The Decision: Is college worth it?

During the summer I work as a camp counselor, specifically with K-1st graders.  As I was meeting the family of one my young campers, the dad asked me where I attended college.  I told him Drake University and he then looked at his children and said, "See, we're always thinking about college.  It's so important."  I'm sure he will reiterate that sentiment throughout their youth.  But I wanted to lean over and tell them, "Eh...not really."

Understandably so, this father was trying to improve his daughters' lives.  It was undoubtedly a genuine effort on his part and I don't blame him whatsoever.  For many parents, college is key.  When they were young a degree actually meant something because not everyone could go to college.  But college is not what it used to be.  Today, almost anybody can attend because of the massive amount of student loans that are nearly guaranteed (Sound familiar?  Housing bubble, anyone?).  Many would say this is a positive thing.  However, those loans need to be paid back eventually and the problem is that there is a high percentage of them that won't be.  In addition, we now treat college as synonymous with learning.  That isn't the case, either.  Simply because you have a degree doesn't mean you are suddenly more intelligent.

So, financially college should be looking rather unattractive for many students.  Recently, Moody's released an analysis of student borrowing and said this of the situation in American education:

Unless students limit their debt burdens, choose fields of study that are in demand, and successfully complete their degrees on time, they will find themselves in worse financial positions and unable to earn the projected income that justified taking out their loans in the first place. [emphasis added]

Basically, students should make a cost-benefit analysis on college.  Does it make sense to take a loan out that will leave an unsurmountable debt once you are done?  If that isn't the case -- if you can survive college without a massive amount of debt, that is -- then it probably is worth it (but, still, not always).  However, with societal pressures to attend college mixed with countless options for loans -- including "help" from the government -- people are going to college that won't be able to pay off their debt.  We're seeing a bubble form in higher education and it is a serious problem.  But it also means parents might not want to beat the idea of attending college into their childrens' heads.  It simply is not what it used to be.

Startup Fever

As the economy continues to suck, more and more college students are turning to entrepreneurship to provide extra income and offset mounting tuition debt.  Max Raskin in Bloomberg Businessweek reports:

Inspired by Mark Zuckerberg, who founded Facebook as a sophomore at Harvard University, in Cambridge, Mass., and stymied by the shortage of jobs in the recession, college students are launching businesses  before they graduate. They're entering industries that previously required large investments, thanks to websites that offer help with manufacturing, inventory management, and accounting, says Dane Stangler, a project manager with the Kauffman Foundation, a Kansas City (Mo.) nonprofit organization that promotes entrepreneurship....

"If you start a company tomorrow, you can be global your first day," Stangler says. "You can have international suppliers, you can have international customers. Just compared with a decade ago, it's unbelievable how fast barriers to entry have fallen to starting a business from your dorm room."

Read the rest here.

Young People Increasingly Aware of Economic Problems

Anecdotal evidence -- which certainly seems accurate on a broader scale from all I've seen/read/heard from others -- indicates that young people are increasingly aware of the serious problems with the economy and the recession's effects on their futures.  For instance, Mish Shedlock shares a story from one of his blog readers about this economic fear:

Our daughters are 15 and 17. Most of their friends are very concerned about their parents' financial situations and tell me their parents have too much debt. Whether their parents know it or not, these kids know exactly what is going on and they are scared.

And the fear isn't without cause, especially for those young people who are college-bound:

Both parents and students are wondering what went wrong as noted in Subprime Goes to College; Students Buried in Debt; Who is to Blame....

Attitudes towards education and education costs have certainly started to change with some starting to question the value of an education and what they are willing to pay, even as the Obama administration tries to keep the education bubble alive by throwing more money at it.

Dear University Alumni Office

Other YAL bloggers and I have posted repeatedly on the way government intervention in the student loans/aid market has driven up the cost of college.  See, for instance, Peter Schiff on "How Government Programs Drive up College Tuitions," or Mish Shedlock on how Obama's student loans proposals will just lure students into greater unsustainable debt.

So this selection from the Best of Craigslist seemed appropriate, amusing, and economically on target [warning: *ed out foul language]:

Dear University Alumni Office,

I'm sorry to hear that the university's $750 million endowment has fallen in value to $500 million because of the recession and because your bank died. I'm also sorry to hear that you're dealing with declining enrollment due to the fact that middle-class families are no longer willing or able to bet their homes on a $45,000-a-year higher education for their children. I really am.

So, what I want to know is, why are you wasting money on glossy fundraising brochures full of meaningless synonyms for the word "Excellence"? And, why are you sending them to ME? Yes, I know that I got a master's degree at your fine institution, but that master's degree hasn't done jack sh*t for me since I got it! I have been unemployed for the past TWO YEARS and I am now a professional resume-submitter, sending out dozens of resumes a month to employers, and the degree I received in your hallowed halls is at the TOP OF IT and it doesn't do a f*cking thing.