Free college education is now being handed out to high school graduates and will lead to the ruination of many unwary young Americans. Here is what happens when higher education becomes commoditized: 1. More people compete for jobs that require college degrees. Greater supply and no increased demand means those graduates who do obtain jobs in their field will be paid less. With more graduates than job openings, these students who momentarily wore a cap and gown in a proud graduation ceremony may end up doing menial labor, like the women who clean my home or the waiters at a restaurant I frequent. Labor is still subject to supply and demand. It may be tough to graduate in engineering, but too many engineers and their earning
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Free college education is now being handed out to high school graduates and will lead to the ruination of many unwary young Americans.
Here is what happens when higher education becomes commoditized:
1. More people compete for jobs that require college degrees. Greater supply and no increased demand means those graduates who do obtain jobs in their field will be paid less. With more graduates than job openings, these students who momentarily wore a cap and gown in a proud graduation ceremony may end up doing menial labor, like the women who clean my home or the waiters at a restaurant I frequent. Labor is still subject to supply and demand. It may be tough to graduate in engineering, but too many engineers and their earning power erodes. There are 117,553 graduates with an engineering degree entering the job market each year. Colleges do no counseling to inform students that the career field they have chosen may have a limited number of job openings. This borders on fraud.
2. If everybody has a college degree, what is it worth? About 4% of American adults have a 4-year college degree. The governor of New Mexico just granted free college education to high school graduates in her state, regardless of family income. She just diminished the value of a college diploma. The over-abundance of anything leads to its devaluation. Gold is scarce. It is treasured. The oil industry attempted to create false scarcity by misleading the world there were only so many dinosaurs and plant material that got compressed in the earth layers to produce oil. And of course, oil producers weren’t refining at capacity. These kinds of lessons are not being taught in American schools. College degrees were once valuable because they were difficult to earn and graduates were scarce.
As my son, then age 10, said to me one day: “Papa, if food (food stamps), housing (rent subsidy), medical care (Medicaid, Obamacare), cell phones (Obama-phone) and college education cost nothing, then the value of everything is zero.”
3. This effort to get every high school graduate to enter college is a likely effort to reduce unemployment rolls. Students are a pawn to a political objective. This keeps them off the unemployment rolls. Close to 20 million Americans are in U.S. private and public colleges. When the cost of a college education became so expensive, many young men and women opted to go into the military, so no military draft is needed. There are an additional 3 million Americans in active military duty. The U.S. unemployment rate is reported to the 3.5%, a 50-year low. Just think if all these young Americans were out looking for jobs.
4. College loans just bury students into debt and they don’t enough have money to get their own life started. They still live with their parents. They can’t buy a car or put money down on a home mortgage. (To add injury to this problem, if students get a job, they have to pay into Obamacare even though they are not likely to need much medical care given their age.) Auto and home sales suffer at the expense of being a loan serf.
Most students with higher academic achievement are already in college. Offering a college education for free will tempt young Americans with C to C- grades in high school to enter college in an attempt to earn more money in their chosen profession. But studies show most of these low-grade students withdraw from college and never earn a degree, leaving them with a college loan to pay and no increased earning power.
According to the Census Bureau and National Center for Education Statistics via Postsecondary Education Opportunity, about 45% of low-income students participate in baccalaureate degree attainment but only about 10% graduate.
Half of the borrowers in default leave school without earning a degree! Unpaid student debt occurs more often to single parent families, in other words, to those who are striving to get out of their cycle of poverty but probably don’t have the where-with-all to be in college in the first place.
Once the federal government began to guarantee payment to lenders for student loans, colleges raised their fees beyond affordability. Tuition prices grew by 63% from 2008 to today (2019). The average cost of tuition for the 2019-2020 school year is over $40,000/year at private colleges and over $20,000/year for state residents at public schools.
A report by author Daniel Freidman is telling. Says Friedman:
The percentage of U.S. students who go to college substantially exceeds the percentage of U.S. students whose academic records suggest that they are capable of doing college-level work. 46 percent of 25 to 34-year-old Americans have at least a 2-year degree, and 36.5 percent earned a four-year degree. However, about 19 percent of Americans enrolled in college but never earned a credential of any type—that’s nearly a third of all students.
At schools that accept fewer than 25 percent of applicants, 88 percent of students graduate, and at schools that accept fewer than half of applicants, 70 percent graduate. However, at schools that take 90 percent of applicants, fewer than half graduate, and at open enrollment schools, only a third of freshmen complete their degrees. Students who drop out, and who are currently at very high risk to default on student loans, will be better off under a program that lets them leave college for free. But they’ll still be worse off than they would have been if they never went to college in the first place, because they will still waste their time struggling in courses that they cannot pass, and will still have poor employment prospects after they drop out. Instead of further subsidizing the programs that are currently failing these students, it would make more sense to try to develop some sort of new postsecondary job-training program that might have better results for students who are unlikely to complete a college degree. But in a country where two-thirds of the population is already going to college, there aren’t many promising students left to find. Few students in the bottom third of academic performers are capable of passing even introductory college classes.
5. It may be wiser for students of lower academic achievement to be trained in a tech school. For example, the auto industry needs an estimated 76,000 auto mechanics each year. The National Auto Dealers Association graduates 37,000 service technicians annually. Starting salary for an auto mechanic out of tech school is $61,000, higher than that of a college graduate majoring in business. Auto technicians can go on to earn over $100,000 a year with continuing education paid for by auto manufacturers.
There are many opportunities to earn more money without a college degree. The Wall Street Journal published a report showing plumbers often achieve a higher income than college grads.
In particular I’ve found ethnic families mindlessly want their kids to get a college degree. Parents of these young people need to re-think.
6. What is the objective of higher education? It sometimes appears to be to earn more degrees. A bachelor’s degree is hardly marketable. A master’s or doctorate may be needed. Colleges may water down bachelor’s degrees so more post-grad education is required. So, the objection of education becomes more education. Think of the guy in Michigan who has earned 29 college degrees – – college degree with the only objective of hanging another diploma on the wall.
I thought college was about increasing one’s value and earning power? If college is prepping you for a successful and profitable career, over and above what college professors earn, then why aren’t these lecturers quitting their posts in going out into the marketplace to earn that money?
7. College should be getting more not less affordable with online courses and ability to get a Stanford physics professor lecturing a world of students without the cost of all those brick and mortar schools. (College is largely a social phenomenon and a place to hook up these days.).
8. College prepares students for a particular career, as if careers last a lifetime. That era is over. According to the Bureau of Labor Statistics, workers age 18-48 changed their jobs 11.7 times. Many of those job changes are career changes. Jobs no longer last a lifetime.
A present but unmentioned reality is that your kids in college may need to prepare for a job that doesn’t exist yet.
Knowledge is increasing at such a high speed that whatever students learned in college with textbooks that are archaic on the day they were published. Basic skills to navigate in the economy (problem solving, personal money management) are imperative regardless of career.
9. America is shooting itself in the foot. One of the political promises has been to “Make America Great Again.” To help that occur the Executive branch of government negotiated to lower taxes on American companies doing business overseas that were leaving profits offshore to avoid higher taxes here at home.
According to one source, in 2017 American companies brought back a total of $155 billion in offshore cash and another $665 billion in 2018 – profits earned offshore – with a tax cut that fell from 35% to a one-time rate of 15.5%.
However, not everybody is cooperating with that agenda. There is refusal to achieve that goal if it favors one particular political party. Unfortunately, American businesses double-crossed America as many companies used the repatriated money ($1.1 trillion – no you didn’t read that wrong) to buy back stock rather than invest in new ventures that create new jobs for college students who do graduate.
10. As a nation we can produce more college graduates by simply lowering the standards. Remedial education, which requires some college students to re-take math and English they should have learned in high school, is being eliminated in some states. Some universities have stopped giving F-grades. The University of Wisconsin is said to offer a bachelor’s degree to students who take online competency tests about what they know. Maybe the objective to achieve college credentials, has supplanted the attainment of knowledge and wisdom.
They say if everyone has a college degree,
we’ll be a really educated society.
But people have to actually learn things.”
– Nathanial Bork, philosophy instructor.
11. What happens when the college bubble pops? A host of struggling colleges and universities are predicted to disappear or merge in the next decade, maybe the bottom 25% of educational institutions. Many private colleges are discounting their fees to build enrollment. A tuition discount above 35% puts a college in a danger zone. One report says 25% of private colleges are running deficits. About 40% of colleges and universities have fewer than 1,000 students. Many of these schools have high discount rates and depend upon tuition for more than 85% of their revenues, and have an endowment that won’t see them through the coming crisis. If institutions of higher learning can’t survive, how do they expect their graduates to learn how to navigate in a competitive job market?
12. All of the above factors lead to an inevitable end – the collapse of upper education in America. So, a hidden way to head this off is free college education. It’s a bail out today before a desperation bail out tomorrow.
Steve Penfield’s STUDENT DEBT CANCELLATION: A GOOD IDEA AND A POLITICAL HOAX article posted at the UNZ REVIEW is telling. Since Penfield presents different spectrums of thought on how to deal with $1.6 trillion of school debt held by 45 million young Americans, 5.2 million who are in default.
The US Dept. of Education now holds all the paper on these debts (underwriter of sorts) and banks loan it out and make all the interest.
Penfield says it is inevitable that this debt will have to be cancelled. It is just on whose ledger does that take place, government (taxpayers), schools, or lenders (banks). Who would you say should take the financial death bullet in the chest?
As Gary North sagely answered the question of who will pay today’s social debts – he said the young will repudiate these loan payments, they won’t be passed on to the next generation. And that is precisely what we have, 5.2 million graduates in default (borrower falls 270 days behind on their payments) on their student loans.
The ultimate government give-away would be to universally pay for college. One of the comments by bloggers at UNZ REVIEW, and the most eyebrow raising, is that it would “only take” $65 billion/year to pay for the college education of every student in America. Increases in defense spending of that magnitude have recently been approved, so why not just pay for everybody’s college education? That is the illogic that is in current discussion. No one in neo-socialist America sees the folly of commoditizing a college degree.