Should you pay $250K to go to college?
I was talking with my brother recently about higher education. We both struggled our way through school, barely able to afford our approximate $40,000 in tuition and expenses over the four years (he at a state school, me at Fordham University).
Now his son has been accepted to a bunch of amazing schools, and we discussed a $250,000 four-year bill. Yep, 20 years after we graduated, the same set of schools cost six times as much.
Which leads to the question parents are faced with today:
Is college worth the money?
The answer? No, it’s not enough value for the money.
In my estimation, college is worth it if you have a ton of money and don’t care about ROI, or if you can pay less than $50,000-$75,000 and get a job with starting pay of $50,000 or more (generally technical, trade or finance work). At $100,000-$250,000, it’s simply foolish.
Why would anyone spend $250,000 to prepare for a job market in which the average salary for graduates who get a job and work in their specific field is -- wait for it -- $44,000. At $44,000 a year, sure you’ll be able to live independently, but you’ll never be able to pay back the loan. With $2,500-3,000 a month post-tax, you have about $100 a day to live. If about 50 percent goes to rent, you’re gonna have $50 a day to eat, be clothed and take mass transit. It’s totally possible, and I did it for years -- but you’ll never pay the $500-$1,000 a month loan down. Never.
But the kicker is that the $44,000 metric above is employer side and doesn’t take into account the reported 60 percent of folks who can’t get a job in their major.
Said another way, folks who get jobs are hopelessly behind, while those who don’t get jobs are, ummm, well what exactly happens if you don’t get a job and still have loans? I guess you go bankrupt, have your credit ruined for a decade and some amount of the debt is forgiven, right?
Turns out you can’t have your student loans discharged in bankruptcy, except in a situation where "repaying the loan would create an ‘undue hardship’ on the student."
A new hope
I’ve spent the last year studying the situation, and there is hope in the form of brilliant folks like Atari founder Nolan Bushnell, Sal Khan of Khan Academy, Sebastian Thrun of Udacity, and Anant Agarwal of edX (to name just a few).
They’re blowing up education by making it a) free, b) on demand and c) engaging -- and even fun!
Last year Nolan gave a keynote at my LAUNCH Education & Kids event and was super clear: "What we want to do is change the paradigm," he said, adding "Everyone should NOT go to college. Some should, but some shouldn’t."
He believes that education is moving from the current state of "credentials" (i.e,. your degree) and experience (where did you work last) to actually "merit" and skills.
Nolan believe that we’re entering "The Golden Age of Capability" and that companies like his, BrainRush, are going to get us there.
Udacity, edX, and Khan Academy are doing similar online education. Did you know you can take tons of courses from MIT, Stanford, and Harvard online right now for free?
Did you know you can get a certificate that you took the course for free as well?
Did you know that more and more, you’re able to go to a testing facility and take a proctored exam and pay a small fee (think: $100) to certify that you understand the material in the course you took?
Thrun put it to be me bluntly: “We now have a trillion-dollar student debt in this country. Tuition rates have gone up 6 percent a year since 1982.”
When a brilliant guy like Thrun tells you, “I will be happy if my son doesn’t go to college,” you know something is up. (This is the guy who helped bring the world Google’s self-driving cars and Google Glass after all.)
“My mission is to say that education is a free, basic right, and it shouldn’t cost money,” he told me in my interview with him last year.
Anant Agarwal is running edX, a competitor to Thrun’s Udacity, that is a partnership between Harvard and MIT. Both universities have committed to a combined $60 million, and he has a hip office in Boston.
Anant told me, “If you go back in history the last several hundred years, we really haven’t had any major innovation in education since the printing press. If you went into a classroom 50-70 years ago, it would look exactly the same as today.”
And he’s right. And he’s changing that by doing distance learning funded by the same people who run those vaulted institutions. In my mind, the colleges know they need to change radically, and they’re hedging their bets by disrupting themselves with edX.
Should my nephew go to college?
Even with all this information, I still feel like my nephew should go to college if he can do it without bankrupting himself and his parents.
That being said, I thought to myself, "What if you gave your child the following?"
a) $20,000 a year to live on
b) paid $5,000 a year for four years for them to work for free in 10 six-month apprenticeships
That would be $25,000 a year vs. $50,000-$75,000 a year for college. After four years they would have four years of work, amazing skills and the ability to live on their own.
Yeah, you miss out on the educational “experience,” but is getting drunk and going to toga parties a priority in a world where job displacement is a lifetime trend? Not for most parents.
It’s not really my choice if he does go to college, but in 13 years, I’ll be having this discussion with my daughter. By then, I think companies like Brainrush, Treehouse, and Udacity will have figured out skills and mastery systems, and that it will be an obvious choice.
And who knows, maybe the schools will look at their value and lower their prices and increase the value of their offering. Anything’s possible, right?
Let’s talk about it
When I get excited about a topic, I tend to do three things: 1) have people on my show, 2) host a conference, and 3) angel invest.
On June 26th and 27th, we will host our second LAUNCH Education and Kids event at Microsoft’s campus in Mountain View. Over those two days, we’ll hear founders in the education space explain what they're building at their startups, hear a couple of keynotes from big brains and -- most importantly -- hear from teachers and educators what they're doing inside the machine.
I could use your help on three fronts:
1. Startups: If you know anyone building something epic, please have them apply to present at the event. We give preference to people launching something for the first time, something that has no press (i.e. a new startup OR a new product/feature set at an existing startup. To apply visit and/or hit reply and intro me to the founders. Startups and founders pay $0.00 to participate.
2. Educators: We’re looking for awesome teachers, principals and administrators to ask questions from the audience, act as judges (alongside investors) and do presentations about cutting edge implementations. If you know any, again do an email intro and/or have them apply here.
3. Partners: We’re looking for media and trade partners to help us get the word out, and for bigger companies and venture firms to buy everyone lunch. If you want to partner, email [email protected].
[Read the original post on the LAUNCH blog.]
[Image courtesy mckibillo]