Is your college degree is a lot of BS? Last week I covered 10 things I taught my interns, but what advice would I give them before they even applied to college? Here are 6 myths about college and my plan to save 90% on tuition.
Listen to this post via podcast (recommended):
Or continue reading it as a blog post:
I just got finished reading a feature article by Penelope Wang in the September issue of Money Magazine. The title was, Is College Still Worth The Price?
In the article, they explore whether it’s time to question if a college education is worth the price, since costs are soaring twice as fast as inflation while salaries for people with bachelor degrees are falling.
I’m going to highlight some of the marketing tricks the article points out that colleges are using to attract students, and give you my take of what’s really important in the digital age.
Let’s start with 2 quick points
1) The cost of college is going through the roof
Wow I’m really dating myself here, but when I entered college in the fall of 1987, total tuition, room and board was around $8,000-$10,000 per year, and by the time I graduated it was maybe $12,000-$14,000, meaning that the total I spent on my education was about $43,000. Well, I just discovered that a SINGLE YEAR at my college now is $43,000.
And the numbers back this up. According to a Bureau of Labor Statistics chart in the Money article, the cost of a college education is up 439%, which is higher than medical costs, higher than energy costs, and four times the consumer price index. The cost of higher education keeps getting higher.
2) So you ask, where is this money going?
Of course, some of it is inflation, some is infrastructure improvements, and some is teacher salaries. But a lot of it is bling. The article cites examples of on campus skating rinks, Mongolian grill restaurants, organically grown coffee houses, 35-foot climbing walls, and 15 person hot tubs. I wish I was making this up. No, actually, I wish they had these things when I was in school.
But what’s really happening is marketing competition and one-up-manship. It’s sometimes difficult to measure the ‘quality’ of an educationâ€¦ is a 32:1 student-teacher ratio really worse than a 24:1 ratio? But if College A has a 9,000 square foot state of the art fitness center and College B has a gym like the Holiday Inn off the interstate, that’s an advantage.
A similar thing happened in the real estate market. The average cost of an apartment in New York City is well over $1 million dollars (Correction: $1.7MM in April 2008). At that price, every listing is going to have granite countertops and stainless steel appliances.
To differentiate, builders are adding in-house gyms, spa amenities, and lap swimming pools. But even if you ARE an occasional triathlete that will get use out of the pool, the smart consumer will base their decision on things like cost per square foot and quality of neighborhood.
Let’s examine my 6 college myths.
Myth #1: The more expensive a college is, the better the education must be
There’s a great cartoon ad I saw in a magazine called ‘breakthrough ideas in business’ It had a picture of a coffee cup with a price of 50 cents below it. Then it had an identical cup, but with the 50 cents crossed out and a new price of $4.50.
Isn’t that basically what Starbucks did? Yes, you can argue the coffee is better or comes in flavors and whatnot, but the fact is, people used to pay 50 cents every morning for a caffeinated liquid extracted from a coffee bean, and now they pay 9 times that amount for the same thing.
Well, that’s exactly the marketing trick that Hendrix College in Conway, Arkansas did. Because their tuition was lower than competitors, they were perceived as a lower quality institution. So they increased their tuition in 2005 by 29%. 29%!!! The result? Applications soared and the freshman class increased 40%. Same education, higher price.
To their credit, the article notes they simply turned around and gave back the in the form of financial aid or merit scholarships to 99% of their students.
Myth #2: Your degree matters
Of course for some specialized fields, your degree matters. But ask around. For every computer engineer with a computer engineering degree and writer with a journalism degree, you can easily find a paralegal with a degree in interior design or a graphic artist that studied criminal justice.
Most people chose their major when they were a senior in high school. There are a lot of things you thought were a good idea when you were 18 or 19. It doesn’t mean you have to live with them for the rest of your life. Except for that Tasmanian Devil tattoo of course.
Myth # 3: The college you attend matters
If you’re in the top 1% of your high school class or you’re clearly gifted, by all means, you should aim to be among the 1% of students that get an Ivy League education. The VP of my department? Went to Yale. The president of CondeNet? Harvard. Managing editor of Wired Magazine? Stanford.
But you’re listening to TheHopkinsonReport, not the Harvard Business Review here. I’m the voice for the other 99%.
â€¢ Case study #1. I went to Bryant College, a tiny little business school that almost no one has heard of. In fact, it’s located in Rhode Island, a tiny little state that people have barely heard of. But I think myself and all my friends have done ok.
â€¢ Case study #2. My interns. If you think I sorted the incoming resumes based on the college rankings in US News and World Report, you’re crazy. I went by desire and demonstrated experience.
And the data might back me up. A paper by a Princeton economist compared salaries of grads from top-tier colleges, with those that were accepted by these schools, but chose to go somewhere else. The research found that the two groups ended up with similar incomes, implying that bright students excel no matter where they get their degree.
Myth #4: Your grades matter
If you’re going on to grad school or competing in a highly competitive field, yes, your grades matter. And certainly they are a decent barometer of academic intelligence. But listen up kids, ask any adult in the workplace if it matters if you got a 2.8 or a 3.8, and believe them when they say the answer is no.
Do you even need to graduate? Yes. The stats still show that those with a college degree will far out-earn their peers without one.
But while your grades weigh fairly heavily when getting that first job, after that, I’d argue that grades have almost nothing to do with getting subsequent jobs. It’s all about networking and connections. Shouldn’t every senior be required to take networking classes? Heck, with 100 million people on Facebook and millions more on LinkedIn, it’s easier than ever to get a job from a friend of a friend that knew of an opening.
Myth # 5: Joining a fraternity or sorority will hurt your chances of finding a job
If you have a strong opinion on the Greek system, there’s probably no way I can change that. Full disclosure that not only was I in a fraternity in college, but Old School is one of my favorite movies of all time.
So let’s look at the facts, or at least the facts that the Greek system gave to us that I used to recite to parents and faculty when we got in trouble. But there were similar numbers on Forbes.com, so there has to be some legitimacy here.
A mere 8.5% of full-time university undergraduates are members of either a fraternity or a sorority. About 2% of the overall population. Yet some statistics showâ€¦
â€¢ Fraternity members have higher grade point averages than non-Greeks
â€¢ Fraternity members have a higher graduation rate than non-Greeks
â€¢ Roughly 75% of US Senators and Congressmen were in fraternities
â€¢ 40 of the 47 Supreme Court Justices since 1910 were in a fraternity
â€¢ All but 3 US Presidents since 1825 were in a fraternity
â€¢ 85 percent of Fortune 500 executives were in a fraternity
â€¢ Greeks contribute more community service hours give back more money to their colleges than non-Greeks
So what does this mean? My take is that these organizations thrust you into leadership positions, force you to relate to your peers, teach marketing and sales techniques as you encourage others to join your group, and even act like a small business, complete with an executive board and a budget. Even if the largest line item on the budget is ‘social expenses.’
Myth # 6: With the cost of college continuing to rise unabated, parents should focus on saving a huge portion of their income so they can pay for their kids’ education
Here’s my take from a financial standpoint. By the time I have kids in college, it’s not out of the question that I would need $500,000. Do you know how much money I’d have to save every month to have five hundred thousand dollars put away? I’m sorry, but I work hard. I rather have a vacation house in the mountains and a new Porsche to get there.
So do you know what my plan is?
No, it’s not to have my kids take out loans. That’s an even bigger problem. The Money article states that the average student leaves college over $20,000 in debt, and the default rate on those loans is nearly 20%. That’s no way to start your post-grad life.
Here’s my proposed idea:
You don’t have to pay for college. You can get a fully paid scholarship if you play your cards right. That’s the ultimate target here.
I’m not saving $500,000. My plan is to save only $50,000.
There’s a few ways I could go with this. Call it the long tail of college planning.
Example 1 is sports.
I’d never push my kids into activities they don’t enjoy, but say little Johnny tries half a dozen sports and it turns out he throws left-handed and has a promising curveball. Look at John Franco of the Mets. He played for 21 years until he was 45 years old. 45!!! You’re telling me that the position is so scarce, that thousands and thousands of minor league players couldn’t beat out a 45 year old man for a roster spot!
So I’m finding a sports niche, whether it be football long snapper, javelin thrower, or the guy that sets it in volleyball. I spend my $50,000 training Johnny to be one of the top 100 high school students at that position, and then we target those sports scholarships.
Example 2 is music.
I started playing the drums in my 20s. Am I good at them? Hell no. I’m pretty terrible actually. But I was still good enough to play in a couple of bands. Did I have a great drum kit growing up? No. Did I take a lot of lessons? No, I took about 10.
So what if my son or daughter wants to play the drums, and I buy them a $5,000 drum set. Then, rather than spending $100 a week on drum lessons, I find the drummer from some washed up 80s band, like Twisted Sister or something, and offer them $25,000 to teach my kid drums. He becomes a mini prodigy, and there’s still $10k left over to have Twisted Sister play at our backyard graduation party.
Best case scenario, he gets a scholarship as the drummer in the college band at USC or something and gets to travel to Bowl games, and then he can have a rock band on the side and have some spending money from that.
Worst case, I really have to specialize, and make my kid play just those two big cymbals, or maybe the tuba. Every college band needs a tuba player, right?
Either way, Johnny or Susie are going to college on a music scholarship.
Example 3 is academics.
Some time in high school, we determine what Johnny’s strengths are, whether it be electrical engineering or marketing or writing. Then we set about getting a 100%, fully paid scholarship in that area. Here’s the plan:
I give Johnny $10,000 and I give a highly-specialized freelancer $10,000. Their only goal? Get Johnny that full boat scholarship. Whoever succeeds gets the remaining $30,000 cash.
The summer of his junior year in high school? He doesn’t work 40 hours a week as a lifeguard, getting $20 an hour and socking away a measly $10,000 toward school.
He works 40 hours a week researching and applying to scholarships, still gets that $10,000, but the ultimate prize is that half a million dollars. There has to be thousands of crazy scholarships out there that the average high school student is too lazy to go after. And you only need one.
So he reads every piece of fine print. He checks for every loophole. He becomes an expert at filling out these forms. And by August, he finds the hidden scholarship at NYU for redheaded blogging drummers with 9 letter last names, and I save 90% on his college tuition.
Am I the only one that thinks this makes sense?
Well, it’s time for me to go. I promised I’d give Dee Snyder a ride in my 911 convertible.
If you liked this article, you might also like: