Libertarian Journalist John Stossel Calls College ‘a Total Ripoff’
“Because our government basically vomits money at everyone who applies.”
Stossel is not a fan of government waste and he clearly sees student loans in that light.
He writes at the New York Post:
Why college has become a total ripoff
It’s August. Many young people head off to college.
This year, fortunately, fewer will go.
I say “fortunately” because college is now an overpriced scam.
Overpriced because normal incentives to be frugal and make smart judgments about who should go to college were thrown out when the federal government took over granting student loans.
Why?
Because our government basically vomits money at everyone who applies.
If private lenders gave out the loans, they’d look at whether they were likely to be paid back.
They’d ask questions like: “What will you study? You really think majoring in dance will lead to a job that will pay you enough to allow you to pay us back?”
Government rarely asks these questions.
Bureaucrats throw money at students. Many don’t benefit.
Many shouldn’t even be going to college.
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Comments
I work in higher ed so I have a lot to say about this article – first, that it’s mostly accurate.
Back in the early 90s I read a decent book on personal finance by a leading luminary of the day (can’t remember her name). She wrote that taking on student debt was, at the time, a good idea because of the leverage. You’d take a small loan out now (to pay much lower tuition) but the ROI was great because of the higher salary you’d get as a college grad (and, on average, yes, lifetime earnings for college grads are still better than for non-grads). You’d be able to pay off a modest loan with a bigger salary and inflated dollars.
But it’s not true anymore. Only some college degrees are guarantors of high salaries. And the loans one must take out for anything better than a state second-tier public university — like state flagship or a private uni — are now exorbitant due to skyrocketing tuition. So the ROI is tiny, and in some cases, negative.
Want to be a teacher or a social worker? You’ll find work, but your salary won’t cover the thousands you had to borrow. You’d have been better off getting a CDL and driving for UPS or a trucking line. When I was hiring entry-level administrative staff I got plenty of resumes from people with degrees in Communication, Criminal Justice, and History who couldn’t find work in their fields.
But if you get a degree in Petroleum Engineering or Actuarial Maths, you’ll do quite well for yourself. The trouble with these lucrative majors for most college students is that they involve a lot of maths, and most of them just can’t hang with it because they don’t get a decent start in secondary school They faint at the sight of a first-order algebraic equation and then sheepishly say, “I’m not a math person” as if that validates and celebrates their ignorance.
So I can see why enrollment is falling. Higher ed isn’t delivering that golden ROI it’s supposed to have.
I agree 100% with everything you have said. I have been at five different universities (and one college pretending to be a university), and the ROI is zilch.
Obama ruined the school loan program for the very reason you cited: they were discriminating about who they lent money to. Giving that business to the government was an invitation (accepted) to set up a virtual money laundering operation, where the gov’t. just spread money to the colleges, and they dutifully raised their tuitions accordingly. To wit: my tuition for one semester at Boston College was about $3800 in the eighties. Look at it now.
The fedguv was wholly and solely responsible for the sub-prime mortgage crisis.
The student loan crisis is exactly the same playbook, except with people instead of real estate.
It is somewhat dependent on where you live. Florida pays tuition for most of its students that should even go to college through the bright futures program. It is funded through the lottery.
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The Teenage Liberation Handbook (Third Edition): How to Quit School and Get a Real Life and Education
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Year: 2021
Inside American Education: The Decline, The Deception, The Dogmas
Author: Thomas Sowell
Year: 1992
Thomas Sowell is a national treasure.
“[People] go mad in herds, while they only recover their senses slowly, one by one.”
— Charles MacKay (1841)
Extraordinary Popular Delusions And The Madness Of Crowds
Change “herds” to “diversity groups,” and it is on the mark.
Stossel is an idiot. The ROI on even the average bachelor’s degree is well documented at about 300% I suggest reading John Henry Newman rather than listening to some teleprompter puppet. And, yes, there are universities that adhere to Newman’s idea of a university (see the Newman Guide).
If the average ROI is as you say, why do Americans own $1.77 trillion in federal and private student loan debt as of the second quarter of 2023….?
What he said. That really pulls the rug out from under the “pay for my crappy education” crowd.
Do you have a source for that “well-documented” ROI that breaks it out by year of graduation, or are you just relying on the usual statistics that lump together earnings & tuition for all 118M Americans with a bachelor’s degree and act as though the calculated value is relevant for young people considering college today?
This is a serious question. ROI is, obviously, calculated as
[ lifetime earnings premium for a college grad over a nongraduate ] / [ tuition and other costs of attending college ]
We know that the denominator – tuition, etc. – in that figure has increased substantially over the past several decades. Unless the numerator has increased *at the same or greater rate*, the ROI will have decreased over time.
Seth, be nice. You’re using math. For most people, math is hard.