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The Great College Hoax

95 points by robg 18y ago

tokenadult 18y ago
"Accepted into the California Western School of Law, a private San Diego institution, Kellum couldn't swing the $36,000 in annual tuition with financial aid and part-time work." That choice of a law school was probably crucial in how the story unfolded. That's not a law school with a high return on investment in that local job market.
- dsaewra 18y ago
  Article states that he and his wife landed six figure salaries, but graduated with 194k in debt. I think more crucial to how the story unfolded is that they probably didn't live below their means, probably didn't consolidate the loans to a lower rate (they were paying rates at 9%-12%), and probably didn't pay the loan off aggressively. I wouldn't blame going to college, or college choice for poor financial sense.
  - swombat 18y ago
    According to the article, the loans were at 18% variable rate... that's probably most of the problem right there.
    - kragen 18y ago
      No, that was somebody else's loan. Kellum's was variable rate that varied up to 9%; Coultas's was variable rate up to 12%.
  - tokenadult 18y ago
    I referred to return on investment because there are other law schools in California a) with lower list price (and thus lower total cost of attendance) and b) even higher prestige (thus making a higher starting salary even more likely). They started out with reasonably good starting salaries, but unreasonably high levels of student debt.
- chris11 18y ago
  I agree with that. Law School numbers put admissions at nearly 50%, and median LSAT is around 153 which is about better than 60% for LSAT test takers. Also U.S.NEWS ranks it at 400. Also their pass rate for the California bar is 6% lower than the state average. Those are all horrible numbers. I was considering law for a while, and have done a little research into it. Basically law is a numbers game. Schools only care about g.p.a and LSAT scores. Law firms only care about where you went to school and your g.p.a if you went to a bad school. And the firms who care the most about your school's name also pay the most. So the difference in salaries from private law firms at a top ranked law school and a bottom ranked school can be as high as 100k. Sure there are loan repayment programs at law schools for people who go into public service, but again it seems like the top schools are able to forgive the most debt. So basically, that law school seems like it has a horrible rate of return, and it looks like Kellum was lucky getting 100k+ a year. Also not looking at the terms of the loan was stupid Law School Numbers:http://calwestern.lawschoolnumbers.com/ http://calwestern.lawschoolnumbers.com/ Salary info: http://www.ilrg.com/rankings/law/median.php/1/desc/MSPrivate http://www.ilrg.com/rankings/law/median.php/1/desc/MSPrivate
- duhduhduhduhduh 18y ago
  California Western's February 2008 bar exam passage rate was the second-highest of any law school in the state of California (behind only Stanford University Law School) and its July 2008 bar exam passage rate was approximately 85%.
vaksel 18y ago
In this day and age college is worthless. Its pretty much 4 more years of high school, except this time you are paying $40-160K for it. The problem is that most college students deceive themselves. They go to school thinking that all those people who graduate and get $80-100K jobs are the norm, when they aren't. So they get into debt to pay for school, because "its an investment" and then when they graduate they find out that instead of $80-100K, they have to settle for a job paying $30K a year. So you pretty much put off 4 years of salary, 4 years of raises, 4 years of building contacts, 4 years of climbing the corporate ladder, all on the premise that it'll pay off in the long term. But it doesn't. As long as the person didn't get a job at McDonalds, he'll be making more money after 4 years, than you would as a fresh college grad. And he won't have the huge debt, like you do. And that goes double for a person who majored in liberal arts.
- eznet 18y ago
  Being one of the college students who deceived themselves, I have to admit that I could not have put it better myself. Is it my own dumb fault? Yes, it is. I was an adult and like to think that I was smart enough to have made the decision under my own merit. Should I have researched the reality of post-graduation life more? Yes, again. It is very true that they sale you the dream of 80k - had I only known then that college wasn't a requirement for realising the dream, I could have saved 40k...
  - vaksel 18y ago
    its not really the student's fault. Its the parents/society's. There is this idea, that if you don't go to college after highschool that you are some sort of loser. When in reality you can self-teach yourself everything they teach you in college. Take programming for example, is it worth going into debt up to your eyeballs, if you could have learned everything on your own?
    - ensignavenger 18y ago
      I wouldn't say everything- if you get a really good teacher in a really good program, you can learn a lot in a short amount of time from an expert that you may never be able to learn (or it may take a long time to) on your own.
jsomers 18y ago
I'm reminded of (Good) Will Hunting's zing to some jerk in a bar, right after calling him out (in a pretty spectacular way) for plagiarizing: "See, the sad thing about a guy like you is in fifty years you're going start doing some thinking of your own, and you're gonna come up with the fact that there are two certainties in life. One, don't do that. And two, you dropped a hundred and fifty grand on a fucking education you coulda got a dollar fifty in late charges at the public library." "Yeah, but I will have a degree," he says in return. It's an open question whether the markets in general (i.e. not just startups, tech, etc.) will get over the apparent value baked into a college degree / GPA, and start worrying about what kids can do, what they know, and how they think.
- Retric 18y ago
  A degree is far from useless. the couple was $194,000 in debt. each landed a six-figure job. interest accruing at up to 12% a year. "the pretax median household income in 2007 was $50,233," they where both making twice that in 1995. Even 12% of 200k = 24k/year should be easy when the couple is making over 200k/year. OMG, they only get to live off 3 times the median household income after graduation how they must have suffered. Granted it would nice to have zero debt, but I suspect their real problems had little to do with debt.
BigZaphod 18y ago
The fix is to not go into debt just to go to college. A college education is a luxury - but it's one that can be had at an affordable cost if you're ambitious, work your ass off, and take advantage of every grant, job, research position, etc. you can find. IMO, it's the people who do the leg work to get into those kinds of programs and reduce the cost of their own education that ultimately succeed in the end anyway.
- arockwell 18y ago
  It is extremely difficult to get an undergrad education without going into some debt even if you go to a public instituion. I went to a very cheap state school in a low cost of living area and even with a full scholarship I barely escaped without any debt from simply paying for room and board. I held a part-time job but at $7.50/hr it didn't go that far.
  - BigZaphod 18y ago
    Oh, it's hard, no doubt. I wasn't so smart back then and went to a private school and took out huge loans because my parents told me that was how it was done. (It's all paid for now, though.) My wife was smarter. She went 5 years at a state school with zero debt by working crap fast food jobs, lab assistant, food service, etc. She'd never even owned a car. She had grants and stuff to help her out. By her last year we were married, so my income made it possible to pay cash for the final stretch which a lot of her grants wouldn't cover. So yeah - I'm not saying it's easy - but it can be done.
gcheong 18y ago
I wonder what the effect on the economy would be if parents or the government gave kids a choice - you can have 4 years of college loans or the amount of 4 years in tuition as seed funding for your start-up.
blankity_blank 18y ago
What the hell were the couple in example #1 doing with their $200K income? If they wanted to pay off their debt in 10 years, they'd need about $2800 a month, assuming the rate was the full 12% the whole time. I agree with a lot of the article, but a couple of idiots who pissed away the fruits of their education on too many vacations and fancy cars (obviously not any real investments, otherwise they could have refinanced their student debt) don't give a very good example.
- Xichekolas 18y ago
  I was thinking the exact same thing when I read that. Sadly I know _many_ people that make six figures and complain about things like student debt and credit card debt. One guy claimed he was lower middle class (he was making $110k at the time, with only a wife, who didn't work, to support). If $110k is lower middle class, then I must be in poverty. It's like the idea that they can lower their living standard slightly to achieve financial goals just doesn't occur to some people. People that make good money and manage it poorly garner zero sympathy from me.
  - newt0311 18y ago
    Yeah, but college didn't teach them about basic finance!!! Clearly its not their fault. On a more serious note: It would be nice if some finance education was mandatory. Ex: there is no good reason for having any credit card debt and yet people still have tons. It shows that they don't know how to manage their income even if they have lots to go around.
  - jwesley 18y ago
    The lawyer mentioned was clearly a dope. The story said he accepted a loan for over $100K without knowing what the interest rate was or who he was borrowing from. Sure, they might have pressured him (like car dealerships do), but you'd have to be moron to get suckered that bad.
    - kragen 18y ago
      The interest rate was pretty good, only varying up to 9%. I'm not a fan of variable-rate loans but he seems to have come out on the good end of this one.
ensignavenger 18y ago
There is a lot of false propaganda spread about the 'value of college'. That being said, there are ways to reduce the expense and increase the return. Just because a few people make poor college financing decisions, and poor decisions about which school to attend, doesn't make all colleges a bad deal.
eli 18y ago
Totally offtopic, but I hate it when people link to the Printer Friendly version. It's a whole lot harder to read on a widescreen monitor. If you don't want to see ads on the regular site, install AdBlock like everyone else.
- robg 18y ago
  Some people, like me, prefer single-page over multi-page.
  - unalone 18y ago
    Ugh, but the complete lack of margin was painful.
    - captainobvious 18y ago
      Shrink your browser window, or increase the font size.
      - unalone 18y ago
        It's not that. I could read it. But psychologically I need that border. When text gets on the edge like that, it hurts to read.
- RobGR 18y ago
  Narrow your browser window.
- becked 18y ago
  I use the following in a bookmarklet to narrow the width of the content on the page: javascript:void(document.body.style.width='500px');void(document.body.style.position='relative');
fiaz 18y ago
This article needs to explicitly state: 1) education is valuable 2) education has become too expensive (implicitly stated) 3) the "hoax" is that of how our credit/debt system works, not about the collegiate system Already people on this thread are jumping the gun and stating that college sucks and you don't need it. But this is a subjective view and should be taken as such. The only fact that I can get from this article is that college is becoming a financial burden - not that the education obtained is worthless. There needs to be a way to make education accessible to all. Instead, the cost of getting an education is becoming yet another factor in further dividing the wealthy from the debt-laden.
- swombat 18y ago
  I think the problem is with those 18% loans (covered by your 3rd point, I think). What the hell? Who pays that kind of interest rate? The article states: A correlation between B.A.s and incomes is not proof of cause and effect. It may reflect nothing more than the fact that the economy rewards smart people and smart people are likely to go to college. I would say that there is likely to be a strong correlation between being foolish enough to take an 18% student loan and getting a low-paid job later (taking on that kind of loan shows a staggering lack of common sense). Seems to me that that's the only problem there. People should not be allowed to turn that kind of profit on student loans of all things. If there's one kind of loan that should be government-sponsored, this is it. For the record, in the UK, student loans come in at about 2.5%.
  - BigZaphod 18y ago
    Most student loans backed by the government have pretty decent interest rates in the US, too. However some people either can't get enough in government-backed loans or fail to qualify or are stupid.. or something.. and so they hit up the private lenders which prey on them something terrible. I never went private so I'm not really sure, but I suppose another reason to go with private loans is so you can spend the money on things much more disconnected from your education costs - like a car. I seem to remember the government loans being pretty tightly tied to the school and thus it wasn't like I could borrow more than the cost of school without going outside the government-backed loans. (But I could be wrong.)
coglethorpe 18y ago
> a bachelor's degree in history Strike one. > took out $60,000 in student loans Strike two. College isn't a bad idea. Majoring in subjects that lead to careers with more job seekers than jobs and taking out student loans is are bad ideas.
- poppysan 18y ago
  It cant be too bad if they are pulling in 200K a year....
- potatolicious 18y ago
  Note that both were on the law school track, and in fact both made it to law school. If this was their intention all along, taking, say, an engineering degree would have been pointless - you pay even more in tuition. Taking out $60,000 in loans to go to law school of all places is not such a bad idea. Your pay after graduation would certainly make it worthwhile, and they both are making $100K+ a year.
- jgfoot 18y ago
  > Majoring in subjects that lead to careers with more job seekers than jobs and taking out student loans is are bad ideas. Too many people think of college as just career preparation. But an education can be useful during the hours of your life when you are not in the office, too. Someone with a degree in history might not be able to get a job as a historian, but I'll bet you they will be more interesting at parties than someone who majored in accounting, works as an accountant, and spends his idle hours watching cable TV. By the way, history majors learn all sorts of skills that are useful in other fields; these people synthesize conclusions from large bodies of contradictory facts. If I were hiring intelligence analysts, or investigators, I would look seriously at a historian.
edw519 18y ago
You had me right up until "bachelor's degree in history".
- swombat 18y ago
  To be perfectly honest, I don't see why that should matter. Studying history is no less honourable than studying physics. We need both in our world. A historian obviously isn't going to be making lots of money later in life, but that doesn't make them worthless. A good education system should allow historians to come out of poor backgrounds too, not force everyone int apparently productive degrees. Hard sciences aren't everything in life.
  - parenthesis 18y ago
    As I see it, the big difference between 'softer' (history, literature, philosophy, ...) and 'harder' (math, physics, ...) subjects is that, as an undergrad, you can 'get by' in softer subjects on very little work, especially if you are reasonably intelligent, whereas in harder subjects if you're not working to at least a certain level, you will do really badly. However, to be a great historian is no less a task that to be a great physicist. Doing anything well is just as difficult as doing anything else well.
  - leonardc 18y ago
    Sir, I applaud you.
- sanj 18y ago
  There was a time when I felt that way. But somewhere along the line I married a woman who's got a degree in History and Literature. I can see your eyes rolling already. It gets worse: she never even (gasp!) took Calculus. But the fact is that she's smart. Crazy smart. Quoted by the Supreme Court smart. And she sees the world through glasses that are very, very different than my own. Our discussions are not about whether X > Y, but whether Y is even a measurable, meaningful value; whether this is the right question to be asking; what X means in a legal sense; what that implies for the how we build policy; and whether we can help people get understand Y. This morning we argued about Robert Reich's premise of restructuring the economy and whether you could blame stagnant wages at the feet of Microsoft. Every day that I talk to her I see nuances where I hadn't before. I get smarter. I'd even go as far as to say I get smarter at a faster rate than I have talking to vast majority of the technical people I've ever interacted with.
time_management 18y ago
Shutter the bad and mediocre colleges, law schools, and business programs. These diploma mills border on fraud. Most people who think they went to "college" didn't. They were expensively babysat for four years because the job market couldn't figure out what to do with them (and, alas, still can't). The upper-middle tier schools (respectable but not distinguished state schools) shall stay in business but should be half of their current size. This problem is even more obvious in law school. "California Western School of Law" is not going to provide access to the level of means that most people associate with being a lawyer. These are the schools that law students call TTTs-- third tier toilets-- and the job prospects they provide don't offset the ridiculous debt one takes in order to attend them. A law program loses accreditation if less than 50% of its students fail the bar exam. There are many shitty law schools out there that take on mediocre, doomed students (like, 140 LSAT) and fail many of them in their first year, in order to improve their bar pass rate. I think it's time to go to an "elitist" European-style system where only qualified students get to go to university and into professional programs, at least with the public schools. Only 5-15% of the population should be getting an academic college education, but it should be free (or very low-cost) for them. No student loans, no parents losing their retirement funds to tuition payments. The other ~85% can go to a private college if they can afford it, as in Europe, but it's not viewed as a universal right.
- gaius 18y ago
  I think it's time to go to an "elitist" European-style system where only qualified students get to go to university What system is that? Here in the UK the ex-polys churn out Media Studies grads like there's no tomorrow. You don't even need good A-levels to get in. GMTV did a story the other day on how they're working manual labour jobs now. Now don't get me wrong we need people to do those jobs but we didn't need for them to spend 3 years partying on the taxpayer first.
- captainobvious 18y ago
  >A law program loses accreditation if less than 50% of its students fail the bar exam. Guess a crummy school where more than 50% fail the bar wouldn't have any problems then.
- 18y ago
deleted 18y ago
[deleted]
jmtame 18y ago
i'm more worried about the other students who come in and think just because they paid a few of their friends to cheat on tests and they got a "degree" it is somehow an entitlement to a life of a high-salary job. most students actually go in with that mindset. "i'll cheat on the tests, i'll slack off, and get the degree. then i'm deserving of a job, because that's what everyone says to do."
lallysingh 18y ago
Wow, those numbers really, really suck. I didn't go to an Ivy, I went to state tech school. My loans were at 4.5% (!) when I started, and the last one was ~7.5%. My initial tuition was $2500/sem, ended at $4500. Note, that's over an 11 year period, covering bachelor's-PhD. Folks covered undergrad, and I did a lot of research work to cover many semesters of graduate school. My loans are somewhere around $50k total. Each semester's loan usually left me with tuition covered and $5k of spending money. There are some things about not going to MIT/CMU I'll always feel like I've missed. But there is the other side of the coin :-)
kragen 18y ago
A lot of people in the comments here are talking about the return on investment of the law-school tuition, but nobody seems to have calculated it. First, some comparison figures. Warren Buffett expects businesses he buys to return about 4% on capital. The US stock market during the 20th century returned about 10% on capital. A bank loaned me money to buy a house in 2000 at a 6.5% interest rate, before the mortgage bubble; presumably it thought that was a good return on the capital it invested in the loan. But it had some risk that I would default on the loan, which lowers its expected return on capital to something a bit below 6.5%. This Joel Kellum guy spent US$36 000 a year on a law program, presumably for three years, for a total of US$108 000. Then he got a job that paid him at least US$100 000 per year, instead of the US$57 500 per year of an average college graduate. If we assume for the sake of simplicity that he only went to law school to make money (instead of, say, because of a passion for justice or the Socratic training in logic that are part of a law-school education) and that the difference in earnings is solely due to this legal training — rather than, say, because he was working 80 hours a week, or got very lucky — then his investment was returning at least US$42 500 per year. That's roughly a 42.500/108 = 39% return on investment. That's not a full NPV analysis, of course, because it neglects the forgone income during his law-school years, the earnings difference he can expect over the years as his lawyer earnings increase at a more rapid pace than an average worker, and the three-year delay between investing his first tuition dollar and landing his junior associate position. Still, it's tough to manipulate those figures to get less than a 20% ROI. I don't see Joel Kellum gets off complaining about a 39% or even a 20% return on his investment. Better yet, it wasn't even his investment — he borrowed most of it at rates that "have ticked as high as 9%"! Any investor would kill for yearly returns like that, even before you multiply by the leverage. Better still, in student loans, typically the lender shares in much of the downside risk — you don't have to make payments until you get a job, for example. This is the kind of investment around which Forbes is tossing about phrases such as "consumer fraud" and "trading in half-truths that exaggerate the value of its product"? What is their agenda? It's also kind of pathetic to see education as merely a means of making more money; but even if you see it in such narrowly self-centered terms, it's an extremely good investment.
kragen 18y ago
Shorter version of my long comment: Forbes is calling college education a fraud because Joel Kellum only gets a 39% yearly return on his "invested" tuition, which he borrowed most of at 9% or less. WTF?
leonardc 18y ago
I am appalled that people could think of education as a luxury. In many Eurpean countries University is free or very cheap. Full educational opportunites for all a countries citizens, as well as comprehensive healthcare, are the hallmarks of a civilized society. Good luck, prosperity and happiness to you all.

95 points by robg 18y ago

"Accepted into the California Western School of Law, a private San Diego institution, Kellum couldn't swing the $36,000 in annual tuition with financial aid and part-time work." That choice of a law school was probably crucial in how the story unfolded. That's not a law school with a high return on investment in that local job market.

dsaewra 18y ago
Article states that he and his wife landed six figure salaries, but graduated with 194k in debt. I think more crucial to how the story unfolded is that they probably didn't live below their means, probably didn't consolidate the loans to a lower rate (they were paying rates at 9%-12%), and probably didn't pay the loan off aggressively. I wouldn't blame going to college, or college choice for poor financial sense.
- swombat 18y ago
  According to the article, the loans were at 18% variable rate... that's probably most of the problem right there.
  - kragen 18y ago
    No, that was somebody else's loan. Kellum's was variable rate that varied up to 9%; Coultas's was variable rate up to 12%.
- tokenadult 18y ago
  I referred to return on investment because there are other law schools in California a) with lower list price (and thus lower total cost of attendance) and b) even higher prestige (thus making a higher starting salary even more likely). They started out with reasonably good starting salaries, but unreasonably high levels of student debt.
chris11 18y ago
I agree with that. Law School numbers put admissions at nearly 50%, and median LSAT is around 153 which is about better than 60% for LSAT test takers. Also U.S.NEWS ranks it at 400. Also their pass rate for the California bar is 6% lower than the state average. Those are all horrible numbers. I was considering law for a while, and have done a little research into it. Basically law is a numbers game. Schools only care about g.p.a and LSAT scores. Law firms only care about where you went to school and your g.p.a if you went to a bad school. And the firms who care the most about your school's name also pay the most. So the difference in salaries from private law firms at a top ranked law school and a bottom ranked school can be as high as 100k. Sure there are loan repayment programs at law schools for people who go into public service, but again it seems like the top schools are able to forgive the most debt. So basically, that law school seems like it has a horrible rate of return, and it looks like Kellum was lucky getting 100k+ a year. Also not looking at the terms of the loan was stupid Law School Numbers:http://calwestern.lawschoolnumbers.com/ http://calwestern.lawschoolnumbers.com/ Salary info: http://www.ilrg.com/rankings/law/median.php/1/desc/MSPrivate http://www.ilrg.com/rankings/law/median.php/1/desc/MSPrivate
duhduhduhduhduh 18y ago
California Western's February 2008 bar exam passage rate was the second-highest of any law school in the state of California (behind only Stanford University Law School) and its July 2008 bar exam passage rate was approximately 85%.

vaksel 18y ago

In this day and age college is worthless. Its pretty much 4 more years of high school, except this time you are paying $40-160K for it. The problem is that most college students deceive themselves. They go to school thinking that all those people who graduate and get $80-100K jobs are the norm, when they aren't. So they get into debt to pay for school, because "its an investment" and then when they graduate they find out that instead of $80-100K, they have to settle for a job paying $30K a year. So you pretty much put off 4 years of salary, 4 years of raises, 4 years of building contacts, 4 years of climbing the corporate ladder, all on the premise that it'll pay off in the long term. But it doesn't. As long as the person didn't get a job at McDonalds, he'll be making more money after 4 years, than you would as a fresh college grad. And he won't have the huge debt, like you do. And that goes double for a person who majored in liberal arts.

eznet 18y ago
Being one of the college students who deceived themselves, I have to admit that I could not have put it better myself. Is it my own dumb fault? Yes, it is. I was an adult and like to think that I was smart enough to have made the decision under my own merit. Should I have researched the reality of post-graduation life more? Yes, again. It is very true that they sale you the dream of 80k - had I only known then that college wasn't a requirement for realising the dream, I could have saved 40k...
- vaksel 18y ago
  its not really the student's fault. Its the parents/society's. There is this idea, that if you don't go to college after highschool that you are some sort of loser. When in reality you can self-teach yourself everything they teach you in college. Take programming for example, is it worth going into debt up to your eyeballs, if you could have learned everything on your own?
  - ensignavenger 18y ago
    I wouldn't say everything- if you get a really good teacher in a really good program, you can learn a lot in a short amount of time from an expert that you may never be able to learn (or it may take a long time to) on your own.

jsomers 18y ago

I'm reminded of (Good) Will Hunting's zing to some jerk in a bar, right after calling him out (in a pretty spectacular way) for plagiarizing: "See, the sad thing about a guy like you is in fifty years you're going start doing some thinking of your own, and you're gonna come up with the fact that there are two certainties in life. One, don't do that. And two, you dropped a hundred and fifty grand on a fucking education you coulda got a dollar fifty in late charges at the public library." "Yeah, but I will have a degree," he says in return. It's an open question whether the markets in general (i.e. not just startups, tech, etc.) will get over the apparent value baked into a college degree / GPA, and start worrying about what kids can do, what they know, and how they think.

Retric 18y ago
A degree is far from useless. the couple was $194,000 in debt. each landed a six-figure job. interest accruing at up to 12% a year. "the pretax median household income in 2007 was $50,233," they where both making twice that in 1995. Even 12% of 200k = 24k/year should be easy when the couple is making over 200k/year. OMG, they only get to live off 3 times the median household income after graduation how they must have suffered. Granted it would nice to have zero debt, but I suspect their real problems had little to do with debt.

BigZaphod 18y ago

The fix is to not go into debt just to go to college. A college education is a luxury - but it's one that can be had at an affordable cost if you're ambitious, work your ass off, and take advantage of every grant, job, research position, etc. you can find. IMO, it's the people who do the leg work to get into those kinds of programs and reduce the cost of their own education that ultimately succeed in the end anyway.

arockwell 18y ago
It is extremely difficult to get an undergrad education without going into some debt even if you go to a public instituion. I went to a very cheap state school in a low cost of living area and even with a full scholarship I barely escaped without any debt from simply paying for room and board. I held a part-time job but at $7.50/hr it didn't go that far.
- BigZaphod 18y ago
  Oh, it's hard, no doubt. I wasn't so smart back then and went to a private school and took out huge loans because my parents told me that was how it was done. (It's all paid for now, though.) My wife was smarter. She went 5 years at a state school with zero debt by working crap fast food jobs, lab assistant, food service, etc. She'd never even owned a car. She had grants and stuff to help her out. By her last year we were married, so my income made it possible to pay cash for the final stretch which a lot of her grants wouldn't cover. So yeah - I'm not saying it's easy - but it can be done.

gcheong 18y ago

I wonder what the effect on the economy would be if parents or the government gave kids a choice - you can have 4 years of college loans or the amount of 4 years in tuition as seed funding for your start-up.

blankity_blank 18y ago

What the hell were the couple in example #1 doing with their $200K income? If they wanted to pay off their debt in 10 years, they'd need about $2800 a month, assuming the rate was the full 12% the whole time. I agree with a lot of the article, but a couple of idiots who pissed away the fruits of their education on too many vacations and fancy cars (obviously not any real investments, otherwise they could have refinanced their student debt) don't give a very good example.

Xichekolas 18y ago
I was thinking the exact same thing when I read that. Sadly I know _many_ people that make six figures and complain about things like student debt and credit card debt. One guy claimed he was lower middle class (he was making $110k at the time, with only a wife, who didn't work, to support). If $110k is lower middle class, then I must be in poverty. It's like the idea that they can lower their living standard slightly to achieve financial goals just doesn't occur to some people. People that make good money and manage it poorly garner zero sympathy from me.
- newt0311 18y ago
  Yeah, but college didn't teach them about basic finance!!! Clearly its not their fault. On a more serious note: It would be nice if some finance education was mandatory. Ex: there is no good reason for having any credit card debt and yet people still have tons. It shows that they don't know how to manage their income even if they have lots to go around.
- jwesley 18y ago
  The lawyer mentioned was clearly a dope. The story said he accepted a loan for over $100K without knowing what the interest rate was or who he was borrowing from. Sure, they might have pressured him (like car dealerships do), but you'd have to be moron to get suckered that bad.
  - kragen 18y ago
    The interest rate was pretty good, only varying up to 9%. I'm not a fan of variable-rate loans but he seems to have come out on the good end of this one.

ensignavenger 18y ago

There is a lot of false propaganda spread about the 'value of college'. That being said, there are ways to reduce the expense and increase the return. Just because a few people make poor college financing decisions, and poor decisions about which school to attend, doesn't make all colleges a bad deal.

eli 18y ago

Totally offtopic, but I hate it when people link to the Printer Friendly version. It's a whole lot harder to read on a widescreen monitor. If you don't want to see ads on the regular site, install AdBlock like everyone else.

robg 18y ago
Some people, like me, prefer single-page over multi-page.
- unalone 18y ago
  Ugh, but the complete lack of margin was painful.
  - captainobvious 18y ago
    Shrink your browser window, or increase the font size.
    - unalone 18y ago
      It's not that. I could read it. But psychologically I need that border. When text gets on the edge like that, it hurts to read.
RobGR 18y ago
Narrow your browser window.
becked 18y ago
I use the following in a bookmarklet to narrow the width of the content on the page: javascript:void(document.body.style.width='500px');void(document.body.style.position='relative');

fiaz 18y ago

This article needs to explicitly state: 1) education is valuable 2) education has become too expensive (implicitly stated) 3) the "hoax" is that of how our credit/debt system works, not about the collegiate system Already people on this thread are jumping the gun and stating that college sucks and you don't need it. But this is a subjective view and should be taken as such. The only fact that I can get from this article is that college is becoming a financial burden - not that the education obtained is worthless. There needs to be a way to make education accessible to all. Instead, the cost of getting an education is becoming yet another factor in further dividing the wealthy from the debt-laden.

swombat 18y ago
I think the problem is with those 18% loans (covered by your 3rd point, I think). What the hell? Who pays that kind of interest rate? The article states: A correlation between B.A.s and incomes is not proof of cause and effect. It may reflect nothing more than the fact that the economy rewards smart people and smart people are likely to go to college. I would say that there is likely to be a strong correlation between being foolish enough to take an 18% student loan and getting a low-paid job later (taking on that kind of loan shows a staggering lack of common sense). Seems to me that that's the only problem there. People should not be allowed to turn that kind of profit on student loans of all things. If there's one kind of loan that should be government-sponsored, this is it. For the record, in the UK, student loans come in at about 2.5%.
- BigZaphod 18y ago
  Most student loans backed by the government have pretty decent interest rates in the US, too. However some people either can't get enough in government-backed loans or fail to qualify or are stupid.. or something.. and so they hit up the private lenders which prey on them something terrible. I never went private so I'm not really sure, but I suppose another reason to go with private loans is so you can spend the money on things much more disconnected from your education costs - like a car. I seem to remember the government loans being pretty tightly tied to the school and thus it wasn't like I could borrow more than the cost of school without going outside the government-backed loans. (But I could be wrong.)

coglethorpe 18y ago

> a bachelor's degree in history Strike one. > took out $60,000 in student loans Strike two. College isn't a bad idea. Majoring in subjects that lead to careers with more job seekers than jobs and taking out student loans is are bad ideas.

poppysan 18y ago
It cant be too bad if they are pulling in 200K a year....
potatolicious 18y ago
Note that both were on the law school track, and in fact both made it to law school. If this was their intention all along, taking, say, an engineering degree would have been pointless - you pay even more in tuition. Taking out $60,000 in loans to go to law school of all places is not such a bad idea. Your pay after graduation would certainly make it worthwhile, and they both are making $100K+ a year.
jgfoot 18y ago
> Majoring in subjects that lead to careers with more job seekers than jobs and taking out student loans is are bad ideas. Too many people think of college as just career preparation. But an education can be useful during the hours of your life when you are not in the office, too. Someone with a degree in history might not be able to get a job as a historian, but I'll bet you they will be more interesting at parties than someone who majored in accounting, works as an accountant, and spends his idle hours watching cable TV. By the way, history majors learn all sorts of skills that are useful in other fields; these people synthesize conclusions from large bodies of contradictory facts. If I were hiring intelligence analysts, or investigators, I would look seriously at a historian.

edw519 18y ago

You had me right up until "bachelor's degree in history".

swombat 18y ago
To be perfectly honest, I don't see why that should matter. Studying history is no less honourable than studying physics. We need both in our world. A historian obviously isn't going to be making lots of money later in life, but that doesn't make them worthless. A good education system should allow historians to come out of poor backgrounds too, not force everyone int apparently productive degrees. Hard sciences aren't everything in life.
- parenthesis 18y ago
  As I see it, the big difference between 'softer' (history, literature, philosophy, ...) and 'harder' (math, physics, ...) subjects is that, as an undergrad, you can 'get by' in softer subjects on very little work, especially if you are reasonably intelligent, whereas in harder subjects if you're not working to at least a certain level, you will do really badly. However, to be a great historian is no less a task that to be a great physicist. Doing anything well is just as difficult as doing anything else well.
- leonardc 18y ago
  Sir, I applaud you.
sanj 18y ago
There was a time when I felt that way. But somewhere along the line I married a woman who's got a degree in History and Literature. I can see your eyes rolling already. It gets worse: she never even (gasp!) took Calculus. But the fact is that she's smart. Crazy smart. Quoted by the Supreme Court smart. And she sees the world through glasses that are very, very different than my own. Our discussions are not about whether X > Y, but whether Y is even a measurable, meaningful value; whether this is the right question to be asking; what X means in a legal sense; what that implies for the how we build policy; and whether we can help people get understand Y. This morning we argued about Robert Reich's premise of restructuring the economy and whether you could blame stagnant wages at the feet of Microsoft. Every day that I talk to her I see nuances where I hadn't before. I get smarter. I'd even go as far as to say I get smarter at a faster rate than I have talking to vast majority of the technical people I've ever interacted with.

time_management 18y ago

Shutter the bad and mediocre colleges, law schools, and business programs. These diploma mills border on fraud. Most people who think they went to "college" didn't. They were expensively babysat for four years because the job market couldn't figure out what to do with them (and, alas, still can't). The upper-middle tier schools (respectable but not distinguished state schools) shall stay in business but should be half of their current size. This problem is even more obvious in law school. "California Western School of Law" is not going to provide access to the level of means that most people associate with being a lawyer. These are the schools that law students call TTTs-- third tier toilets-- and the job prospects they provide don't offset the ridiculous debt one takes in order to attend them. A law program loses accreditation if less than 50% of its students fail the bar exam. There are many shitty law schools out there that take on mediocre, doomed students (like, 140 LSAT) and fail many of them in their first year, in order to improve their bar pass rate. I think it's time to go to an "elitist" European-style system where only qualified students get to go to university and into professional programs, at least with the public schools. Only 5-15% of the population should be getting an academic college education, but it should be free (or very low-cost) for them. No student loans, no parents losing their retirement funds to tuition payments. The other ~85% can go to a private college if they can afford it, as in Europe, but it's not viewed as a universal right.

gaius 18y ago
I think it's time to go to an "elitist" European-style system where only qualified students get to go to university What system is that? Here in the UK the ex-polys churn out Media Studies grads like there's no tomorrow. You don't even need good A-levels to get in. GMTV did a story the other day on how they're working manual labour jobs now. Now don't get me wrong we need people to do those jobs but we didn't need for them to spend 3 years partying on the taxpayer first.
captainobvious 18y ago
>A law program loses accreditation if less than 50% of its students fail the bar exam. Guess a crummy school where more than 50% fail the bar wouldn't have any problems then.
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jmtame 18y ago

i'm more worried about the other students who come in and think just because they paid a few of their friends to cheat on tests and they got a "degree" it is somehow an entitlement to a life of a high-salary job. most students actually go in with that mindset. "i'll cheat on the tests, i'll slack off, and get the degree. then i'm deserving of a job, because that's what everyone says to do."

lallysingh 18y ago

Wow, those numbers really, really suck. I didn't go to an Ivy, I went to state tech school. My loans were at 4.5% (!) when I started, and the last one was ~7.5%. My initial tuition was $2500/sem, ended at $4500. Note, that's over an 11 year period, covering bachelor's-PhD. Folks covered undergrad, and I did a lot of research work to cover many semesters of graduate school. My loans are somewhere around $50k total. Each semester's loan usually left me with tuition covered and $5k of spending money. There are some things about not going to MIT/CMU I'll always feel like I've missed. But there is the other side of the coin :-)

kragen 18y ago

A lot of people in the comments here are talking about the return on investment of the law-school tuition, but nobody seems to have calculated it. First, some comparison figures. Warren Buffett expects businesses he buys to return about 4% on capital. The US stock market during the 20th century returned about 10% on capital. A bank loaned me money to buy a house in 2000 at a 6.5% interest rate, before the mortgage bubble; presumably it thought that was a good return on the capital it invested in the loan. But it had some risk that I would default on the loan, which lowers its expected return on capital to something a bit below 6.5%. This Joel Kellum guy spent US$36 000 a year on a law program, presumably for three years, for a total of US$108 000. Then he got a job that paid him at least US$100 000 per year, instead of the US$57 500 per year of an average college graduate. If we assume for the sake of simplicity that he only went to law school to make money (instead of, say, because of a passion for justice or the Socratic training in logic that are part of a law-school education) and that the difference in earnings is solely due to this legal training — rather than, say, because he was working 80 hours a week, or got very lucky — then his investment was returning at least US$42 500 per year. That's roughly a 42.500/108 = 39% return on investment. That's not a full NPV analysis, of course, because it neglects the forgone income during his law-school years, the earnings difference he can expect over the years as his lawyer earnings increase at a more rapid pace than an average worker, and the three-year delay between investing his first tuition dollar and landing his junior associate position. Still, it's tough to manipulate those figures to get less than a 20% ROI. I don't see Joel Kellum gets off complaining about a 39% or even a 20% return on his investment. Better yet, it wasn't even his investment — he borrowed most of it at rates that "have ticked as high as 9%"! Any investor would kill for yearly returns like that, even before you multiply by the leverage. Better still, in student loans, typically the lender shares in much of the downside risk — you don't have to make payments until you get a job, for example. This is the kind of investment around which Forbes is tossing about phrases such as "consumer fraud" and "trading in half-truths that exaggerate the value of its product"? What is their agenda? It's also kind of pathetic to see education as merely a means of making more money; but even if you see it in such narrowly self-centered terms, it's an extremely good investment.

kragen 18y ago

Shorter version of my long comment: Forbes is calling college education a fraud because Joel Kellum only gets a 39% yearly return on his "invested" tuition, which he borrowed most of at 9% or less. WTF?

leonardc 18y ago

I am appalled that people could think of education as a luxury. In many Eurpean countries University is free or very cheap. Full educational opportunites for all a countries citizens, as well as comprehensive healthcare, are the hallmarks of a civilized society. Good luck, prosperity and happiness to you all.