80 Million Strong for Young American Jobs

A very interesting new organization has been started by Maya Enista and Matthew Segal, with the goal of preventing student debt, creating jobs for young people, and creating entreprenurial opportunities for young people. Visit their website here.

Is This Article Worthless?

Smart Money has published another weird article about the value of college. The article by Jack Hough, is called "Is A College Degree Worthless?", and here's what I think about it:

a) The article is dead-wrong in trying to say that college degrees are financially worthless. The truth is that college degrees are often financially valuable, they are required for the best jobs and for grad school, and college students can greatly reduce their risks by reducing their costs.

b) The article is correct in saying that college degrees are often much less valuable than advertised.

c) The article is correct in saying that colleges often offer poor educational services.

d) The article is correct in saying that many free educational resources are currently available. However, the problem is that employers will not recognize these sources, unfortunately.

e) The article is correct in calling for the creation of a new "intelligence credential" that could be earned without ponying up thousands of dollars for college.

New Consumer Protection Agency To Regulate Financial Products, Including Student Loans

The SLA blog reports here that the Obama Administration is trying to create a new consumer protection agency to help consumers avoid bad loans and financial products. Given how many problems our country has experienced in the past ten years due to debt for housing, education, and credit cards -- and the low level of financial literacy in this country -- it seems like this kind of organization is long overdue.

Schools are Approving a Record Number of Appeals and Giving More Aid

Great article here by Kim Clark of US News about how to "negotiate" with colleges to try to get more financial aid.

Two Lawyers Walk Into a Bar

Here's an interesting and detailed article from a 2008 issue of the Chicago Tribune about law school, law school debt, and the payoff (or lack thereof) of a law degree these days. The outlook for these students is probably even worse now, in 2009, due to the recession.

Five Star Review

I'm happy to say that No Sucker Left Behind received it's 7th 5-star review on Amazon yesterday, and the book's total rating is now 5-stars. I'll reprint the entire review below. This review includes a nice summary of the first half of the book, but it neglects all of the money-saving tips that are featured in the second half. Regardless, I appreciate the positive feedback.

College is supposed to be an investment that guarantees a student's success - but this is no longer true. More than one out of three recent (2004) college graduates have jobs that don't require a college degree. Also, in 2004, more than one million college graduates were unemployed. The result is that the average high-school-only graduate has more money than the average college graduate for about the first 15 years after high school.

Colleges have found sports program success linked to increased enrollment - thus, athletic empires are not built just to appease alumni. [The author] also points out high marketing and salary expenses incurred by supposedly penny-pinching colleges. Revenues are further boosted by lots of extra fees - eg. parking. Savings do occur, however. Many professors don't teach (doing research) and are replaced in classrooms by graduate assistants, groundskeepers etc. are low-paid, and class size sometimes exceed 200. Meanwhile, revenues are further aided by numerous useless "requirements" courses.

"Faculty research" (economist Richard Vedder even suggests that professors are spending less time on both teaching and research work) is the reason given for much of the college cost escalation - news articles about contributing to medical research and NASA trips are favorite public relation tools. [The author], on the other hand, provides compelling evidence that most "research" is of little/no value. More than 9 out of 10 arts and humanities research articles, half of those in the social sciences, and even 2 out of 10 in the sciences are NOT cited by other researchers within five years after they're published. (Science, 2/9/1991; 1/4/1991) Many other research studies receive such little respect they're never published.

Graduate quality is also often questionable, and even declining. The U.S. Dept. of Education 2003 "Assessment of Adult Literacy" found less than one-third of college graduates are proficient in basic reading and mathematical skills, and literacy levels have declined significantly among college graduates from 1992-2003 (2003 National Assessment of Adult Literacy).

Probably the biggest sales pitch for attending college is the claim that, on average, graduates earn $1 million more in their lifetimes than non-graduates. [The author] deflates that belief as well. Using median incomes (not distorted by very high earners) and adjusting for income taxes and the costs of college, [the author] says $467,000 is more realistic. Of course, college costs are especially risky for the many students who drop out.

More surprisingly, [the author] also points out that a number of graduates in fields like engineering and science have difficulty finding jobs (WSJ, 11/16/2005 - "Behind 'Shortage' of Engineers, Employers Grow More Choosy.") Meanwhile, college graduate earnings are falling - BW (1/21/2008) reported that income for graduates aged 25-34 fell 8.5%, after inflation, from 2000-2007. Further, average salaries for business school graduates was relatively flat from 2000-2005, while tuition at top business schools rose 55%.

About half those enrolling in expensive doctoral programs ultimately drop out, and research found no difference in academic abilities between those who drop out vs. those who complete. It's estimated that 40-505 of all doctoral students drop out.

Some good news - [the author] suggests high-school advanced placement classes, and taking free classes at local colleges while in high school are good ways to reduce costs. He also cites research showing that higher-costing colleges are not linked to improved graduate incomes.

I'm Going to Harvard. Will You Sponsor Me?

This new article comes from the New York Times, describing a new student lending service called Unithrive. Right now, this service is only available to Harvard students and alumni, but I'd be interested to see what would happen if this were opened up to students and alumni at any school. And it would be interesting to see what would happen if alumni were allowed to lend to students at other schools. Why should particular schools get to hoard the wealth? After all, Harvard students tend to have below-average loan debt and above-average salaries; there are plenty of other students who need this money more.

Unemployment Rate High For Young College Graduates

This new article illustrates that unemployment rates for recent college grads are almost as high now as they have ever been. Specifically, the unemployment rate for these people is now 5.9%. This is less than the rate for the total population, but it is still high.

However, this does NOT mean that you should skip college!! Instead, what it means is that you should keep your costs and debt as low as possible, just in case you have trouble finding a decent job. Even grads who have jobs have very low salaries that make it difficult for them to pay their loan bills. Go to college, but keep your costs low.

Nightmare Application May Be Driving Students to Costly Loans

Forbes reports here that many students may be choosing more expensive student loans because they are not completing the FAFSA form that could make them eligible for less expensive government loans.

I also wonder if students are choosing expensive private loans because their schools, or the lenders themselves, are pushing students toward these dangerous loans.

In any case, the message as always is to make sure you fill out that FAFSA. As it says in the name, it's completely free (and can save you thousands).

Human Capital Score

I just saw this service, Human Capital Score, mentioned in a US News article.

Supposedly, this (currently free) calculator can tell you how much money you will earn after college, based on your test scores and which college you attend.

I can;t vouch for the accuracy of this calculator. In addition, I'm skeptical of any service offered by a student loan company (which this is). But I hope to learn more about it, and I invite you to post what you learn in the comments here.

Diplomas and Dropouts

There's a new study out from AEI ("Diplomas and Dropouts: Which Colleges Actually Graduate Their Students and Which Don't") which reports that only 53% of students at 4-year colleges get their degrees within 6 years. Which means that less than half of students at 4-year schools graduate within 4 years!

Maybe we shouldn't call them 4-year schools anymore, if most of the students don't graduate in 4 years. Maybe we should call them "4 year" schools, or 4* year schools (*your mileage may vary).

Graduation rate is not always the best measure of whether a school is good or not, but you should definitely be wary of schools that have an unusually low graduation rate.

You can find the report here and the USA Today summary here.

Hat tip to Al Tompkins at PoynterOnline.

Recession changes top high school seniors' college choices

This new article reports that many high school valedictorians and straight-A seniors are changing their college plans, pursuing less attractive colleges, due to the high costs and financial recession.

Part of me applauds these decisions, because I like to see students make smart financial decisions. On the other hand, I'm sorry to see so many students disappointed. Even worse, I'm concerned about what it means for the future of our country if our best and brightest students can't afford to attend the schools that might offer them the best training and preparation.

My New Podcast

I'm happy to say that The New Majority, David Frum's website, just posted a 20-minute podcast of an interview I did with one of their reporters, Jeb Golinkin. You can find this podcast here. My thanks to Mr. Frum and Mr. Golinkin for helping to get the message out.