Saturday, August 29, 2009

Readers Respond on Higher (Cost) Education

Readers respond to my recent entry on higher (cost) education.

I received a variety of thoughtful responses to Is Higher Education Worth a Lifetime of Debt? I've been promising (or is it threatening?) to update Readers Journal and What's for Dinner at Your House? but every spare kilocalorie of my flagging energy has been devoted to completing Survival+ which is still grinding forward like a glacier. This compilation is the best I can do at the moment.

Clearly, education is a complex topic. Here are the reader commentaries, more or less in order received. There is much good thinking here--some provocative if not outright subversive/inflammatory:

Rich H.

I paid for my 4 year BS college myself. Tuition and expenses were reasonable and affordable back in 1979-1983. I paid for college myself. No loans were needed. My degree was in Biology. I soon learned that there are no good jobs in biology. Some of my classmates got jobs as lab technicians. Low paying dead end jobs. So I got a job as a computer programmer. Computers and electronics were my hobby.

That lasted for many years until many of the computer jobs were outsourced to India. I love Indian food but the thought of getting paid a few dollars a day was not appetizing. I worked as a consultant and I could pretty much set what my hourly rate was for the job being done. Then I found my clients saying things like: "Submit your lowest offer". These were people I had done work for in the past and had a proven track record of solving their problems quickly. But now they could get cheap offshore programmers. I was competing with people that lived in huts with dirt floors. At that point I said forget it. I quit.

Now I'm restoring antique cars and selling custom designed/made electronics. And guess what? Everything I've done to make a living had nothing to do with what I learned in college. So, did I need the college degree? In short the answer is no.

But I did get something from college. I learned things I should have learned in high school. Things like math and writing. The school system I went to as a kid was pathetic. Looking back I can now see this clearly.

The bottom line is that if I had a good elementary and high school education I would have not needed college.


Cheryl A.

It is not unusual for students graduating medical school to have a combined debt from undergraduate and graduate school of $200,000 to $300,000. While some of these newly graduated physicians can "work" it off by joining the military, public health service, or finding a position that includes repayment of school debt, many will be paying several thousand dollars a month toward their loans for 20 years. I do not think it is a stretch to speculate that this may affect the specialty they choose, as well as other decisions.

You couldn't have been more timely if you tried: Law school students incurring significant debt (NY Times)

Louis R. also submitted this NY Times article--thank you, Louis.

Murph Freeacre & Murph

Your last post on higher education prompts me to step into some comments. I guess an old fogy like me had seen a distinct change in this area of society and one which I suspect is having long term questionable effects.

In your essay you unquestionably treat higher education as a means to a job, you know, much like a vo-tech except with more expensive books, longer apprentice time and a more esoteric subject matter. I went back to the university system in the 90's with the belief that the degree would set me up for a job until I retired and I finally finished up my degrees, including one in education. When I started looking at the schools systems with a microscope, I backed away from it all, never used the degrees for a job meanwhile accumulating a debt so large there was no way it could be paid back. When I went to the university in the late 50's and early 60's I could pay for it all with part time jobs. No way now-days.

The purpose of this letter is to take issue with you over this higher education concept.

First off, I think we really need to define what we mean by "education" and what it means to be "educated". Is it really just a means of getting a higher paying job? What relationship does this concept have with the concept of education in the classical Greek era, or in the age of enlightenment or even in the early American higher degree attainment? I am going to assert that higher education(and to a great extent secondary education) is simply a vo-tech by definition with different course structural demands.

An excellent examination of educational systems can be found by reading Joel Spring, "Education and the Rise of the Corporate State" and a multitude of other books by this man. One book in particular "Educating the Worker Citizen, the Social Economic and Political Foundations of Education" which may be a tad hard to find these days.

In his analysis he examines the educational system from the 1600's to the 20th century in England and the U.S. He shows the dramatic shift in what we call education prior to the involvement of corporations to the present time of heavy corporate involvement since the industrial revolution. It is a drastic change of concept.

What we have gotten far away from in our educations system is generalized knowledge about our world and its interrelationships to one of high specialization with no knowledge of relationships. One of the really big problems with this shift is the degree of bureaucratic manipulation and control this entails and makes possible. We thusly turn out people with advanced degrees that have no ability to see what impacts their specialty has on other parts of the social, economic and environmental systems. They are also being conditioned into fitting within a huge bureaucratic system in corporations to cause no ripples by asking question about the validity of their work and applications of their specialty job training.

Anyway, I think a more thorough examination of what is actually happening with education would be in order.


Eugene P.

A few thoughts on your most recent essay re: higher education.

Somewhere along the line, between the founding of the first US college (Harvard, 1636) and the present, the populace became convinced (mostly via liberal propaganda, probably during LBJ's Great Society) that attending college, and receiving a degree, and walking down the aisle to Pomp and Circumstance was the best, safest, and indeed, the ONLY way to gain upward social mobility. If your dad worked on the assembly line in a factory, and you didn't want his life, one of manual labor and little promotion, your choice was clear: go to college, and then you can become the manager of that factory! (I say this with a mild jest, of course).

The government encouraged this behavior by offering low-cost loans (a moral hazard in it of itself, and a price inflator, since anyone with half a brain knows that cheap credit leads to higher prices), federal education grants (a redistribution of wealth from taxpayers to taxpayees), and its own taxpayer-funded propaganda mouthpiece, the Department of Education. (Now that sounds positively Orwellian, doesn't it?)

From a college's point of view, you have slowly gained a captive consumer. You have a product (a university degree) that the consumer is convinced he ABSOLUTELY needs, and will go into hundreds of thousands of dollars of debt just to acquire. Cheap and abundant student credit (again, partially subsidized by tax dollars via the GSE Sallie Mae) ensures that you can charge *whatever* you want (with little to no room for negotiating - have you ever tried calling a Registrar's office for a tuition discount?), and since most students don't understand the concept of credit, or compound interest, you simply convince them that all the debt can be paid with but a wave of the hand, once the students have graduated with their prestigious piece of paper, and land their dream job without so much as lifting a finger.

The colleges continue to rake in the money. Private institutions escape being taxed by the government, by calling the profits of their education casino "endowments" or "trusts." Public institutions make their money on tuition to out-of-state students, and on the other fees that have 100% profit margin, and little discussion: book fees, students association fees, housing/meal fees, and the like. Have you ever looked at the salaries for the administrators of some of these "public" institutions? When I was attending the University of Illinois (Urbana-Champaign) in the late '90s, the Chancellor of the University was making something like $500K a year. That's more than the President makes, for crying out loud. How can she possibly justify her salary?

Since the demand (artificially created as it is) is so much greater than the supply, the big dogs (the Ivies, the Stanfords, the U of C system) can continue to charge more and more, while admitting fewer and fewer students every year (as a percentage of the total that apply), so that they can improve their "admission ratio" numbers, and be considered even more "elite." They contribute to the caste mentality. On the other side of the spectrum, "diploma mills" like the University of Phoenix and Robert Morris churn out degrees as quickly as you can pay for them, diluting the "brand value" of an undergraduate degree from a more "legitimate" university, thus setting the table for grade and degree escalation. Nowadays, an undergraduate degree is not enough to distinguish you. You need Master's degrees (which of course entail you having to go back for more school, and paying colleges more tuition). Perhaps sometime in the near future (if the education bubble has not already popped), one will need a PhD in food-service management and administration before McDonald's will even consider hiring you for one of their burger-making associate positions.

Don't get me wrong, colleges have large liabilities, too. Much like General Motors, and any other corporation/government that promised unsustainable benefits packages, colleges have tenured professors. Tenure is the holy grail. I've met non-tenured professors who do the work of two or three men, patiently biding their time until the get tenure, and get into "the system." I've met tenured professors who couldn't give a rat's a** about teaching, or education, or students; they make even more money by authoring the multi-hundred dollar textbooks that are required reading for the one class they have to teach a semester. Then there are the TAs, who get paid barely enough to make ends meet, and do all of the heaviest lifting: the grading, the office hours, all the other sh*t jobs that a tenured professor wouldn't touch with a ten-foot pole. Once you get tenure, you keep it forever. That's even better than unionized workers, who constantly fight (and sometimes lose to) management that decides it must renege on its previous commitments. The joke is that unless you turn out to be Jeffery Dahmer, you get to keep your tenure.

Of course, there is an equal amount of blame to be shouldered by the students, and the parents of the students. Most students don't know anything about finances, or debt, or even what they actually want to study. They know more about their favorite TV shows, the texting functions of their cell phone, the hours of operation of the local mall. College, for them, merely represents an opportunity to get away from home, party, get laid, etc. They don't want to have to actually work, or think, so they pick majors like Leisure Studies, or Communications, or Diversity and Social Change, majors that colleges are all too willing to offer and charge for, "since the customer is always right!" It matters not that these majors will make these students essentially unemployable if and once they graduate. Parents don't think much either; they simply react, capable of only shuddering at the thought of the tuition bill in the mail. They've bought into the college propaganda as well.

College is a business, like any other. They exist to make money first. I claim that if you, as a student, happen to earn an education while attending college, than you were either smart, or lucky, or some combination of both.

I will say that those attending college, and those colleges providing programs, for such avenues of study like medicine, engineering, and science should be mostly immune from my commentary.

For the people that can afford to attend college, and not worry about where they'll be employed, or how they'll pay off the debt (e.g., the classic trust-fund baby), college is probably a good time. They can take whatever classes they want, meet some interesting people, and live in a sheltered bubble that doesn't resemble the real world. Once they leave, their money can continue to insulate them from the real world. Might be unfair, but life is unfair.

For the rest, they need to take a long, hard, critical look at the value proposition of college, ignore the self-serving "advice" of college counselors and admissions officers and the biased MSM, and decide for themselves if its worth it.


Chuck D.

I live in a big state university town. Among other events, it is famous as the home team of a highly ranked player who died of cocaine overdose, and a post-game riot bonfire which cooked a major East Coast fiber optic trunk a couple of years ago. The U crossed a threshold in MY mind when they ripped up a perfectly serviceable concrete sidewalk in front of their new performing arts center to replace it with slate slabs embedded in concrete. Slate is smooth and slippery when wet, uneven and hard to scrape the ice from when cold, and it was just so unnecessary. But with all that money coming in, it had to go somewhere, right?

I have a son at the U, who disgustedly reports on the many ways in which his peers waste their years.

Here are a few reasons why a college degree is so expensive:

1. when a student pays for room & board, they also pay for the accumulated damage and dirt that students bring to the dormitory.

2. downtown businesses thrive on students who buy discretionary food and (especially) drink. (How do I know it's discretionary? Most of them are overweight!) The "Animal House" ethos of collegiate partying is alive.

3. if a product is expensive, but people buy it anyway, then it HAS to be good, right? Higher tuition is a mark of quality that's just simple enough for the typical collegiate consumer.

4. every government program that tries to make college more "affordable" just makes it more expensive, because the customers will always spend up to a threshold of affordability. The reckless granting of HELOCs is one such source of cash.

5. just as spending money while on vacation is easier because "we'll only be here once", students probably have an attitude of "party now, pay later".

6. even in recession, I expect our state school to be popular, since there can be just as many students shifting down into the school as there are shifting down into community colleges.


Edward D.

Charles, your latest article about education certainly had me pounding my desk in agreement. However, I was surprised that you seemed to have missed one crucial aspect: the bourgeoisification of work. My specialty is in the IT field and I can attest that this problem is becoming rife in the industry.

So, I disagree a bit with your network admin scenario. Technology is a fast moving target and most state universities are two to three years behind the curve. Furthermore, they are dogmatic and tend to base curriculum around academic platforms that may not be widely used by real world businesses.

My #1 rule of software is that most solutions do not require overly complex computer science. Selecting the biggest building block possible and applying it to your particular business need tends to be the most efficient way to develop software. Universities do not teach this. They tend to teach, in great detail, how to reinvent the wheel and, in effect, duplicate the millions of man hours spent developing the platforms that exist today.

Certainly, we need elite OS kernel engineers, compiler designers, and advanced silicon wafer engineers – just not many of them. So, if this is the case, yet businesses are constantly complaining about their incoming IT graduates, what’s going on here?

Two things, really: 1) most state universities are geared towards the defense industry which, by nature, does not leverage commercial software and reinvents the wheel at any expense and 2) there has been the creation of a “weeder” methodology to create a walled garden to block out competition from self-trained computer/IT professionals.

As for factor 1, yes, computer science and electrical and computer engineering are infinitely deep, mature sciences. Out universities produce some of the brightest researchers on the planet that will create tomorrow’s technology at companies like Raytheon, Intel, and Microsoft. But, I’d like to focus on the more pragmatic computer professional. You know, the ones that businesses are, supposedly, starving for and cannot find enough of.

Well, it should be clear that there are divergent groups of professionals with divergent goals stuck in the same class with one another. Everyone thinks they need to be a computer scientist or an engineer. But to what end? What does it do for your customer? Yes, it’s all computer technology and programming. But creating an operating system, or an airplane’s control system, is a far cry from, say, the workflow automation that businesses need. So the traditional CS curriculum serves research and defense, but not the needs of typical SMBs. I think the reason this curious construct persists is factor 2:

Let’s examine factor 2. Traditionally, the computer industry had few official accredited degrees for those working in the field. Most pioneers in the IT field came to the industry from a tangential, perhaps related, field. These computer pioneers, especially personal computer pioneers, were “hackers”, which meant that they hacked, or tinkered, with technology in their spare time.

Everything was too new to learn from the university and all the business models were untested. So, how did these professionals learn their craft? They hacked – they picked up books, manuals, magazines, and trade journals, they programmed, stuck together different systems, and devoured every last bit of information they could get their hands on.

And this tradition was healthy all the way through the mid 90s. I was just a kid hacker when I got my first computer technician job at 16, yet my coworkers seemed to think that I was as knowledgeable as any other. The notion of giving respect for practicable knowledge and performance was also a hallmark of the IT industry.

But, some time later (and I’m not sure when), perhaps during the dot com bust, the bourgeoisification of IT work began. Job postings started ratcheting up the education requirements for even the most mundane computer technician jobs.

Then, as a response I suppose, came the onslaught of the cottage industry we know as IT certifications. I guess those that lacked the proper undergraduate degree thought they could demonstrate that they actually knew what they were doing by acquiring certification in each of their IT specialties.

This seemed to be a stable compromise for a period of time. But alas, it backfired. The certs obviously could be gamed and all kinds of kids came out of the woodwork with ridiculous numbers of them. A certification did not mean you had the intense passion of a hacker, or the experience, and once again corporate America ratcheted up their requirements.

And so the infection began. With the artificial requirement of said degrees in place, the ranks of IT departments slowly became filled with those that held them. The average business developer knows that they really possess no knowledge that is so unique that a determined individual couldn’t just grab a bunch of books, online classes, and tutorials, and become proficient within a couple of years. In fear of job security, perhaps from the phony cert-kiddies, the degreed fraternity was born.

So if you want to play the game, buy the degree and endure its misguided curriculum or forever be fought off by the bourgeoisies. It’s becoming true in the IT industry and I’m sure it’s becoming true elsewhere. What a cancer on America.

Keep up the thought provoking articles.


Paul K.

Charles ... there are two really separate issues in an analysis of higher education. One is costs and the other is value.

I agree with you on value. Higher ed is a good value for students who have a good feel, going in, on how to use a higher education to advance what they already sense they want to do. I would, however, avoid calling them elites ... they are no more elite than a great craftman who has interned with other great craftsmen or Labron James who is an elite athlete. The are just focused on what they do and that makes them better. People who succeed in higher education have one set of skills, not the essential set of skills. Value, as in any setting, is dependent upon both cost and outcome and outcome is in the eyes of the beholder. But we agree here that too many people think that a College or University education is all that it takes to be successful and that is far from true.

As for the costs of higher education rising, the reason is simple and not at all political or manipulative. Higher education, like hospitals, research centers and other creativity-based businesses, are highly labor intensive. In higher education, about 70-75% of all costs are labor (and Fringe benefits). Small annual increases in labor rates yield a sustained and significant increase in higher education costs over time.


Ernesto M.

The first thing I will say is that philosophically, I am opposed to ANY public education because I do not believe that there is anymore of a reason to create an entitlement in this area than in any other.

But from a practical standpoint, I have grudgingly come to consider it necessary with the following exceptions. The first is that there should be NO federal government spending at all because it is unconstitutional. The constitution specifically delegates the rights and responsibilities that are not specifically outlined in it to the states and this is not one of them. And no, I would not favor a change to the constitution to permit what exists today either.

The second is that I consider it undeniable that any assembly line system, which is the most likely system under any level of government and the only one possible when the federal government is involved, will always be of low quality. So the expenditures might as well be reduced to as little as practically possible. This is also consistent with the conclusion of your (last) article.

The primary purpose I see for the “educational” system today is twofold and yes, I know this opinion is a cynical one but it is accurate. First, we cannot have millions of indigents running unsupervised in the streets. So the taxpayer must provide a form of child daycare which just happens to be disguised as the public school system.

And second, because of the increasingly technological direction of the economy and the limited role which agriculture and manufacturing now fill plus the fact that most people now work for someone else, it is necessary to take steps to keep people occupied to reduce unemployment. This purpose is filled by both the public school system and to a lesser degree, a college “education” until these graduates are generally old and mature enough to generally have the capacity to fend after themselves (albeit as a defacto DEBT SLAVE in many instances due to the ridiculous cost).

Most people either do not see the logic in this position or reject it out of altruistic incurable based romanticism combined with envy filled populist demagoguery. From an economic standpoint at least at the university level, most people look to the impact on the individual along these lines.

They compare the lifetime economic advantage for college graduates versus those who do not have a university diploma. And since many or most people cannot afford to pay the cost on their own, that’s why they believe the taxpayer should cover the cost for them. It’s based upon the public presumption that, at a minimum, an opportunity to a middle class lifestyle is a universal entitlement. Many others apparently believe that a minimal middle class standard of living is an entitlement period. Either position is, of course, an absurd justification for public funding but I will overlook that minor detail for the moment.

I’ve never seen the empirical evidence for this position but even though I implacably reject it, for the moment I’ll assume for the sake of argument that it is correct. Nevertheless, I believe that the economic value of a diploma has been shrinking in absolute terms over time even though it is or may be increasing relatively versus those who do not have one.

First, this is due to the fact that the number of college graduates is increasing continually in both the United States and elsewhere and probably at a faster rate than the number of jobs which are supposed to provide the expected compensation. And since the labor market is becoming increasingly global, those from the developed economies are increasingly competing not just with each other but with those from the developing world. There is numerous information technology staff in my company from places like India and the Philippines (generally contractors) and this is true at many other organizations as well. (And yes, my interactions with them support that they are very well qualified and that Americans better get off their chairs and get serious about their marketable skills.)

The second reason is the increasing cost of a university degree. I graduated in 1989 with my masters but when I talk to younger people, I find=2 0it incredible how absurdly expensive a college “education” has become. And the reason why this has primarily happened is (once again), you guessed it, the government. Government subsidies of “education” have enabled institutions of all types to increase and maintain prices at levels that their “customers” could not possibly afford under competitive market conditions. This is an example of Bizarro world economics. There isn’t a single other “industry” that I am aware of (unless it is also distorted by the government such as housing and health care) where anyone can continually price the good or service in the market place above the customer’s ability to pay without going bankrupt. Eventually, this is going to prove unsustainable just like the housing bubble was and financial assistance is ultimately either going to be allocated politically (as it partially is now) or the number of enrolled students will have to decrease dramatically. Possibly a combination of both will occur.

Now that I have addressed some of the individual considerations let me turn to the societal ones.

One thing you will typically hear is what a competitive advantage an educated workforce is to an economy and yes, this is true. In fact, if you listen to the socialist apologizers of the democratic welfare state, you would think it is the most important or even the only competitive factor. This is false for several reasons and here are at least two of them.

The first is that there is widespread empirical evidence in other countries where people with university degrees are performing menial jobs like taxi drivers and restaurant servers even when they have law or graduate degrees. I’ve been to some of them myself.

Now some of these people may have received an inferior “education”, but the primary reason they cannot find a job in the local market consistent with their actual or supposed qualifications is the government’s inability to protect or outright hostility to private property right’s which leads to capital flight and inadequate business investment. A second reason may be that there is a huge excess supply of college graduates due to the government artificially increasing the supply. Or maybe it is both.

But in any event, this creates an economy with few to no jobs available for these people no matter what their qualifications are on paper. And this isn’t just true in the developing world but in Europe also. This is the direction we are heading toward in the United States if the socialist idiots ever get to conduct their ivory tower social experiments in the real world.

The second consideration from a societal standpoint is that a substantial number of jobs today do not in actuality require a university or advanced degree of any kind. Many people falsely believe that they do but that is only because they may look at the job requirements which a hiring organization claims they need or want. It’s true that there are some (primarily technical) jobs that did not exist before that are better filled by a college graduate, but the vast majority are generalist professional and managerial jobs that do not. The reason we know this is because many or most of these jobs were filled by employees without a college degree in the past when the pool of college graduates would not accommodate it. Most of these jobs require leadership skills more than formal training and while a university experience can help develop them, it is hardly necessary.

I remember at the beginning of the Clinton administration when there was wishful thinking to essentially make a university degree a public entitlement. Bush in my opinion was also in favor of that philosophically and now under the Obama administration, we may actually get it. My comment to that is it would be economically more cost effective to just grant everyone a diploma by decree rather than waste the economic resources that would be necessary to make that happen.

Any substantial increase in the college population would lead to even larger increases in costs while simultaneously diluting both the value of a diploma and the quality of the graduate pool. Today, with the government distortions created by financial aid, there are many students that have no business being in a post-secondary school and many academic institutions that have no business granting diplomas.

And at the same time, these distortions that concurrently increase the supply of college graduates and cheapen the value of a diploma also turn many of the students who excel academically that actually deserve to be in school into defacto debt slaves due to the absolutely ridiculous cost of obtaining a degree. Today, it isn’t uncommon for students to graduate from college with student debt resembling a mortgage. Is this fair?

To summarize this topic, the optimal solution to this problem is to get the federal government out of “education” altogether and let the states run the primary and secondary schools and the state university systems (at least for the moment) with “only” their own money. At the university level, a removal of the (primarily) federal government induced distortions would finally force many of these institutions to compete on a market footing and bring their costs in line with their customer’s ability to pay. If this happened, then those who provided comparable value for what they charged (whether in an economic sense or otherwise) would survive while those that do not would go out of business as they deserve to, just as in any other industry where an organization does not provide sufficient value for what they charge.

Thank you, readers. Please pardon my poor editing--my editing neurons have been fried by the process of trying to edit my own work...


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