A couple of weeks ago I witnessed the arms race first hand. It isn’t a military arms race between the U.S. and China. It isn’t a political arms race between the democrats and republicans. It is the arms race occurring between Universities across the country, all vying to attract and retain students to their educational institutions. Like all arms races, it costs a lot of money. According to a Bloomberg Article, this arms race has created a $5 billion industry within the U.S.
So what is this arms race about?
Luxury Student Living
As a friend of mine drove me through the downtown of, Athens, GA, the college town host for the University of Georgia, I stared in disbelief at the immense structures being erected upwards, actually creating a skyline for the town. It seems that having an influential faculty and elite educational offerings is no longer enough to keep classrooms full. Today, students also demand granite counter tops, hardwood floors, crown molding and roof top pools, and all this luxury is costing someone a lot of money. I guess the days of the struggling college student are over.
All of this reminds me of the movie, The Big Short, in which the character played by Steve Carell is interviewing a pole dancer who owns five houses and a condominium. After the interview, Carell’s character begins shorting the housing industry, which after the bubble bursts in 2008, made him billions of dollars. According to a study by Dartmouth College, the 10 fastest growing job categories today require less than a college degree. Couple that with the fact that over 40% of the college graduates are now working in low-wage jobs. Obviously, luxury student living is not sustainable.
When looking at the luxury dorms and condos that students live in today, it is no wonder that college costs now total over $28 thousand a year on average according to Forbes Magazine. Considering that the average student takes five years to graduate now, that comes to $140,000. Now throw in the opportunity cost of foregoing the opportunity of working full time. Business owners must factor in opportunity costs all the time in order to make wise financial decisions. If Johnny or Susie made an average of $10 an hour over the course of those 5 years, that comes to $100 thousand they are turning away. Thus the real cost of college on average is $240,000.
How is college worth almost a quarter of a million dollars today? Think about the fact that with a simple web browser, one can access all the knowledge of the world on the Internet. Do we really need to keep congregating tens of thousands of young people in a college town to educate them?
Which is why today we are told it is all about the college experience! It will all be more than worth it because college is a rite of passage and is the best years of one’s life. Really? Our best years are at the front of our lives and its only downhill from there? I had fun playing beer pong in college but it was far from the best years of my life. I have had so many more substantive and wonderful moments and achievements in my life since college.
And is this experience really worth $240,000? I can think of a lot better ways to spend that much money.
How about this for an alternative? Have your parents give you the nest egg they were allotting you to go to some college town, get a student loan and go to Europe for five years instead. Hobnob all through Europe living in Airbnbs and hostiles (no granite counter tops and crown molding). Get part time jobs here and there to subsidize your budget. Learn the cultures and languages of all the countries that make up the European continent. While you are there, study on line with an accredited American college or university at a nominal cost and get your degree with that loan money. And guess what, at the end of five years you will return to the United States with more than just a degree. You will return with a cultural education and an understanding of the world that few if any of your peers will be able to match. You will also be primed for the new “gig economy” which requires independence, self-confidence, a self-starter attitude. And to top it all, you will have a Facebook timeline that no one can compete with.
Unlike the students huddled in their luxury condos playing beer pong, it will truly be the most magical five years of your life.
bradinthecloud 
Posted on February 23, 2017
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