Her Very Costly College Education

January 5, 2011 by  
Filed under Fools of Finance

This young woman bought herself a financially worthless sociology degree for $200k in student loans.  She regrets it.  She should.  She admits now that she was “delusional.” Those delusions were propped up by “student loans are good debt” advice from financial morons posing as guidance and admissions counselors. 

But the best part of this woman’s essay is her explicit recognition that there can be excellent alternatives to following a traditional “college experience” path to debt hell:

An idea that some students may want to consider is going into business rather than going to college. Peter Thiel, billionaire co-founder of PayPal, recently launched an initiative to encourage students under 20 years of age to focus on their entrepreneurial ideas as opposed to dutifully fulfilling the expectation for college. The Thiel Fellowship offers $100,000 each to twenty young people who are willing to put their education on hold in order to pursue these ideas.

That’s an approach worth considering.

The “student loans are good debt” advocates love to cite statistics about how much more money college graduates make. I call B.S. on those statistics for two reasons. First, while I concede that certain college degrees can mean greater earning opportunity for motivated students, a correlation is not the same as causation for all students and all degrees. Second, I direct your attention to more current data from the Bureau of Labor Statistics:

  • In 1992, 17.6% of all college graduates were working in non-college level jobs.  By 2008, this percentage had doubled to 35.2%.
  • In 1992, 119,000 waiters and waitresses had college degrees. By 2008, this number had almost tripled to 318,000.

With for-profit colleges seemingly multiplying like rabbits, this sad data is destined to get worse. Unfortunately, parents don’t get it. Families are misled by guidance and admissions counselors who have a vested interest in sending everyone to college, even if it means putting the poor kids on a heavily loaded student loan train to get there.

Here is a link to the complete essay: My Very Costly College Education

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8 Responses to “Her Very Costly College Education”
  1. andyg8180 says:

    something to teach your kids! I was accepted to UPenn but my parents refusesd to sign any loan documents. Even with scholarships i would have easily walked away with 80-120K in loans… Soooo i went to a state uni… Majored in the same thing, still partied and did the “college experience” and now i have a job making at, if not more, than my counterparts who went to expensive colleges… Rememver, people are being frugal, and so are businesses… Experience w/ degree trumps no experience + brand name college any day… (in many fields of course, im not saying all…)

  2. Zyzzyx says:

    Ah… something I wish I’d thought of 10 years ago. Went to ITT Tech. Seemed like a fine idea at the time. Certainly wasn’t anywhere close to 200k in loans, but I am still paying them off now. And all that just for an A.S.

    Currently looking at the local uni’s to take my A.S., and 6 years of other college courses, and get a B.S. And do a combination of scholarships and pay-as-I-go.

  3. Money Beagle says:

    I wish student loans were understood more before they are handed out. Both to the parents and to the student. I think a lot of students depend on their parents to help them understand those decisions, not realizing that the parents aren’t going to be (in most cases) the ones responsible for paying them after they’re out in the real world and the tab comes due.

  4. kitty says:

    Why do people even pursue these degrees that don’t lead to jobs? I’ve never understood that not even when I went to college and at the time the cost was far less than it is now. I’ve always thought that only rich kids can afford to study subjects for fun. I’d make exception for very competitive fields in case of outstanding talent (music, writing, acting – although even there there are scholarships) as sometimes not trying it may mean lifetime of “what ifs”, but people should know what they want to do.

    If they aren’t ready to decide of what they want to do when they grow up, maybe they aren’t ready for college?

    If they know what they want to do then the decision of one college vs another and loans vs perspective earnings is a typical investment decision – is it worth it. As to this girl – getting loans for a sociology degree is that same thing as getting loans to pay for a hobby.

  5. GW in TN says:

    TML – Your timing is impeccable!

    My son called today telling me he was ready to go back to school. He found a tech program and the school had “found” him the money to attend. He would have a $10k student loan, a $5500 grant and only have to come up with $1500 cash to do the deal.

    I suggested that he delay the start of school until he could pay for it in cash or at least find a pay as you go plan… I’m happy to match anything he saves to help make it work.

    We’ll see if he decides to work and sacrifice to be able to graduate debt free…

    “There is no such thing as good debt.”

  6. I chose to go to a public university in state to avoid student loans. I was unhappy with my overall college experience, but I’m glad I don’t have the student loan debt my friends have.

  7. MasterPo says:

    Reality check:

    By whatever metric you want to use history proves those with formal education (as a group – individual results will vary) ALWAYS do better then those without. And in the current economic enviroment, which I do think will last for some time, it is skills and education that will make all the difference.

    This woman is an idiot IMO!! Yes, I said it. For her to have gone through all the time, effort and cost to get her sociology degree and not realize how hard it is to put it to practical income-producing use is HER fault, *not* the fault of the school. No one is (yet) putting a gun to a students’ head as to what major to take and what loans to take out for it.

  8. Todd says:

    It’s a tough choice. You’re an educated person, TML. There’s not a uniform approach that can be taken, of course. I would assume that you aren’t opposed to education in general?

    I went to a state undergraduate school and a state law school. I’ve been told we learned the same stuff at those institutions as the people everywhere else. I don’t know. I think the ivy leaguers will usually earn more than the state college people – but the name of the school you went to probably isn’t the reason why (at least not the only reason). The reason may be that it’s very difficult to get into those schools. It’s difficult to get into MIT – and engineering is a difficult major. The person getting that degree was probably pretty talented to begin with.

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