New schools are popping up.
Some offer one year programs but no college degree. Good idea?Ben Carlson at
Wealth of Common Sense is irked by the question: Is College Worth the Cost?
Reddit co-founder
Alexis Ohanian gave some advice to young people in a recent interview with
the New York Times:
“Do you really need to go to
college? There is a huge student loan debt problem in this country. I think
there’s going to need to be a drastic change in how these universities work.
And I also think we’ve lambasted the trades for way too long. You can make six
figures as a welder.”
These
kinds of statements irk me, especially when they come from rich entrepreneurs.
This line of thinking reeks of survivorship bias.
Successful
entrepreneurs must understand they’re the minority. Most businesses fail and
most 18 year-olds don’t have what it takes to start, let alone run their own
business. I certainly would have been lost at that age trying to make a go at
it on my own.
I get what Ohanian is
trying to say here. There are plenty of problems with the higher education
system. It’s too expensive. Most students aren’t given enough guidance in terms
of how their preferred area of study will lead to actual employment or how much
that employment will pay. Student loans can also be a huge burden after school
for many.
In
many ways, much like personal finance, people are mostly on their own when it
comes to figuring these things out, which is a shame.
Are
we really expecting 18 year-olds to perform a cost-benefit analysis on whether
or not they should go to college or skip it altogether and go straight to the
working world to save on the tuition costs? Better yet, how many adults perform
a cost-benefit analysis when they purchase a new car or house? How many adults
do you know who track their spending? Create a household budget? Pay down their
debt every month? Save enough for retirement?
One Year of ‘College’ With No
Degree
Let’s now consider One Year of ‘College’ With No
Degree, But No Debt And a Job at the End.
As a high-school senior in
Hampton, Va., Aidan Cary applied last year to prestigious universities like
Dartmouth, Vanderbilt and the University of Virginia.
Then he clicked on the
website for a one-year-old school called MissionU and quickly decided that’s
where he wanted to go.
Mr. Cary, 19 years old, is
enrolled in a one-year, data-science program. He studies between 40 and 50
hours a week, visits high-tech, Bay Area companies as part of his education,
and will pay the San Francisco-based school a percentage of his income for
three years after he graduates.
MissionU, which enrolled its
first class in September, is part of new breed of institutions that bill
themselves as college alternatives for the digital age. The schools—whose
admission rates hover in the single digits—comparable to the Ivy League,
according to the schools—offer a debt-free way to attain skills in hot areas
and guaranteed apprenticeships with high-tech companies. Together those create
a pipeline to well-paying high-tech jobs.
What they lack is an
accredited degree, the longtime entry ticket to a professional career, and the
traditional trappings of college including a full liberal arts education.
“The
degree is dead. You need experience,” says the website for Praxis, a
five-year-old digital school based in South Carolina.
Stunningly Simple Choice
There
is no choice here, at least for Mr. Cary. One would have to be a fool to turn
down the opportunity.
There
is no catch, but there is a problem. These schools get 10,000 applications for
50 spots. They will take the brightest of the brightest, knowing full well the
kids can be placed in a high-paying job.
Everyone wins. Those accepted
make a great salary after one year, and they finish school with no debt.
Skip College and Go to Trade
School
Parents are stumped Why an Honors Student Wants to Skip
College and Go to Trade School.
Raelee Nicholson earns A’s in
her honors classes at a public high school south of Pittsburgh and scored in
the 88th percentile on her college boards.
But instead of going to
college, Ms. Nicholson hopes to attend a two-year technical program that will
qualify her to work as a diesel mechanic. Her guidance counselor, two teachers
and several other adults tell her she’s making a mistake.
When
she was 14, Raelee rebuilt a car with her older cousin. She doesn’t listen to
those trying to dissuade her from her passion. “Diesel mechanics charge $80 an
hour,” she says.
Less Than Useless Guidance
Counselor
Raelee
should tell her guidance counselor to go to hell.
The
counselor no doubt wants her to blow $80,000 or more on college, and walk away
with some sort of degree in a field in which she has no interest.
With
no interest in her major, she would be precisely qualified to work at Target or
Walmart in a job she hated.
It’s
crazy.
Irked
Let’s return to Ben Carlson
who is irked when entrepreneurs say skip college.
I
think Reddit co-founder Alexis Ohanian was spot on in this important sense: It
is beyond stupid to go to college if you do not want to, especially if you have
other viable options.
Carlson asks “Are we really expecting 18 year-olds to perform a cost-benefit
analysis on whether or not they should go to college or skip it altogether and
go straight to the working world to save on the tuition costs?”
Fair
enough. But if they cannot do that, then they also cannot figure out that going
$80,000 in debt for a humanities degree is a bad idea.
Carlson
and guidance counselors give kids horrendous advice and pressure them on the
need to go to college, willy nilly, even when many of the kids are bright
enough to figure things out on their own.
Worse
yet, those who have no business going to college at all end up in college
precisely because they cannot do what Carlson asks, and also because of
incessant pressure to blow money on education.
I am
a proponent of trade schools, of one year colleges with no degree (if you can
get in), and also 4-year degrees in colleges overseas.
Some
kids are bright enough to figure this out on their own. The rest need a bit of
genuine guidance instead of a preach job on the need for a four-year college
education.
Reprinted with permission
from Mish’s
Global Economic Trend Analysis.
Mike
"Mish" Shedlock is a registered investment advisor representative for
SitkaPacific Capital Management.
Copyright © 2018 Michael Shedlock