College is for Suckers

BarnumBailey“There’s a sucker born every minute.”

We’ve all heard the quote, originally targeted at circus-goers.  I think it applies to a large swatch of college-goers as well.

Why do so many kids leave college deep in debt with bleak prospects at employment?  They’ve fallen for one or more of the following traps:


  • paid way too much
  • learned way too little
  • gained the false impression that they “deserve” an easy, high-paying job

Face it: young adults graduating college are treated like a commodity.  They’re soaked up by American businesses based partly on their college GPA (they managed to finish) but mostly on their ability to be mildly engaging in their interviews.  The really good candidates will prove themselves on the job, the bad candidates will wash out after a few years, find a new career more suited to their abilities, or will just endure decades of a “career” that goes nowhere.

How do we help our kids avoid falling into these traps?  How do we counsel them as they approach high school graduation?

It all starts with understanding the economics.  Spending money on a college education can be seen either as a really expensive four-year vacation, or as an investment in securing future income.  There are plenty of people out there in the American workforce who don’t have college degrees.   They earn less, on average, than college grads.  But is the difference worth it?

Right about now, are you thinking that I must be crazy?  That I’ve gone off the wagon for even beginning to think that college just isn’t worth it?  Take a step back and think objectively about the state we’re in at present: colleges and universities a charging outrageous annual tuition for something at hasn’t increased in quality AT ALL in the last three decades.  On the contrary, many of the more prestigious universities now have their entire course catalogs available free on-line, so that anyone in the world can take any of their classes.  These free students won’t, of course, receive a diploma – but they will receive the same education as the paying circus-goers.

What’s the real value of a Bachelor of Arts (BA) degree?

Imagine a large corporate machine mobilized to get you to buy something you don’t need at a tremendously inflated cost, complete with advertising, marketing, and branding that says you’re not hip if you don’t have one, but when you get one you discover it’s of poor quality and obsolete in ten months.  That’s a BA.”  — from  The Last Psychiatrist,  “Hipsters on Food Stamps”


Let’s look at the numbers and see what they tell us.

As of 2011, average weekly income, and net take home (assuming 35% total tax withholding):

  • High school dropouts: $451  – $15K/year net take-home
  • High school grads: $638  – $22K/year net take-home
  • Two-year college grads: $768  –  $26K/year net take-home
  • Four-year college grads: $1053  – $36K/year net take home

For the college grads, these are averages; a petroleum engineer will earn on average $120K/year before tax, while a psychology major will start out at just $29K.

Let’s say Brad is thinking about college, and wants to major in psychology, and figures that after financial aid, he’s going to graduate with $40,000 in student loans.  (This is the average amount of debt for students who graduate with one or more loans.  The overall overage, including those students without debt, is $27,000 in loans.)

Brad may spend the next two decades paying off that debt – and will miss other opportunities to save and invest for retirement as a result.  His brother Sam decides to take the community college route, and winds up with a similar starting salary after earning a general or technical certificate, but will likely have little or no debt.

While Brad is making student loan payments into his 30s, Sam is investing that same amount, and will have nearly $100K in his investment account when Brad makes his last loan payment.  I’m sure that the four years earning a BA was fun – but for Brad was the college education worth it?  If Brad had looked at his choice in these terms before going to college, would he still have made that choice?


Don’t fall into the trap of going to college because it’s “just the right thing to do.”  College costs should be looked at with the same scrutiny as making a $100,000 investment in the stock market.    Here’s some ideas on discussions to have with your high-school or college-bound kids:

  • Take as many general courses as possible at a community college.  Make sure to look at the potential to transfer those credits.  Spend those years at community college figuring out what your career path is going to be.
  • If you get a great shot at a job out of community college, take it!  Some employers will subsidize the completion of a four-year degree.  Even if they don’t, you can earn that degree if it’s still important to you, without going into debt.
  • Look at the cost and potential benefits of a four-year degree.  How much more income potential is there in the desired field?  If the cost-benefit makes sense, then by all means go for it!
  • Think very carefully about whether or not it makes sense to incur student loan debt to get a four-year degree.  You may find that it makes more sense to delay graduation while working through college, graduating in say seven years without debt, rather than in four years with $40K in debt.  Those three extra years now may give you ten extra years of retirement later.

Above all, don’t be a sucker.  Don’t assume that any BA degree, from a nice private university, accompanied by $40,000 in debt, is “the right thing to do.”  There are plenty of choices smarter than this, and they can all lead to successful, fulfilling careers.

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