The Naked Truth About Colleges

Friday, 06 April 2012 19:08 GFP Columnist - Basil Venitis
The naked truth about colleges is that a college degree is not worth the price of the sheepskin on which it's printed! College education is waste of time and money. The college bubble will burst soon, tearing down all ivory towers. The college degree payback is very long, an expensive education is not a guarantee to higher real wages, and it is not worth going to debt to finance it. A widespread public skepticism is fueled by poor job prospects. Real wages, that is, what you earned after you subtracted inflation and taxes, entered a freefall in the past two decades. Rather than be out of work, most citizens quietly settled for lower real wages.

A college education has a value relative to future earnings, vocational success, and its ability to lift you above the economic burdens of underemployment and stagnant earnings. Right now, that equation just doesn't measure up. The reward to risk ratio of college education is the lowest of all possible investments.

Peter Thiel, the superstar Silicon Valley investor, has famously dismissed university as a waste of time and money, and even offered students cash to drop out. Thiel has argued that the brightest young minds should strike out on their own and start companies rather than take on crushing debt to pursue a college degree.

Colleges are frauds. Many administrators rob the funds, many professors trade grades for kickbacks and sex, and most students dumb down! Anyone who wants to learn anything can do it much better on the Internet, without retreating to fraudulent concentration camps, called campuses. Allons enfants de la Patrie!

Colleges have little value, and their graduates cannot find jobs. They are an embarrassment to education. Sending a child to a university is irresponsible. Total college education, direct and indirect, including bygone salaries, costs around 200,000 euros. That money would bring higher reward-to-risk ratio in any other investment. College years are lost years.

The main effect of government student aid programs is not to transfer wealth from taxpayers to students, but from taxpayers to academic institutions. That's because the rise in student subsidies over the decades appears to have fueled inflation in education costs. Tuition and other college costs have soared as subsidies have risen.

It is matter of supply and demand. More and more citizens have sought a college education, which has pushed prices higher. Ordinarily, such upward pressure would be restrained by consumers' willingness and ability to pay, but as government subsidies have helped absorb tuition increases, the public's budget constraint has been lifted. Federal subsidies are seen by colleges as money that is there for the taking. Tuition is set high enough to capture those funds and whatever else can be extracted from parents.

Over the past few decades, a vicious cycle has been perpetuated by college policy. Governments increase subsidies for colleges, inflating students' purchasing power, in turn allowing universities to raise tuition, which ultimately increases the demand for more government subsidies. Not only would an increase in grant funding not break this vicious cycle, but it would also fail to place pressure on colleges to use resources more efficiently. The dysfunctional college market is an arms race where vast resources are targeted toward non-academic purposes such as athletics, building renovations, and administrative overhead costs in order to compete for students.

Most troublesome of all, continuing to increase subsidies for college raises questions of equity. Increasing government subsidies for colleges, whether in the form of grants or student loans, shifts the responsibility of paying for college from the student, who directly benefits from college, to the taxpayer. Transferring the burden of student loan financing from university graduates to the three-quarters of taxpayers who did not attend college is unjust. Kleptocrats should restructure the grant program so that funding goes directly to students, not to universities, and should limit access to grants after four years of undergraduate work.

Dropping out is a smart strategy of cutting losses short! Most top presidents and self-made billionaires dropped out of high school or college! The list includes Bill Gates(Microsoft), Larry Page(Google), Michael Dell(Dell), David Geffen(Geffen Records), Steve Jobs(Apple), Richard Branson(Virgin), Ralph Lauren(Ralph Lauren), Jerry Yang(Yahoo) and Zuckerberg(Facebook). Zuckerberg and Gates went to Harvard.

Page and Yang both attended Stanford. Jobs only completed one semester at Reed College in Portland, Oregon. Dell left the University of Texas at 19. Geffen dropped out of three universities before launching his record label. Lauren went to Baruch College in New York City, but left after two years. Branson, a mild dyslexic, never made it out of high school. Han Han, the world's most popular blogger, dropped out of high school in China. Ford Motors founder, Henry Ford, never had any formal education, outside his training as a machinist.

Without fundamental reform, universities will not be able to compete with cheaper and more effective online education providers. While many young people are still going to university, a growing portion of the best and the brightest students have given up attending classes, because the information is available in a more easily ingested form online.

Universities must shift their business model from the centuries-old notion that a professor lectures students, to a more collaborative, interactive model. Instead of being the sage on the stage, professors should be the co-pilot for students as they explore and collaborate online to acquire knowledge.

We also need an entirely new modus operandi for how the content of higher education — the subject matter, course materials, texts, written and spoken word and other media — is created. Rather than the old textbook publishing model, which is both slow and expensive for users, universities professors and other participants can contribute to an open platform of world-class educational resources that students everywhere can access throughout their lifetime. If universities open up and embrace collaborative learning and collaborative knowledge production, they have a chance of surviving and even thriving in the networked global economy.

Stuart Butler points out higher education is approaching a tipping point, and that the industry will encounter disruptive innovation quite soon. In twenty years, half of the institutions of higher education will have either merged or gone out of business. This change will not seriously threaten exclusive top-brand universities like Harvard and Yale, given the perceived high value of their brands and the connections and other extras they provide. Public universities, however, are in for a real shock.

Butler notes public universities are particularly vulnerable to the coming college revolution. Most state-school students are ideally suited to the online education and flexible approaches to instruction offered by low-cost upstarts. Furthermore, prospective state-school students generally come from households that are more price-sensitive than those considering elite private universities.

The more urgent reason for public schools' vulnerability is the ongoing fiscal disaster in the states. As state budgets come under increasing pressure, tuition costs are likely to continue growing and services at state schools are likely to be slashed further by hard-pressed legislatures.

And the problem is only exacerbated by public universities' politicized governance structures — which, when combined with the state schools' lack of endowments to rival private universities', makes it much more difficult for public schools to adjust and innovate in response to changing conditions and competition. Those looking for signs of the coming revolution in higher education would thus be wise to keep their eyes on bloated public universities.

Butler says most college leaders live in a bubble in which the costs of ever more elaborate facilities, expanding administrative bureaucracies, and high-profile professors with light teaching loads can simply be passed on to customers in the form of higher tuition.

But those days are about to end. Underneath the surface, upstart institutions are perfecting radically new education technologies and business plans at the same time that young people and their parents are becoming more frustrated with the traditional higher-ed model, and more open-minded about alternatives.

Image Courtesy of Basil Venitis' Blog

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