I had a very expensive education. But it was at a good school (RPI),¹ in the right major at the right time.² So upon graduation, I was employed, well-paid, and ready to avoid snow for the rest of my life.

However, many students have paid just as much or more, but they ended up with massive debt and terrible prospects. Here’s how you can have a great education and a great job, or at least avoid crippling debt. Fair warning: it also explains why we’ll never see free higher education in the US.

Forgive and Forget
Student loans are common and literally unforgivable, meaning bankruptcy doesn’t erase them. Why? Well, if you stop paying your mortgage, they take your house. Your car loan? They take your car. But there’s no lien on your education, and no way to repossess it. It’s yours for life, or at least until you forget it. In a dystopian system, they could make you forget it, but they still wouldn’t have it back. That’s why you always owe what you borrowed for education.

A forgiven student loan is essentially a scholarship or grant. Those are great, but have completely different qualification criteria. You typically have to have good grades and beat out other students. I got some grants and scholarships due to academic performance, but it only covered half my tuition. Those who performed better than I, or had greater financial need, got full rides. Makes sense!

Less Than the Paper It’s Printed On
Some think all higher education should be free, but that would be insane because of value. By value, I mean your earning potential after graduation. Some degrees are worthless. Actually, when you factor in opportunity cost – what you could have gained with the same time, effort, and money – they have negative value. This describes many degrees at for-profit universities. Some say those universities tricked people into going there, and I’m sure some did. The government is definitely doing a lousy job of protecting students there. Maybe forgiveness is reasonable in those extreme situations (fraud), but I’d rather see a class action or government lawsuit for fraud repay students, instead of our tax dollars.

Let’s say you’re going to a good school. Your major and the job market still have a huge impact on degree value, and it changes over time. Switch to a Democrat in the White House, defense spending goes down, as does the value of an aerospace engineering degree. Stringent (some would say overbearing) regulation on nuclear power plants has had the same effect on nuclear engineers. These unpredictable events can devalue a degree significantly. Disruptive technology can have a similar effect.

But even with good timing, is the right school and major enough? No, your degree matters a great deal. A friend who majored in bio had to get a masters degree just to be a lab tech or teach high school.³ Just about every scientific field other than computer science requires you to get a Ph.D. to have any career prospects. Many fields of engineering now expect a MS. It blows me away how many students enter college without realizing that.

Of course, you can still have the right major and degree at a reputable school, but it’s the wrong school! Most American universities are specialized in one field or another. Combined with reputation, it has a big impact on value. For instance, MIT is one of the best engineering schools in the world, if not the best. STEM⁴ degrees from there are quite valuable.

But did you know that MIT offers majors in all sorts of liberal arts fields, such as languages, cultures, and literature/writing? Given that MIT is also one of the most expensive schools in the world, do you think this is a wise investment? What is the expected return on a writing degree from here vs. NYU or the University of Iowa? (Hint: they are the MIT of creative writing.)

The Tuition is Too Damn High
So why don’t universities charge different prices for different degrees, when their value differs so wildly, and there’s clear data to prove it? Because the cost to educate them is roughly the same. You’ve surely heard about the soaring cost of education. Well, investigative reports show it’s not due to faculty salaries. Dependence on adjunct professors has skyrocketed, keeping educator payroll (vs. administrative) pretty stable.

Adjuncts are the bottom rung of professorship. They are part-time teaching jobs that not only have low wages, but educators are paid only for the hours spent in the classroom, not preparing lesson plans or grading papers. Many work multiple jobs to get by and are on welfare and food stamps.

One theory behind the rise of adjuncts is a flooded labor market. Lately, more college students are unsure of what to do upon graduation. They don’t like their options, especially if they have a liberal arts degree, so they stay in school. They get an MFA or PhD, take on more debt. Now they’re qualified for a job that has a flooded market and the worst prospects for tenure we’ve ever seen.⁵

So if the actual teaching costs aren’t to blame, what is? Buildings. Turns out, your obscene tuition – and alumni gifts – go to new buildings and campus beautification/maintenance. Why? Because prospective students rank campus beauty and amenities very highly when choosing a school.

My friend’s daughter is very smart and sensible. They toured several schools, but when they got to the Ivy League schools, she was smitten. “It looks like Hogwarts!” She’s right, and you know what? I did the same thing. I toured some schools with computer labs that were just a bunch of Macs and PCs scattered around a room. Then I visited RPI and saw rows and rows of high-end workstations housed here:

A big, beautiful chapel of stone and stained glass. It was like a sign from God.

Teenagers may be very smart and sensible (or not), but we’re asking them to make major life decisions – high risk investments – without the benefit of wisdom and hindsight. They are emotional thinkers, and architecture makes us emotional. So they weigh it much higher than they should, and colleges are using it to win them over.

A friend pointed out that administrative costs are also rising. That’s true, but I’ve read that most are related to buildings – it takes a lot of people to plan, build, maintain, and staff a $100M building. You know, like the arts building at my alma mater, an engineering school. Of course, it went way over budget.

Indiscriminately handing out loans makes it easy for schools to raise tuition. Since Reagan, politicians have been buying votes with easy money for houses, elevating homeownership to a basic human right, and causing the housing bubble and economic collapse of 2008. The same kind of thinking, applied to student loans, has created a tuition bubble. Unless we put that in check, tuition will continue to rise and Americans will be saddled with ever more debt.

Solutions

The first is mandatory mentoring. Before teens pick a school, force them to interact with professionals who have the job they think they want.⁶ Tell them which schools in their field are most respected, and what degrees are required. In other words, tell them up front what the minimum requirements are. We assume they know this, but they don’t, and neither do their parents. That wastes tons of time and money on the wrong school, major, degree, or all three.

Next, make schools collect data on employment rates and salaries by major. That’s the basic info a student needs to calculate his/her return on investment (ROI) for their chosen degree program. It should be part of the accreditation process and used for student loan qualification. People hate hearing this, but for the foreseeable future, computer science majors at top engineering schools should qualify for much bigger student loans than art history majors at the same school. Or, for that matter, CS majors at Bojangles College of Book Learnin’ and Taxidermy.

That’s smart investing. You don’t reward schools for skyrocketing tuition by having taxpayers give everyone a free ride. That’s part of what’s caused this mess. Schools will erect gilded palaces with 24/7 concierges and we’ll foot the bill.

And those bills will only get bigger. People point to Scandinavian countries as a working model for free education, but ask someone from there how many “permanent students” they know. People studying into their 30s, getting multiple degrees, happily living off the stipend with no intention to graduate. Then consider that the US population is over 12 times larger than all of Scandinavia combined. Heck, California alone is 40% bigger. Imagine the tax burden this would cause. Actually, you don’t have to, just ask someone from Scandinavia what their tax rate is.

At the same time, a top student from a poor family should never think they can’t afford Harvard or MIT. It should be guaranteed!⁷ That’s how we raise the impoverished. Reward both students and universities who perform well.

Finally, is there an alternative to college? Mike Rowe has been pointing out for years that our society suffers from a false belief that colleges are the only good answer to employment, and learning a trade is a recipe for hard times. In reality, compared to many college graduates, welders and machinists make way better money, have better job security, and they spent less time and money on their education.

I know it’s not easy work, but it could be a lucrative path to artist or author. I’m willing to bet that many tradesmen have great stories. I know veterans do;  just look at Hemingway. Pulitzer Prize? Check. Nobel Prize? Check. College degree? Nope.

The Future

It’s fun to think about the future and what might disrupt education. The first, which is already happening, is distance learning and MOOCs (massive open online courses). A great example is the Online Master of Computer Science offered by Georgia Tech. For at least 25 years, Georgia Tech has been considered a top 10 engineering school and by all accounts their distance learning program is legit. It’s just as rigorous as the one on campus, but cheaper and more convenient.

Given all the cheap adjuncts and grad students available to act as teaching assistants, you can have the star professors giving the lectures and scale this out to many students across the world.

You can also have educational tourism, in the same way you have medical tourism. That could play out in a few ways. First, note that undergraduate education, in STEM fields at least, is largely homogeneous. It’s there to prepare you for a graduate degree, where the real differentiation happens.

Therefore, a school abroad could gain a good reputation by licensing a curriculum from a top school. MIT Open Courseware has most of their material online for anyone to learn from. If a school could also license the assignments, tests, and grading policy, it would gain instant credibility.⁸

There has already been press about Americans attending German colleges for “free.” I can even see the same for us, brain draining the rest of the world because we don’t have enough students who get can into, say, top medical schools. Seems like a great alternative to a doctor shortage. I’m all for attracting the world’s best to America and fast-tracking their citizenship and contribution to society (including taxes).