Higher education in America is expensive. It’s not even a little bit expensive, it can be incredibly expensive.
I felt it was time to take a moment to step away from Higher Education as what we’ve all come to know. Instead I propose we think of Higher Education in the abstract as a thing. Nothing more, nothing less.
Let’s look at this thing with economic eyes. What do we have.
The thing is good. Because it is good, people want to buy this thing. There is increased demand for it.
With increased demand comes an opportunity for the seller to charge more for this thing. Over time it becomes more and more expensive.
Before the demand for this thing went way up, people could buy it with cash. They would work and save up for it or their parents would pay for it. People didn’t borrow to pay for this thing because you didn’t need to borrow for it. But borrowing also wasn’t much of an option. People couldn’t borrow because they didn’t need to and people didn’t need to because they couldn’t really borrow.
People kept liking this thing and the price kept going up. As prices for other goods increased, it also cost more to provide this thing. Some people couldn’t afford this thing. In 1965, President Lyndon Johnson signed a bill into law saying “Hey! We need people to have access to this thing. Let’s start offering low interest loans to people who want to buy it. It’s a good thing and they should have more money after buying it, so the Government guarantees that everyone will pay the Government back for this thing.”
With loans, more people could access the thing. More people bought it and places kept selling it. No one really cared about how much it cost because buying this thing effectively came with a guarantee you’d have a better life. If you owned this thing, you’d make more money, have more success and damnit people would like you!
The trouble was the Government money to buy this thing was guaranteed to the sellers. With guaranteed payment, the sellers could charge whatever they wanted. They charged more and more and more and more and people kept buying it.
After 50 years, the price of this thing is out of control. And unlike the days of yesteryear, owning this thing no longer guarantees you the life it did 30 or 40 years ago. In fact, so many people own this thing, it doesn’t differentiate you at all from anyone else. It seems everyone owns this thing.
Sure, having this thing is still great for some. Maybe it turns out fine for many. But what about everyone else?
Do you think you should still buy this thing?
This thing is so expensive it could potentially ruin your life.
Once you buy it, you can’t return it.
If you can’t pay back what you borrowed to buy this thing, there’s not much you can do about it. It will follow you around until you die or become permanently disabled.
It’s time we buy this thing differently.
The cost of this thing needs to be important.
The color of this thing barely matters any more.
Yes, this thing is probably still great in the long run, but that doesn’t mean you should trade your future for it.
Be smart when you buy this thing.
- Work more to save up to pay for it.
- Talk with people about why you want this thing. They may give you money to help you buy it.
- Buy half of the thing in your community, near home. Then you only have to pay for expensive parts when it matters.
- Learn about yourself before you buy this thing. The last thing you want to do is buy the wrong one, because they won’t let you return it.
This thing is shiny and I know you want to buy it. But remember, there are no refunds. Think before you buy. It’s only a thing.
Goodnight Debt. 
And that’s why I rarely mention this thing to my boys. There are many other things out there that they may want to pursue with their time, energy, and money.
Smart! Some people are told all their lives they’ll go to college. That’s great if it’s already paid for, but that’s going to be a rude awakening when the kids have to pay the bill themselves.
It is always a small shock to me to see how much a college degree costs in the US… Compared to the US prices, our comes almost for free… Back at the end of the 90ties, It was almost for free… One of the good things of paying that much taxes… I guess we rather pay afterwards, when we work.
The prices shock us too. But even more shocking is that people pay them, without thinking about it.
Our tax structure isn’t designed to support free college like other countries. Our universities also don’t support being fully funded publicly. Everything right now is about flashy new buildings and even flashier stadiums. They have to spend all that money somewhere.
Education is changing so drastically. There are so many free and cheap resources online. I think the traditional structure may not even carry as much weight as it does now for my own children. It will be based on skills and ability rather than degrees. Think outside the box.
You are so right. The biggest trouble I see is that corporations want identifiable badges. They know what a bachelor’s degree is. Some of the tech alternatives show promise, but all of the other stuff I’ve seen is just a cash grab by organizations trying to capitalize on people’s desire to have another badge. So many people at my company are getting new letters at the end of their names, but outside of the standard letters like JD, CPA, MBA, PhD, the letters don’t mean much. I went to an informational meeting about one of the major ones in my industry and the best thing they had to say about the week long program was that the food was really good. Um, excuse me what? You want me to pay you thousands for a business certificate because the food is good? No thanks. Sell better next time! LOL
Ba ha ha ha! People are the worst sometimes!
I LOVE this post! So brilliant. What’s interesting is that you could swap in health care and write almost exactly the same post. It’s interesting that we have these two major areas of our society where price is basically not part of the conversation at all. Like two colleges could have very different costs, and same for two hospitals, but that doesn’t seem to enter into the equation for most people — AND the prices have very little connection to value. Interestingly, going to the vet with my dogs has taught me to be more price-conscious for health care (I know health care is not the point of your post, but it’s my closest analogy at the moment, since higher ed is now a long time in my past). Vets tell you how much things cost and understand that you might make decisions based on price, unlike human doctors. But that has retrained me to think about cost in all health care settings, which I think is a good thing. I wish I’d known that about college, but then I went to public school all the way through and got a nice scholarship, so it was less of an issue. If I look at what my public university costs now, though, not all that long later, it’s a crazy increase. It’s scary to think about where those prices are headed… surely we have to hit a price ceiling soon?? Or maybe not.
You are so right that price doesn’t seem to matter in odd little areas. Education, Health Care, the dentist sometimes… boozy drinks on a night out (I hate that they don’t list prices of alcohol. Maybe this is why I don’t drink out much).
I went to college during the changing days of tuition. My brother’s tuition (4 years before me) was relatively reasonable. It started climbing when I was in school, then it went crazy when I graduated. It’s a tough sweet spot for when to go to college. You want to go when you are ready and when you know why you want to go, but you don’t want to wait and save too long, because tuition increases are more than you can save. It’s such a crappy system. I think we are getting close to the price ceiling, but you never know. So long as people aren’t thinking about the price and the payment is guaranteed to the school by the government, prices will only go up. The only release valve I see is if student loans are dischargeable in bankruptcy. That will turn the whole situation upside down.
Another one is weddings! For a while and still for some, the cost of weddings doesn’t matter. This one is particularly stupid because its one day and its usually one day you only remember from pictures.
All so true. And weddings — yes! We did a tiny wedding (just immediate family) because we wanted it to be NICE, but not expensive. And I have never regretted it! I think we spent like $7K all in, and I loved every minute of the long weekend. I think if we’d had a bigger wedding, there would have been lots more things to stress over, and so many more hidden costs. We’ve never regretted going small, though our “small” was still pretty lavish.
Haha, you can’t return it. True story! I’d return mine if I could.
I think what complicates the view of higher education as a “thing” is the assumption/belief in many cases that it’s actually an *investment* with potentially massive returns. Some people get degrees for fun, I suppose, but most of us (myself included) have this idea that if we just shell out (or borrow) a huge amount of money today, it will be paid back to us tenfold in the years to come when we get amazing, high-paying jobs that we never would have gotten without this degree. (Obviously it doesn’t always work out that way! But the belief still persists.)
But in any case, I do think your way of looking at higher education is useful and illuminating. It really is very odd that I was willing to pay such a high amount of money for this thing when I certainly wouldn’t have bought any other thing that cost nearly that much! I think that after my education, the next-most-expensive thing I’ve ever bought was when I paid $4200 cash for a used car in 2008.
The investment part is part of the problem. People don’t analyze it as an investment. They don’t care what the education costs, only that its an education. College is such an emotional decision. Financial facts are only an after thought. I hope the massive amounts of outstanding student loans are a bit of an awakening for people. It sucks that college is getting so expensive so fast because people rely on anecdotal evidence and their anecdotes are outdated.
I totally agree that people don’t think about the cost. But with massive purchases, money is hard to grasp. The same happens with houses or even expensive vacations. What’s another little extra to throw on top of the pile?
I love how you classified higher education as a thing. It’s weird to think about it like that but it really is. If I had looked at higher education as a “thing,” instead of an investment or necessity, I might have put more thought into signing my life away on that loan paperwork. Maybe they should include this post in the beginning of all that paperwork since no one seems to explain what you are really getting yourself into, especially when you’re so young. Great view point and read!
It’s crazy how money doesn’t seem to matter even when something is that expensive. I guess we can’t expect schools to have their student’s financial futures in mind. They are a business after all. There job was to sell you this thing, and they did just that.
Keep killing that debt! I’ll work on getting this as part of the college admission process 😉
I received scholarships for my college education, but am still bitter about it sometimes. I don’t regret it, especially the study abroad and exposure to a lot of literature, but as far as the promise of a better job or illustrious career for getting merely a “degree”? Nope. The things I would tell myself as a senior in high school…
Part of it is the economy. My dad got a better job straight out of high school than I did out of college. Your post is spot on that if everyone has the “thing” you mention, it starts to look like the old thing, which is a high school education. I think we do need to see these promises of an automatic better life as advertising and regard it more critically, as we would any advertising.
There is this idea, however, at least where I grew up, that a college education is almost a right you have and that to not go is to give something valuable up that you already have. Maybe this idea will go away as the middle class is eroded further due to all of this debt.
We live in an interesting time for a changing environment. It will be interesting to see how it all evolves as so many people are stunted by debt.
I completely agree that people need to see the promise as an advertisement, because that is exactly what it is.
Thanks for sharing a historical and economic perspective of this thing–that is important to understand. I really wish teachers, parents, and other authorities adolescents trust would stop mindlessly pushing this thing on kids, and offer warnings like you’ve offered here. And community college is such a great approach. Not only is it much more affordable, it’s a great way to get your feet wet and learn about yourself and what you want to do.
I wish they would offer a few warnings too. The worst is those kids that aren’t ready and they are pushed into university not having a clue what they want to do. That’s where the biggest debt and the biggest regret usually grows.
Yay community college!
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I absolutely love this post. I think it’s difficult for me to explain the real vs. perceived value of higher education to high school students brainwashed into thinking this is the path forward rather than one of the paths available.
and heaven forbid you recommend something other than college to HS kids. My sister is a junior and struggling with her next move and I’m trying so hard to get her to do a gap year. Not even a don’t go to college, just don’t go this moment. Even that has had major push back.