Sunday, January 17, 2010
I sat through a "college night" recently at my son's high school.
It was much more enlightening than I was expecting, but not for the reasons one would hope.
First, let me say how much removed from economic reality the college reps were. One of the colleges represented was a $50,000 per year private, liberal arts college. For a $200,000 and Bachelor's degree in nothing you can make a living at, you too can get a job making $32,000 per year, with upside to $50,000. After taxes, you MIGHT be able to pay back your student loans (if you are poor) or trust fund (if you are rich) in 20 years or so, but only if you scrape and save and struggle. Thanks! I needed that!
Then, the rep from an extremely selective school spoke. Also $50,000 per year, but at least you had bragging rights, and at this university you could get a degree in nursing, social work, history, english lit, art appreciation, education and host of other educational opportunities in which a graduate could expect to make $32,000 per year to start IF they could find a job (ok, you can always find a job in nursing, and probably for more money... but, to spend $200k for it?).
I wanted to stand up and ask the representatives if their institutions would still be around in 20 years, but since I am quite sure that more than half of them will not be, I did not wish to "rain on the parade".
You see, most of the parents in attendance had already invested $200,000 in their children's primary and high school education, and were now finding out just how poor of a return they had gotten for their investment. But, like any other environment where the masses can see clearly that the "Emperor has no Clothes", we sit there and nod politely in agreement while we are being Bullsh*ted. We LIKE a healthy dose of social approval with our Bullsh*t.
In truth, what option did we have? To send our kids to a public school with 40 kids in a classroom, 50 different kinds of drugs, several guns and knives... and 1 teacher? (We can thank the NEA, as well as other local teacher's unions for this sorry state of affairs, but that is another matter. Since they are staunch supporters of the Left, they will blame it all on GWB.) So we were stuck.
But I digress. Back to the economics of it all....
The increase in the costs of educational institutions has come at double or triple the rate of wage and price inflation. At this pace, if it were possible, within 20 years education would consume well over 100% of average family income... but that ain't what is going to happen.
The price bubble for education was blown by easy money and the Federal Government's Student Loan Program - "Sallie Mae". Sallie Mae performed the same function that Fannie Mae and Freddie Mac did in the housing market - they provided easy loans that enabled the industry to pass on ridiculous price increases. Young graduates will be no more able to pay off their student loans than the sub-prime market was able to pay off its mortgage debt. It sounded noble - "Everyone a homeowner" and "Every one a college graduate"; but any rudimentary top down analysis will yield the ultimate outcome - each credit market will eventually collapse, and with it the industry it supported.
So here I was, watching these colleges pitch 50 year old couples', with 2, 3, sometime 4 children (rich people generally don't have 7 kids but I guess there could have been an outlier present), most of whom are middle class millionaires why they should invest 1/3 or 1/4 of the family's net worth in said private college (for the 2 or 3 kids). Meanwhile, most of these folks have a lifestyle overhead that requires them to not only keep working forever, but to be as productive at 65 as they were at 40. Since we all know that ain't what's going to happen... what is going to happen is that many of these millionaires will eventually be a burden, rather than a blessing, on their children. Rather than being in a position to buy our children a home and start them in business, we have been conditioned into believing that $400,000 for private school and private college is the better investment. (But who says I'm so smart? What do I know? Nothing more than I have more experience with being poor and getting going then most of those present.)
This is insanity at its best.
The high school had built a monument to itself, yet requires that all of its students be dropped off and picked up, leaving the parents 2 round trips per day BY CAR. I often wonder what THAT looks like at $8 per gallon and 20% unemployment, and it is depending on the ability of parents to bear 5% -10% increases in total costs in a deflationary environment.
But I digress... (again)
I also wonder how this might have been improved upon. Since it cost over $400,000 to educate each child at private school and then private college, wouldn't it have been better to use that money to buy them each some income producing bonds or property and send them to public schools? Of course it would... but its too late now. (If you want to get REALLY, REALLY politically incorrect, all I have to do is bring up the family dynamics that led to this REALLY , REALLY bad decision.) The psychology of investment dictates that since we are "in for a penny, we are in for a pound". No matter how clearly we see the mushroom cloud over our kid's shoulder...
But I am not allowed to bring this stuff up. I am already persona non grata at the school because I have pointed out some silliness in the past. After all, these institutions do not want anybody directing any independent thinking in THEIR direction.
The "State University" rep was even more interesting. After being led to believe that going to a private school for high school would be helpful in getting their children into the more selective state schools, the State U. rep said that the State required the admissions officers to go strictly by the numbers - GPA and SAT or ACT scores. In other words, not only did we parents spend a great deal of money on private school, it actually HURT the student's chances of getting of getting into our state's most selective state school because of the "rigor" of the school's curriculum; student's in "less rigorous" programs have a better shot at a higher GPA, all else being equal.
My jaw hit the floor (this would partly explain how the Valedictorian of the school a couple year's back was rejected by the University of Florida). Thereafter, he tried to cover what he just said by telling the parents that while the "school did not take XXX school's" program into account, he did. But then he went on to say that it was again, strictly by the numbers because of Florida's "Sunshine Laws".
And there you have it.
Posted by The Short Story Man at 5:23 AM