College “Planning” is Rigged

This topic is so important I will probably write a less incendiary and more analytical article on my Walnut Hill Advisors site sometime soon. And it took reading James Altucher’s article on this topic to fire me up to write this right now because it’s right in line with that I am telling clients in my practice. Here we go…

For now, let me mess with your head. And I am directing this to those who are struggling and wondering how they are going to send 4 kids to some over-priced and over-hyped university somewhere in the USA at $50-75,000 per.

It’s time to rethink the value proposition of college.

There I said it. Why did I say it? Because much of the industry is a scam. It’s mostly “non-profit” but behaves like a racket. Can you tell me any other widespread industry besides real estate that people can buy with loans that are subsidized by the government? For 30 year terms???

Think back, if you are over age 60, to what you paid for college. There’s a good chance you didn’t pay it off over 10-30 years. When I was in college and soon after I graduated, I talked to plenty of grads from the decades before. I NEVER heard of people taking decades to pay off loans. Often they would tell me they worked and paid off the loans as they went! Now very few could do this unless they received generous financial aid. And student loans, contrary to some people’s reasoning, helped cause the higher tuition. How? Simple. Any time you can buy something over an extended period of time, the prices will rise (think 7 year car loan or lease). People don’t often pay attention to the idea of debt servitude for a long time, they just see the small loan payments and don’t worry so much – they should be looking at the principal amount!

Secondly, it is so ingrained in our culture to get a prestigious college degree, that even if someone winces at the price, they still “buy” because they think they have no choice. And this is part of the insidious racket. Now please understand – I am not in favor of avoiding education. I think there are many skills that kids shouldn’t leave their teens without learning. I’ll list those skills in a bit. But I am in favor of exploring ways to keep costs down and investing in education that matters. For example, we all have to take our “requirements” when studying for a liberal arts degree. But if you are studying history, English, psychology, geology or art, what would be preferable – paying 5-8,000 for that class or being on a system that would give you ratings (like Yelp or TripAdvisor) to the beat liberal art classes available worldwide and at the best prices?

Don’t think that’s possible? What did you also doubt space travel??? It’s already beginning – Udacity, Coursera are just a couple of growing efforts by top schools to spread their education reach. What if students start skipping a regional high priced school and 1m people worldwide signed up for a English class for 150 bucks on Coursera taught by a globally high-ranked professor? Why again are you paying $5-8k/class for that regional college where the class is taught by TA’s? Why???

Where It Will Make Sense to Invest

I think professional schools and graduate schools would be a good place to spend more money and to be there in person. Many of these programs require hands on learning (think Medicine) and being with the top peers in the practice would be helpful to development. You might say that this advice applies to undergrad too. In some cases yes. And remember this can be flexible. Maybe studying 2 years through online and community colleges and then 2 years at a top university makes sense. Students could also study at a foreign university for a year (how about the National University of Singapore which subsidizes tuition for all students),possibly save money, learn a language/culture that could never be fully learned in a classroom, and put an interesting item on their CV.

I just have a problem with parents (and students) who have to pay for this, worrying themselves and up all night stressing over paying for this. The future (and present) offers many alternatives. Education planning when blended with various cost-saving measures can make a big difference. And I have no problem advising people to consider alternatives.

And note: if your main goal in college is to find a suitable spouse, then maybe you want to make the investment. At least this Princeton graduate thinks the ladies should be thinking about that.

What Should Kids Learn?

This is my biased list but here’s what my son will learn (in a fun way of course):

  • a second and possibly third language and foreign cultures
  • music
  • a team sport
  • basic statistics
  • basic computer programming
  • how to negotiate
  • how to handle himself when dealing with others
  • poker 
  • chess
  • how to work with his hands
  • basic agriculture

Sounds very Boy-Scoutish doesn’t it (as in many life skills)? The idea is to learn skills that will help him FUNCTION in the world. A lot of these are learned through experience and FUN.  Here’s an easy lesson: if I flip a coin 10 times and it comes up heads 9 times, what’s the odds that it comes up heads on the 11th flip? Do you know how many people get this wrong?

James Altucher has his list of 8 things to do besides college: 8 Alternatives to College – this is for young adults but this is also an excellent advice list.

Thanks to Michael Covel for bringing that post to my attention. And this video by Seth:


And I haven’t listened to the whole thing yet, but Covel also goes off on the education “industry” on this podcast: Education System Chaos