Education Inflation – Your College Degree is Becoming Worthless
Education inflation is making your college or university degree practically worthless.
One of the key principles of economic theory is the principle of supply and demand. Increase supply with demand being constant and prices go down. Increase demand with supply remaining constant and prices go up. Our student loans system has increased the supply of university degrees and diminished their value at the same time.
We have more people going to college or university now than at any time before in history (recent figures peg over 70% of high school graduates in the US as going on to college). This unprecedented multitude of college entrants is due in large part to the low or no cost loans that are being offered to them (backed by federal governments in Canada and the US and elsewhere), combined with the inflation of marks that are being granted in high schools (just how uncommon is it for a student to have an A average these days?). Practically everyone with a heartbeat is getting the marks that they need to get into college or university these days.
This wasn’t always the case. There was a time when an A average actually meant something (not too long ago actually). There was also a time when a college or university degree meant something special. You actually stood out to a very large degree (pun intended) if you had attained a college or university education. You were coveted by employers. Today a Bachelor’s degree is a prerequisite for many entry-level call center jobs.
True Costs – Is a College or University Education Worth it?
In Canada, yearly tuition now runs about $9,000 for an undergraduate program. Add about a $1,000 for books, and roughly $10,000 or so if you live away from home. That adds up to roughly $20,000 per year.
Now remember that as a full-time student you are also foregoing the opportunity cost of having a full-time job during the years that you are studying. A entry-level typical job might pay you around $30,000 per year or so.
Now let’s do the math. A four-year honours degree will end up costing you about $80,000 for tuition, books, and room and board PLUS about $120,000 in foregone wages. Total cost - about $200,000 dollars! You will start work as an indentured servant and, most probably, remain one for the rest of your life as you struggle to pay off your student loans and eventually get a mortgage when you buy your first home.
The figures in the US are even more extreme. Non-state colleges apparently charge close to $30,000 per year in tuition. Run this amount through the same math and your looking at roughly $41,000 per year for tuition, books, and room and board. Assuming that your foregone full-time wages are similar to those in Canada ($30,000/yr) and your looking at a total cost of $164,000 plus $120,000 or $284,000 US!
This is a pretty big hole to get yourself out of when first starting work after you graduate whether you live in Canada or the US.
Too Many Degrees = Education Inflation
Quite simply, we have too many college and university graduates. Each additional graduate increases the supply of graduates and, thus, reduces the value of your degree.
With that being said, I have earned two degrees. I have to say though that many people who were in my classes really didn’t seem too interested. They seemed to be there simply because going to college or university was the thing to do, because they were expected to by their parents, or because they simply didn’t want to get a job.
This was, perhaps, most evident during our class tutorials. Tutorials offer a smaller group setting and they are designed as forums for discussion and debate. I always loved my tutorials and the chance to discuss ideas but found that these sessions always turned into a simple two-way or maybe a three-way discussion between the people who actually came prepared and who were interested. Most people just sat there and did not contribute a single idea because they were too busy texting or because they did not prepare by doing their assigned readings. Deadweight. Not sure how they passed, but they all did (somehow). This blows my mind to this very day. Why were they even there? How did they even get accepted into the program? How is it that they were allowed to pass? I think their best interests and ultimate happiness might, perhaps, have been best fulfilled elsewhere.
In this case, the value of the degrees that all of us earn through much sacrifice and hard-work are diminished by the people who do very little to earn their degrees. We all pay the price; employers by hiring less-qualified candidates with credentials, and qualified graduates who are lumped together with those who did not work as hard for their degrees.
Each and every graduate increases the supply of graduates in any given program and reduces the prices (wages) offered for these degrees. We have taken this to such an extreme degree that an college or university degree is a prerequisite for many call center jobs. There was a time when a degree meant something; now it is just an entry-level ticket into an entry-level job.
I guess a professional degree like medicine or law might, at first, considered the real ticket. The problem is that in order to attain these degrees you need to spend a huge number of your earning years in school. Even after graduating, there is little but grand promises of huge incomes (some which do come true, many which don’t).
There are many graduates that are making much less then they thought they would. They are being forced to compete for those coveted jobs against all of the other graduates who graduated before them, with them, and who will graduate after them. All the while paying off student loans while working at low paying jobs.
Not a Big Advantage if you have One, But a Huge Disadvantage if you Don’t
Now don’t get me wrong, education inflation means that a degree is now a basic prerequisite for many of what used to be entry level jobs. In many cases, applying for a job without a college or university degree will not get you very far – there are hundreds of graduates applying for the same job. All things being equal, any employer will almost always pick a college or university graduate over a non-graduate for the same position.
Find Something You Love to Do and Become Really, Really Good at it
If you love what you do, what else really matters (as long as you can get all of the other stuff you need like food, water, and shelter, and a few key items that you really enjoy)? In fact, the people that do something really, really well are often those that love what they do. They are the tops in their fields and often become the top earners in whatever job it is that they choose to do. You will make a top salary and love your work.
They key here is finding what it is that you love to do. College and university can help you develop skills in what you love to do, but it can also distract you from the real issue of finding happiness if you are not there with that goal in mind. If you are unhappy making minimum wage, you will most likely still be unhappy making millions. A college or university might help you achieve this, it might not. It is a mistake, however, to think that you will suddenly become happy after you graduate if you are entering a program simply ‘because’. If it meets your purpose, great. If not, a degree does offer some degree of insurance against being jobless, but not as much as it used to. Just keep that in mind.
Take some time to find out what it is that you really love to do (keeping in mind that this could very likely change as you get older). Next, become really good at what you love to do. The rest will take care of itself (and you’ll be happy as well).
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