, but you are confusing correlation with causation, as explained before. And if you can learn more valuable material at a fraction of the cost online, then the price of that degree is vastly inflated, regardless of what salary you end up with. Yes, markets aren't working in college education, isn't that obvious with all the govt involvement? There is a lot more govt involvement in education and medicine than other sectors, so it isn't just the normal amount of govt interference. It's not just worthless "softer" degrees funded by the govt, there are a lot of worthless degrees in "harder" fields being funded too. You're saying those going to $50k schools or getting harder degrees don't get govt loans or they pay it all off in 2-3 years? There are plenty of counter-examples to such a claim. Online can be used for any degree, including medicine. Haha, you think there's no information revolution, wow, you're about to be surprised in the coming years. :D I've never taken a pure online class, but my college classes did have online homework and the like: it was a big step forward. When online really takes off, you won't need to be "taught" by anyone, you'll simply watch canned lecture videos by the best lecturers or read or use whatever modality works best for you, with a supplement of some interaction through IM/email if necessary.

 
At 10/31/2011 2:06 AM, OpenID Sprewell said...

You keep repeating your dumb claim that college tuition isn't overpriced because some portion of the degree-holders make good money. But as I said already, that completely ignores that the price is still wildly inflated from the real cost, particularly given new online methods that are an order of magnitude cheaper. You keep asserting that high salaries make up for everything, while blatantly ignoring what is actually taught, which is why the education itself is useless. I could just pick out all the same kids who were good enough to enter Olin College, pay for them to party in the Caribbean for four years, and they'd do just as well when they went to work, because they were good enough to get into Olin in the first place. You are right that in purely economic terms and from the short-term perspective of the student who only wants a quick salary, all that matters is if the degree will give you a high-paying job. But we just went through a cycle where according to more substantial, long-term measures that formula yielded some abysmal results, ie all the finance grads who learned bad financial models in college, got high pay, then made dumb choices on Wall Street. So I don't think even you will say that it is only your pay in your first few years that matters: the content matters.

I'm guessing you didn't bother watching the linked video, where several people say they would not take a million dollars in return for never using the internet again, so the employer is irrelevant. Not sure what your point about marginal revenue is because nobody's talking about whether it actually costs a million to deliver internet access, only what it's worth to internet users, just like you claim the educational content of the degree is worth $200k to the employer. You are right about Don's comment that you're not actually taking money from the non-graduate to give it to the graduate, but if that degree is useless and most employers are blind to that, you are doing effectively the same, by not recognizing and compensating the talent of the non-graduates.

Not sure why you think there's some incongruency with free markets and worthless college degrees. We already agree that govt subsidies of student loans is dumb, or I thought we did, so I don't know why you're bringing that up again. In any case, your claim that barriers are not lowered for medicine, law, etc is based on what, that the govt doesn't subsidize those degrees or that those degrees are worth it? I think you're saying the latter, in which case, a subsidy is a subsidy, of course it lowers the barrier. If you haven't noticed, my argument is based on all degrees, not just the ones you disdain. Not sure why you don't think govt is raising the prices of the "valuable" degrees also, more funding and subsidies means rising prices in any market. You're probably right that it raises the prices of less valuable degrees more though. But 50k schools likely wouldn't be 50k anymore, without those subsidies. For someone claiming to understand economics better, you certainly have some strange ideas about subsidies. It doesn't matter if the investment opportunity, ie degree, is attractive or not, a govt subsidy will raise the price in either case.

 
At 10/31/2011 3:45 AM, Blogger Don said...

" You are right about Don's comment that you're not actually taking money from the non-graduate to give it to the graduate"

But you really are. Money has relative, not absolute values. If a subset of the population has relatively large amounts of money, they bid up the prices of goods and services out of the reach of everyone else.

Regards, Don Lloyd.

 
At 10/31/2011 4:53 AM, OpenID Sprewell said...

Don, you're right, I misspoke. AIG was right on a purely technical point that it's not socialism, because they're not taxing the non-graduates to give to the graduates. But that wasn't actually your framing, socialism was how he reframed it, so your statement was correct as is. However, I don't think your relative/absolute framing now is helpful because it's really both, particularly when the population is large enough, ie if I make $30k and you make $100k, yes, you can outbid me on ebay for that rare antique pez dispenser we both crave, but you can't raise the price of my Blackberry tablet because there are millions of Chinese willing to
crank those out cheaply. So overpaying college graduates definitely has effects of the sort you describe but they are not as dominant as you seem to imply.

 
At 10/31/2011 8:40 AM, Blogger sethstorm said...


Well sethstorm I don't know how it is by you but locally the St. Louis county community college grads (usually two years, in a few cases a year or two more) have done quite well due to the skill sets they've picked up...

Only enough to do promotional literature, as I've heard the same excuse from the ones in my own locality. The better solution is to roll them into a 4 year program where no US citizen pays or has to wonder about a slot.

Let the internationals pay a ton of cash. Milk them for what they're worth and don't give them any more priority or prestige over any US citizen attending the university.

 
At 10/31/2011 12:02 PM, Blogger morganovich said...

wait until you see what obama's new student lending policy does to these prices.

his plan is to cap student loan payments at 10% of annual income in excess of $10,800 and limit the term to 20 years.

so, if you make $50K, you will pay $3900/year, max all in of $78k, less than half the cost of most of these institutions.

to pay off $220k in loans before 20 years are up, you'd need to have average earnings of over $120k for the 20 year period.

that's maybe 5-10% of people, especially as it's the early part of a career.

not only is this going to wind up being a huge subsidy program, but it's costs will skyrocket as it sets off a tuition spiral the same was subprime set off a housing bubble.

think about it. it totally destroys incentive to care what you spend for 90% of people. go ahead and get a $250k education and then earn $50k. so what? you'll pay the same if the loan is $200k or $2 million.

this is going to be a disaster.

 
At 10/31/2011 12:21 PM, Blogger Ron H. said...

"The better solution is to roll them into a 4 year program where no US citizen pays or has to wonder about a slot."

Why even bother with this intermediate step? Why not just roll them into lifetime jobs, and train them as required?

 
At 10/31/2011 4:57 PM, Blogger sethstorm said...


Why even bother with this intermediate step? Why not just roll them into lifetime jobs, and train them as required?

Companies actually did that when they didn't complain about skills. The intermediate step is due to there being no effort for companies to do anything but complain.

 
At 11/01/2011 2:09 AM, Blogger Ron H. said...

"Companies actually did that when they didn't complain about skills. The intermediate step is due to there being no effort for companies to do anything but complain."

Hmm. I didn't realize colleges were such a recent development.

 
At 11/01/2011 11:24 PM, Blogger AIG said...

"This is perfectly demonstrated when practically everyone says they never use what they learned in college on their job. "

I use what I learned in school every day. A lot of your claims seem to be based on anecdotal hear-say, not evidence. I bet Mark Perry uses what he learned in college everyday, too ;)

" we wouldn't have the stupid hiring we see now, but it is fairly widely accepted that the curricula themselves are largely worthless for the job."

Stupid hiring?

"Yes, matrix algebra is completely worthless on the job, as that's what your computer is for. If you find yourself solving matrix equations by hand, there is something very wrong at your workplace."

So what do you say to the guy who writes codes and has to program for solving matrix equations? I actually had to do it by hand once, or develop the code for doing it, since no off the shelf solution existed.

"Actually a lot of Burger King employees did go to college. ;)"

Actually, not a lot of them did. What's a lot to you? 1 thousandth of a %?

"And those odds are changing as people start to realize the worthlessness of college, witness the many computer programmers who never got a college degree."

I have never witnessed a computer programmer that never got a college degree. Does Microsoft hire computer programmers that don't have college credentials in their field? ;) Gee...I wonder why that is, even through their own founder didn't have one.

"Yes, the MIT grad will tend to afford that Mercedes easier, but you are confusing correlation with causation, as explained before. "

No one is claiming correlation or causation. I'm claiming sampling bias. Colombia or MIT or others practice sampling bias...the bias that tells the employer that an engineer from MIT is going to be a better engineer than one from Mississippi State.

What you are saying is true; that is the purpose of college. It weeds out people into categories for employers to chose from, without having to incur the costs themselves. And thats a VERY important role that it plays.

Employers are not going to experiment on a constant basis to hire anyone off the street that claims to have the knowledge they seek. But they KNOW...with a certain degree of certainty, that someone who went through 4-5 years in a top university, is very likely to be much more competent than someone who didn't.

A 4-5 year "aptitude test" to prove to an employer that you have what it takes, isn't cheap. It shouldn't be cheap.

"And if you can learn more valuable material at a fraction of the cost online, then the price of that degree is vastly inflated, regardless of what salary you end up with"

Information is free. Schools don't teach information. You can go get information at Wikipedia if you want. Employers aren't looking at what information you have access too.

This is what a lot of people here are missing; education is not about information.

 
At 11/01/2011 11:24 PM, Blogger AIG said...

"Yes, markets aren't working in college education, isn't that obvious with all the govt involvement? "

Markets aren't working? So if gov. involvement is evidence of markets not working, than which market is working? And if market aren't working, wouldn't that be an argument in "favor" of more gov. involvement?

The fact that gov gets involved in higher ed a lot, is not evidence that the "market" is broken. Its just evidence that the gov will get involved into things that provide its member with votes and power.

" It's not just worthless "softer" degrees funded by the govt, there are a lot of worthless degrees in "harder" fields being funded too. You're saying those going to $50k schools or getting harder degrees don't get govt loans or they pay it all off in 2-3 years? There are plenty of counter-examples to such a claim"

Such examples are called...outliers.

" Online can be used for any degree, including medicine. Haha, you think there's no information revolution, wow, you're about to be surprised in the coming years. "

Education isn't about information.

"When online really takes off, you won't need to be "taught" by anyone, you'll simply watch canned lecture videos by the best lecturers or read or use whatever modality works best for you, with a supplement of some interaction through IM/email if necessary."

You can do that today, already, at Wikipedia. Put that on your resume, and go get a job :)

Thats why education is not about information.

 
At 11/01/2011 11:25 PM, Blogger AIG said...

"This is perfectly demonstrated when practically everyone says they never use what they learned in college on their job. "

I use what I learned in school every day. A lot of your claims seem to be based on anecdotal hear-say, not evidence. I bet Mark Perry uses what he learned in college everyday, too ;)

" we wouldn't have the stupid hiring we see now, but it is fairly widely accepted that the curricula themselves are largely worthless for the job."

Stupid hiring?

"Yes, matrix algebra is completely worthless on the job, as that's what your computer is for. If you find yourself solving matrix equations by hand, there is something very wrong at your workplace."

So what do you say to the guy who writes codes and has to program for solving matrix equations? I actually had to do it by hand once, or develop the code for doing it, since no off the shelf solution existed.

"Actually a lot of Burger King employees did go to college. ;)"

Actually, not a lot of them did. What's a lot to you? 1 thousandth of a %?

"And those odds are changing as people start to realize the worthlessness of college, witness the many computer programmers who never got a college degree."

I have never witnessed a computer programmer that never got a college degree. Does Microsoft hire computer programmers that don't have college credentials in their field? ;) Gee...I wonder why that is, even through their own founder didn't have one.

"Yes, the MIT grad will tend to afford that Mercedes easier, but you are confusing correlation with causation, as explained before. "

No one is claiming correlation or causation. I'm claiming sampling bias. Colombia or MIT or others practice sampling bias...the bias that tells the employer that an engineer from MIT is going to be a better engineer than one from Mississippi State.

What you are saying is true; that is the purpose of college. It weeds out people into categories for employers to chose from, without having to incur the costs themselves. And thats a VERY important role that it plays.

Employers are not going to experiment on a constant basis to hire anyone off the street that claims to have the knowledge they seek. But they KNOW...with a certain degree of certainty, that someone who went through 4-5 years in a top university, is very likely to be much more competent than someone who didn't.

A 4-5 year "aptitude test" to prove to an employer that you have what it takes, isn't cheap. It shouldn't be cheap.

"And if you can learn more valuable material at a fraction of the cost online, then the price of that degree is vastly inflated, regardless of what salary you end up with"

Information is free. Schools don't teach information. You can go get information at Wikipedia if you want. Employers aren't looking at what information you have access too.

This is what a lot of people here are missing; education is not about information.

 
At 11/02/2011 12:09 AM, Blogger AIG said...

"But you really are. Money has relative, not absolute values. If a subset of the population has relatively large amounts of money, they bid up the prices of goods and services out of the reach of everyone else."

So your argument is...they are stealing form "you" because they make more money than "you". Yep...thats not socialism at all ;)

So, I gave up on trying to respond to your comments Sprewell, cause the posting mechanism decided to die on me multiple times, and I lost everything I had typed. Oh well...lets just leave it at: you're totally wrong, still :)

 
At 11/02/2011 12:10 AM, Blogger AIG said...

"You keep repeating your dumb claim that college tuition isn't overpriced because some portion of the degree-holders make good money."

And you keep pretending as if "college degree" is an equivalent term, whether it is in basket weaving, or brain surgery.

Thats like saying that being a rocket scientist and burger flipper are the same thing, since they are both "a job".

"But as I said already, that completely ignores that the price is still wildly inflated from the real cost, particularly given new online methods that are an order of magnitude cheaper."

If they are cheaper, and provide an equivalent amount of value...than schools are going to start adapting them more and more. No problem there. However, they are certainly not there yet.

Again, education is not about information.

"You keep asserting that high salaries make up for everything, while blatantly ignoring what is actually taught, which is why the education itself is useless."

??? So you're saying that these kids are not being taught anything, but somehow employers seem to think they are, and keep hiring them, and never realize that these kids come out of their schools with no applicable knowledge at all? Strange.

"I could just pick out all the same kids who were good enough to enter Olin College, pay for them to party in the Caribbean for four years, and they'd do just as well when they went to work, because they were good enough to get into Olin in the first place."

???? Go ahead and try. Would make for a great paper that you could publish, and maybe win a Nobel prize too.

"You are right that in purely economic terms and from the short-term perspective of the student who only wants a quick salary, all that matters is if the degree will give you a high-paying job."

What is a..."quick salary"?

"But we just went through a cycle where according to more substantial, long-term measures that formula yielded some abysmal results, ie all the finance grads who learned bad financial models in college, got high pay, then made dumb choices on Wall Street"

Strangely, vast majority of finance graduates are still working on Wall Street. Maybe...maybe...it wasn't "all" :) They're still making high wages, strangely.

" So I don't think even you will say that it is only your pay in your first few years that matters: the content matters."

Content determines your pay.

 
At 11/02/2011 12:10 AM, Blogger AIG said...

"I'm guessing you didn't bother watching the linked video, where several people say they would not take a million dollars in return for never using the internet again,"

I most certainly didn't watch the video. But its irrelevant. The internet "ever again", encompasses a lot of things. The internet is not equivalent to "university". Internet is just a faster better easier method of communication...and its benefit, compounded over the next 50 years, accounting for future expected growth in technology and information...is certainly worth 1 million dollars to me.

But its such a disconnected example from what we are talking about, I'm thoroughly lost in your example. After all, if I couldn't use the internet, I couldn't work, since I couldn't send out e-mails, and no one would hire me. But what does this have to do with...education?

"Not sure what your point about marginal revenue is because nobody's talking about whether it actually costs a million to deliver internet access, only what it's worth to internet users, just like you claim the educational content of the degree is worth $200k to the employer."

The two examples are completely and totally unrelated. The point of marginal revenue was...one additional unit of "internet" to me is not worth 1 million dollars. ALL FUTURE units of "internet" for the rest of my life...is another issue. But what does it have to do with what education is worth to an employer, or you?

"but if that degree is useless and most employers are blind to that,"

So...your argument is that all employers are idiots, all college grads are idiots...everyone is an idiot; except you and the 3-4 other people on this blog who claim that "college is worthless". Quite an argument. I'm almost convinced.

" In any case, your claim that barriers are not lowered for medicine, law, etc is based on what, that the govt doesn't subsidize those degrees or that those degrees are worth it? I"

People who are smart enough to get into those degrees, are a good enough investment that they don't require the gov to "lower" their barrier to entry. Schools give them scholarships, private bank lend them money etc etc. That doesn't mean that they don't take gov. loans too...but that they are certainly not necessary for those kids to go for those degrees, for those degrees to exist, or for the schools to charge as much as they do for them.

The ones on the other end of the spectrum, would disappear tomorrow if gov subsidies went away. But they are not the same class of "investment".

"I think you're saying the latter, in which case, a subsidy is a subsidy, of course it lowers the barrier."

It doesn't lower any barrier, since there isn't any barriers for them. What kind of financing and cost structure would appear in the absence of gov subsidies for interest...is another matter (and I'd think the prices would increase for certain degrees).

 
At 11/02/2011 12:12 AM, Blogger AIG said...

"If you haven't noticed, my argument is based on all degrees, not just the ones you disdain."

Yes I know. Thats why your argument is rubbish. There's no connection between "all degree", any more than there is between "all jobs"

"Not sure why you don't think govt is raising the prices of the "valuable" degrees also, more funding and subsidies means rising prices in any market."

Or lowering prices for a particular part of the "bundle" a college offers, since the subsidies flow into particular "degrees" more so than others; ie if a school has 30,000 students, it MAY afford to keep engineering and science degree costs lower, if 20,000 of those students are "teaching" and "arts" students. If the school focused only on engineering and science, it may have to charge higher. Just saying...its not a "given", since we're talking about things which are really NOT connected or in the same "market".

Gov subsidies to "teaching degrees", increase the prices of teaching degrees...not "engineering degrees".

Not to say that the gov. consciously subsidizes one degree over another. But the students who go for an engineering degree, for example, are far less likely to use government subsidies to fund their education, than those who go for a teaching degree. Its...again...selection bias.

"But 50k schools likely wouldn't be 50k anymore, without those subsidies."

They likely would be.

"For someone claiming to understand economics better, you certainly have some strange ideas about subsidies. It doesn't matter if the investment opportunity, ie degree, is attractive or not, a govt subsidy will raise the price in either case."

It does matter if those subsidies flow towards one thing, more so than others. It does matter if a school is looking at a bundle of degrees it offers, and makes calculations on which degrees will cost more, and which less.

 
At 11/02/2011 12:24 AM, OpenID Sprewell said...

AIG, the education market doesn't work because the govt involvement doesn't let it work. The federal govt alone pumps in at least $30-60 billion into higher education every year, with another $70-80 billion from state/local, so the govt is either paying for or subsidizing at least half of college revenues. I already pointed out that this is a much higher degree of involvement than in most sectors, so I don't know why you come to the nonsensical conclusion that I'm saying any govt involvement means the market won't work. Perhaps your educational institution failed to help you think clearly about these issues? ;) Why would govt destruction of a private market be an argument in favor of more involvement? That's a claim only the retarded lefties make.

Nobody said govt getting involved was "evidence," it was given as the reason they are broken, just like they break every other sector that they heavily get into, like we just saw with housing. And it's not really about "votes and power," just antiquated systems that haven't kept pace with technology and so are about to be destroyed by the new tech. :) If there are "plenty of counter-examples" to a claim, they are not "outliers." Lol, "Education isn't about information," OK, what pray tell is it about? Some mystical process where a shard of spirit fire is passed through the generations? ;)

I already do learn from Wikipedia and other online sources and make money off of it. For example, I make money selling software and almost all of that was learned on my own from online sources, since my degree was in a different engineering discipline. I think what you're trying to say is that a college degree is not about information, but that says nothing about education, which is only about information. And I already agreed with you that a college degree is useless for information, as it's only a signaling mechanism for those who did well in high school and standardized tests and are disciplined enough to wade through four years of largely worthless classes at a college, without giving up. So apparently we agree on that, but where we probably disagree is that I see the internet destroying the university and degree and replacing them with real certifications online, which are about the information.

 
At 11/02/2011 12:51 AM, Blogger AIG said...

"AIG, the education market doesn't work because the govt involvement doesn't let it work"

That doesn't tell us anything of value as to what one thing would cost, or another...or whether it is valuable or not. It just tells us something about the nature of gov and politics.

"If there are "plenty of counter-examples" to a claim, they are not "outliers.""

There's certainly not "plenty" counter-examples. In fact, its pretty statistically significant in the opposite direction of what you're claiming.

"Lol, "Education isn't about information," OK, what pray tell is it about?"

Education is about getting information, getting input on how to use it based on experiences of those teaching you...and most importantly...its a 4-5 year TEST of how well you know how to apply that information.

Information is free. A 4 year test of applied knowledge...isn't.

"I think what you're trying to say is that a college degree is not about information, but that says nothing about education, which is only about information"

Education isn't about information.

"So apparently we agree on that, but where we probably disagree is that I see the internet destroying the university and degree and replacing them with real certifications online, which are about the information."

???? So a system which gives you knowledge and tests your knowledge and gives you a certificate...is SOOOOOO different from...a university? Hmm...yeah you convinced me.

 
At 11/02/2011 12:56 AM, Blogger AIG said...

See here's why you're totally wrong.

You claimed that there are so many "programmers" out there with no college degrees.

How many programmers work for Microsoft, Apple, Google etc...who have no college credentials in their field?

How many?

While you're at it, can you tell me how many medical practitioners are out there practicing medicine without college credentials?

How many engineers are there out there, operating without college credentials in their field?

How many physicists work at research institutions, with no college credentials?

How many chemists work at Bausch and Lomb without chemistry degrees?

Why do you think that is? You think every employer in the US has no clue, and simply doesn't learn anything even though they keep hiring new college grads on a daily bases?

Thanks for playing.

 
At 11/02/2011 1:02 AM, OpenID Sprewell said...

Nobody said that a degree in basket weaving is equivalent to one in brain surgery, that is your dumb conflation. What I said is that both require a similar amount of worthless classes, for example, how the brain surgeon is required to do years of worthless study on completely unrelated bodily systems. Your analogies are hilarious in how you just grab them out of nowhere, with no connection to what is actually being discussed. :) But the internet has been around for decades now and schools largely haven't "adapted" them much. That's a great sign that they are hopelessly broken, just as we saw with the newspaper industry that is now going out of business. Employers know the kids are not being taught anything, they complain about it all the time. You must not be paying attention much if you're completely unaware of this phenomenon. Haha, publishing a paper for a Nobel prize, your metrics are hilariously clueless. :D What's going to happen is that someone will get online learning going, hopefully me someday, :) and make billions putting the universities out of business: that's the real prize.

A "quick salary" is what I said it was, "pay in your first few years," and what you referred to as "Starting salaries." Is it really that hard for you to pick up such shorthand, particularly given the context? I'm guessing your college failed you on this, am I right? ;) Actually, unemployment in finance is pretty high at 7.3%, which is pretty high compared to other college grads. Yes, those who didn't lose their jobs still make pretty high wages, but the internet is about to destroy them too. :) I see, so "education is not about information" but "Content determines your pay." You do realize that information is content, right? XD If education leads to pay but it's not about information, then it's not about content either.

 
At 11/02/2011 1:37 AM, OpenID Sprewell said...

Again, nobody said the internet is "equivalent to 'university'," another simple-minded and illogical extrapolation on your part. You certainly seem to have some trouble understanding the internet analogy, so let me put it in simple, direct terms that even you might be able to understand. You claim that the internet is worth 1 million dollars to you and that the college degree is worth $200k to the employer. Therefore, would you pay $10k/year for your internet access, which is about how much it will cost per year to add up to a million dollars over your lifetime, since it is worth a million to you? Of course not, you would never pay that much because that's not really what it costs to produce, yet for some magical reason you say that everyone should pay $200k for their degree, which should never cost $200k in the first place. Of course you could still work without the internet, you'd just be stuck in outdated sectors where they don't use it much, like newspaper or doctor's offices. ;) Your terminology of "units" of internet is meaningless.

Employers are not idiots because they don't know what's taught by the degrees is useless- I already pointed out that they're aware of how useless the degrees are- they're idiots because they don't do anything about it, ie training non-college grads themselves and cutting out the degree expense. College grads are largely idiots, as I pointed out that I myself was not equipped at 16-17 to choose not to enter the college scam. My argument is based on pointing out how specific subjects like matrix algebra are useless for most who are forced to study it, or all the classes that padded out my engineering degree: that you choose to ignore this argument is your own problem.

Whether doctors and lawyers are a good enough investment to not require govt support is irrelevant to the reality that they do get plenty of govt support now and that it does raise their tuition prices, causing "the schools to charge as much as they do for them." I already agreed with you that such govt subsidies probably prop up the less intrinsically "valuable" degrees more. If you think the prices for medical and law degrees would increase in a free market, as you said "prices would increase for certain degrees," then you do think the govt subsidies lower a barrier for them. You apparently think it's not lowered much because you seem to think lenders will salivate over lending to them regardless, but the fact is that there are always dropouts and defaults, so there's always some barrier and a higher price will always raise the barrier.

 
At 11/02/2011 2:46 AM, OpenID Sprewell said...

There is a connection between all degrees: they're all padded out so that most of the classes are worthless. Of course, some are 85% worthless like my engineering degree and others are 95% worthless, like many sociology degrees, but those are small gradations compared to the large amount of worthlessness in all of them. You posit that higher govt support of teaching and arts degrees might lower costs of science and engineering degrees through some sort of cross-subsidy, but that's contradicted by reality, ie the list price of my engineering degree was higher than theirs, before subsidies, of which I received none. You may be right that the cost of a whole bunch of worthless ancillary activities that colleges currently fund, like giant football or basketball stadiums or large theaters, are being cross-subsidized by the teaching students, but that's irrelevant to the cost of the actual education. Again, nobody said govt subsidies to teaching degrees increases the prices of engineering degrees and I think you're fairly deluded if you think engineering students are "far less likely to use government subsidies." Why you think 50k schools would still likely be 50k without the giant govt subsidies, who knows. So you apparently think govt subsidies "flow towards" the less "valuable" degrees more and that schools then decide to cut the prices of the more valuable technical degrees as a result, but both claims are not supported by reality and evidence.

Sprewell: "AIG, the education market doesn't work because the govt involvement doesn't let it work"

AIG: "That doesn't tell us anything of value as to what one thing would cost, or another...or whether it is valuable or not. It just tells us something about the nature of gov and politics."

Your nature is so nonsensical and obtuse that I thought it was worth repeating. ;) I see, so most who attend 50k schools pay it off in 2-3 years and take little to no govt subsidy? You are seriously ignorant if you think that's the case. You seem to be saying that education isn't just "information," it's also information "on how to use it" and a "TEST of how well you know how to apply that information," which is guess what? Information.

What you fail to grasp is that all such models or tests are also information, as information is a very broad word. To use a software analogy, you seem to be differentiating between software, which would be analogous to the mental models that a student develops, and the data fed to the software, analogous to the subjects the student learns, like math or writing. But software is also information, so you chose the wrong word. Anyway, getting to the crux of your argument, most of what goes on in college is regurgitation of the class subjects, with not much building of mental models, so college is actually particularly bad at that. A 4-year test of applied knowledge may not be free, but it is certainly worthless if the information taught is mostly worthless. :) Yep, online learning will be different because it won't have most students learning worthless subjects like algebra or trigonometry or calculus when computers do those tasks easily these days. Nor will you be forced to waste four years learning a bunch of worthless stuff to get a single certificate, when you can be done in a year or two and get certification for each class you take. Those are big differences, but if you think it's the same because you still have tests and certificates and still have to absorb knowledge, regardless that colleges currently teach you mostly useless knowledge and online will actually give you useful stuff, you clearly are too ignorant to be convinced about these subjects.

 
At 11/02/2011 2:51 AM, OpenID Sprewell said...

Many programmers, at the biggest companies in the world, never got "college credentials in their field." The guy in the link didn't even go to college, yet worked for precisely the companies you list. I don't know anyone who collects such a stat, but it is well known from experience that a significant majority never studied CS, partially because it is a pretty new and fast-growing field. But the bigger reason is that anyone can buy a cheap computer and learn to program on their own and now with the internet, that's true for pretty much any profession: you can learn on your own. Of course doctors can't do it right now, only because the US govt stupidly criminalizes practicing without a US medical degree, but soon I'll be able to make an appointment over webcam with an Indian doctor who is unlicensed in the US and they won't be able to stop me, just like they can't stop me from gambling online now. :) So yes, you're right that most engineers and physicists and chemists and the like still have degrees, but that's only because their employers still stupidly require them.

The employers are too dumb to realize that they'd be better off getting those workers trained online, which is why they will soon be put out of business by new entrants who do. :) The mistake employers make is that they primarily hire degree-holders for those positions, even though only about 10% of the degree is even relevant to the job if they're lucky, then spend a great deal more on "intensive training classes" (skip to last section on training) to prepare them for the actual job. They could just cut the college degree out and try to filter the non-college grads themselves, but they're apparently too stupid to try that yet. This will change, because colleges currently charge way too much and deliver very little, whether you see it or not, which is why the universities are are all about to be put out of business. :)

 

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