James and Bill on the Value of College
Here’s James Altucher’s take: “College a waste of time and money for kids.” My take on his take is threefold: First, WTF (W = “where”) does he anticipate most people send their kids to college? $200,000 to $400,000 for a college education? Maybe I’m biased by my location, near the Aggies, where a four-year degree is under $100,000, but I think not. James is overstating the cost of a degree by about two to four times, based on the averages in this article, so I think James is biased by his location, or by where his peers are sending their kids. Second, James is dead on with regards to the “value” of a “rounded education.” You don’t want to be that guy who “dropped a hundred and fifty grand on a f*ckin education you coulda got for a dollah fifty in late chahges at the public library!” You can get “rounded” on your own time for free. Third, James has a (quite understandable considering his background) bias towards kids considering internet and computer-related businesses.
My take on the issue hasn’t changed since I published it in May of 2007. The benefit of college is solely that businesses use the degree as a screening process for (1) the capacity to perform boring, repetitive, entry-level work, (2) intelligence, and (3) breeding and pedigree, at least where prestigious colleges are concerned. Note that items (2) and (3) are things which businesses can’t legally screen for directly! Also note that as time passes, the functionality of item (2) has been diluted, hence the ever-growing focus on higher-level degrees! The fact remains that there are tons of jobs available to those without a traditional degree, and there are lots of resources for finding them.
Is college a complete waste of time and money? That’s probably too wide a statement to make, as I’m sure some people could weigh the pros and cons versus their goals and decide it was worth it. Is the value of a college education in today’s world greatly overrated? I think the answer is a definite YES.
February 12th, 2008 at 8:06 pm
I can’t completely dismiss the value of a college education. If there’s one thing that college can provide you with is connections. Even at a lower tier school, there is the opportunity to develop a large, diverse, and valuable network of professionals.
There’s also the opportunity to drink an inordinate amount of beer and meet girls.
February 12th, 2008 at 8:15 pm
[edited and expanded for clarity] That’s a good point, and this is actually the main selling point of an MBA from a prestigious school. It’s not so much that a prospective employer recognizes the value of the process, but the prospective employer recognizes the value of the the alumni, the previous graduates, the professors, and the peers, that the newly minted MBA now knows as professional contacts.
Even a fraternity or sorority relationship can be valuable, and if one stays local for a long time, even small school contacts can be mint, since those people likely stay local, too.
But let’s not forget Bastiat’s “broken window!”
Someone who skips school to develop a career in the trades can still spend the time between age 18 and age 23 networking. :)
February 13th, 2008 at 10:46 am
It is likely that the original author quoted 200-400 grand as the total opportunity cost.
Meaning: Cost of tuition + cost of room and board, supplies, travel to and from school + loss in income for being unemployed for 4 year.
That doesn’t seem outrageous.
100-200 grand in tuition,
50 grand for housing, food, supplies and travel,
100,000 to 150,000 in lost income.
February 13th, 2008 at 1:06 pm
Let’s take a look at that.
The Aggie number is $80K resident and $110K non-resident, and includes everything you mention except the loss of income. To get to $200K, Jame’s low end, they’d have to be missing out on $22-$30K annual salary by doing so, not too unreasonable for an 18-year-old without any trade skills. To get to $400K, the student would have to be missing out on $70-$80K annually in salary, begging the question of why they’re going for a Bachelor’s degree.
The MSNBC number is $89K for four years and doesn’t include room+board, supplies, travel, or personal expenses. Using the Aggie numbers of about $12K for those items on an annual basis, or your flat $50K total assumption, then we’re looking at a salary loss of $15K annually to meet James’ low end, and $65K annually to meet James’ high end.
I still think, even if you include salary loss as an opportunity cost, that James’ upper number is a bit high, don’t you? The low end $200K, however, is reasonable if you assume he included salary loss.
February 13th, 2008 at 1:24 pm
Great post. My son is currently in Juco knocking out the basics for a very low cost per credit hour.
The cost for higher education has bothered me from the time I went to school (I paid my own way). I’d really like to see the private sector take a hard run at these bloated “institutions of higher learning” and prove a 5-star education shouldn’t cost twice an average family’s annual income.
Ever notice the politicians never call for sworn testimony of college deans for their sky rocketing price increases? I guess you have to be an oil exec to qualify as greedy.
February 13th, 2008 at 8:28 pm
Bill,
You don’t want to know what it’s costing me to send my kid to college….and he’s majoring in Latin &Ancient Greek……
Jeff
February 13th, 2008 at 9:45 pm
Could he get Sanskrit, too? Complete the “Dead Language Trinity?” Perhaps Basque, as well?
October 23rd, 2008 at 8:54 pm
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