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Monday, October 8, 2012

Cheap College Degrees - What are They Really Worth?

From the Atlantic article linked below.
A college degree for $10,000.00 USD.

That's what the governor of Texas wants to create according to this WSJ article.  The governor, according to the article, said: "A $10,000 degree provides an opportunity for students to earn a low-cost, high-quality degree that will get them where they want to go in their careers and their lives."

Now this really makes no sense at all.

An average new car comes in, according to Forbes, for 2012 at around $30K USD.

An average college education (by averaging the in and out-of-state rates) is probably around $40K USD.

So if you want a "good" college education for 1/4 the going rate it would be like buying a car for 1/4 the going rate.

According to that would be this car.

There's only one problem, the cheapest car is about 1/3 the going rate.

No new cars come in at 25% of the average rate.

Now I imagine that if someone could create the lowest cost product for the auto market they would.

But there is no car in that range.


More than likely the cost to create a usable, salable, legal car for that price is impossible.

There's another problem.  The car at is Nissan Versa Sedan.

Now if you don't need much room or a lot of storage capacity or towing capacity, etc. you might be okay.

But what if you have a large family?

This car is probably too small.

There's another problem as well.  If all new cars cost $1,000 USD then everyone that wanted a new car would buy one, probably several times a year and twice on Sunday.

This would flood the used car market which would have no buyers - why buy used when new is so cheap?

So everyone employed in some way with handling used cars now becomes unemployed.

Now what about employers?

Would you hire the applicant from the "cut rate" school?

How about your get airliner captain?  Would you take the guy from the traditional high-end flight school or from "Bob's-U-Fly'm" down the side road at the county airport?

There are already too many "college educated" people flooding the job market: 53% cannot find jobs according to this.

This is about 1.5 million people.

With no jobs and no prospects.

(Of course, it matters what the degree is in - technical degrees tend to create more hiring opportunities.)

The problem is not the education - its the balance.

Society cannot only have a huge, top-heavy cadre of intellectual elite.  There is no support of for infrastructure: plumbing, building, fixing, repairing, and so on if everyone is busy pushing buttons on a computer somewhere.

It also seems very likely, at least to me, that a college graduate that's unemployed will have a bit of a problem repaying that $40K USD in education loans working at Pizza Hut.

So the current 2009 rate of 13% defaults will likely increase as this problem becomes more acute.

And since today's education does not equal yesterday's experience hiring a recent college grad will likely fall at the bottom of the priority list - if you need someone competent you'll hire someone with experience.

Isn't government "central planning" wonderful?

(Edit: Note that according to this from only about 20% of physics PhD's work in their field and only a few percent work in academia - the vast majority must move outside of their "education" for jobs - and most are ill prepared for this).

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