Marketplace has a new podcast for kids, "Million Bazillion!" EPISODE OUT NOW
Marketplace Scratch Pad

Is college a waste of money?

Scott Jagow Nov 23, 2009

A recent post about a 20-year-old woman who bought a home drew much attention here and around the web. I noticed in the comments that people were debating not only her decision to make such an investment but also her choice to skip college for the time being. Today, I read another article claiming that college may be a waste of money. So, let’s have at it.

From Minyanville:

“College costs — along with living and medical costs — are rising, and salaries are going down right now,” Managing Director of Formula Capital and Wall Street Journal columnist James Altucher said. “College graduates don’t have the same benefits as they did 30 years ago…”

“If a student wants to go back to school in their 20s, when they’ve made some money, traveled, and matured a bit, then go ahead,” Altucher said. “But a parent shouldn’t have to spend $50,000 a year for their kid to go to frat parties all day long.”

The basic argument here, and I’m sure you’ve heard it before, is that college isn’t for everyone. It’s kind of like challenging the ideal of home ownership, something that’s been encouraged in this country as the “right thing to do” and the way “to get ahead.” How about some alternative thinking?

Why don’t parents give a quarter of the amount they would have spent on an education to their kid to invest? The cost of starting a business is next to zero. Not everyone is an entrepreneur, but there’s no harm in trying to be one.

“Critical thinking shouldn’t cost $200,000,” Altucher said. “There are other ways to learn that while kids can make money and get experience. Lay your own track. Become an artist, entrepreneur, investor.”

Minyanville actually makes the statement: “The best university in the world is called Google. You can learn anything you want on the Internet, free of charge.”

It’s easy to say something like that, and of course, there are examples of non-college grads who went on to fortune and fame. Career coach Marty Nemko keeps a list of them. He argues that college is “a wise choice for far fewer people than are currently encouraged to consider it:”

Colleges trumpet the statistic that, over their lifetimes, college graduates earn more than non-graduates, but that’s terribly misleading because you could lock the college-bound in a closet for four years and they’d earn more than the pool of non-college-bound–they’re brighter, more motivated, and have better family connections.

Earlier this month, the Chronicle of Higher Education asked a series of questions to higher education experts. It’s worth reading. Here’s an interesting question:

How much does increasing college-going rates matter to our economy and society?

Nemko: Increasing college-going rates may actually hurt our economy. We now send 70 percent of high-school graduates to college, up from 40 percent in 1970. At the same time, employers are accelerating their offshoring, part-timing, and temping of as many white-collar jobs as possible. That results in ever more unemployed and underemployed B.A.’s.

Winters: Increasing college-attendance rates in the United States is essential to reducing income inequality and maintaining our stature as a world economic leader. Our economic dominance in the second half of the 20th century was directly related to our educational dominance.

It’s a good debate to have right now. With our economy changing in so many ways, there’s definitely room to consider our old models of higher education. Maybe we should encourage shorter, more affordable “bursts” of school? Perhaps that would encourage more students to wait until they know what they want to do with their education.

I’d love to hear your thoughts. And do you think employers are ready to embrace such changes?

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.