Summary
Our second show sees the Money Mastermind crew head back to school. We debate what the value is of a university/college education is in today’s modern economy. Discussion takes us from trying to quantify the return on investment offered by many post-secondary education options, to how college/university has evolved over the past few decades. We also talk about a few alternatives.
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Key Takeaways From This Episode
Some important points made in this episode:
- Average debt of 2014 U.S.four-year grad $33,000, more than $1 trillion outstanding (Source)
- Average debt in Canada $26,000 (Source)
- The cost of university per student has risen by almost five times the rate of inflation since 1983, and graduate salaries have been flat for much of the past decade (Source)
- Do colleges and universities post scientifically accurate numbers when quoting earnings figures relative to other education levels? (Source)
- Is there an imbalance between theory-based educations (traditional 4-year degrees) and more skill-based options (technical colleges and co-op programs)?
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- More than 7 million borrowers are in default on their loans (source)
- The Project on Student Debt, a non-profit, says that 15% of borrowers default within three years of entering repayment. At for-profit colleges the rate is 22%. (source)
- The cost of university per student has risen by almost five times the rate of inflation since 1983, and graduate salaries have been flat for much of the past decade (source)
- According to the College Board, the average cost of tuition and fees for the 2013–2014 school year was $30,094 at private colleges, $8,893 for state residents at public colleges, and $22,203 for out-of-state residents attending public universities.
- Universities are spending a lower percentage on teachers/faculty/instruction, and more on administrative and support services. (source) They have become less about quality teaching and one on one instruction, and more about entertainment, school amenities, research, subsidizing athletics and pumping out degrees: Roger Geiger of Pennsylvania State University and Donald Heller of Michigan State University said that since 1990, in both public and private colleges, expenditures on instruction have risen more slowly than in any other category of spending, even as student numbers have risen. Universities are, however, a higher percentage on administration and support services
- Big university building spree (to have the best to attract students/researchers) – taking on debt to pay for it (which leads to rising tuition and fees.) (source) Harvard may be the wealthiest university in the U.S., but it also has the most debt, to the tune of $6 billion. Miami University is a public institution in Ohio; its debt in 2011 was $326 million, up from $66 million in 2002. A small Catholic school in Maryland, Mount St. Mary’s University, is $63 million in debt and its credit is now rated as junk. Ramapo College of New Jersey, a public institution, has racked up $281 million in debt to build a new business school, dormitories, a 2,200-seat arena and a new wing of a buildings for a nursing program.
Items Mentioned In This Show
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