Seven Years of College Down the Drain

When I was an undergrad attending a state university in the middle of nowhere, I often encountered people who seemed out of place. They didn’t look or speak differently from other students they just didn’t have their mother following them around with a vacuum cleaner or their father constantly reminding them to do their homework or wash their feet. They were decent enough people and fun to drink beer out of whiffle ball bats with they just didn’t belong in college.

I happened to meet up with one of these folks when we had both been out of school for about three years. I was working part-time at a liquor store while getting a master’s degree. He had put his communications degree to use and was working as an assistant to a stock broker. When I read that President Obama wants to increase the number of people attending two year and four year colleges I have to wonder if this is a good move. Do we need more people spending four or more years and tens of thousands of dollars to get job or career they could have obtained without a degree?

According to Manpower Inc., the country’s largest placement and employment service, only four of the "The 10 Hardest Jobs To Fill In America" require a four year degree. Engineering, as always, is number one and certainly dependent on undergraduate and advanced degrees. The other three are Nursing, IT Staff, and Teacher. That leaves Skilled Trades (electricians, carpenters, plumbers, etc.), Sales Reps, Technicians (skilled or semi-skilled workers), Driver, Laborer, and Machinist or Machine Operator. You can certainly become any of the last six with a college degree but a degree is not required.

So what? Well, to begin with, when you look at the President’s proposal it’s essentially an entitlement program with little or no long-term economic benefit. Here’s the Shady breakdown of the plan:

Create the American Opportunity Tax Credit: Creates the American Opportunity Tax Credit that allows for the first $4,000 of a college education to be completely free for most (no % provided) Americans, and aims to cover two-thirds of the cost of tuition at the average public college or university. (Commentary: Not a bad idea but by next year when fewer than 50% of Americans will be paying federal income tax will this matter?)

Simplify the Application Process for Financial Aid: The President believes “The application process for financial aid is cumbersome and evidence shows it may be a reason why students never apply for college. Research has shown that the low take-up rate of the Pell Grant and HOPE and Lifetime Learning tax credit programs is likely due to the complexity of the application process. The current Free Application for Federal Student Aid (FAFSA) is 5 pages and 127 questions – making it longer and more involved than many federal tax returns. Not surprisingly, over 1.5 million high school students failed to apply for aid in 2004, despite being eligible for a Pell Grant”. (Commentary: This reads like something out of Monty Python “Seeing as it is too difficult for college students to fill out the form to get into college, we are killing the form so that more students can get into college”.)

Help Students Become Aware of College Readiness: According to the President’s website “Barack Obama and Joe Biden will provide $25 million annually in matching funds for states to develop Early Assessment Programs. These funds will also promote state efforts to raise awareness about the availability of federal and state financial aid programs”. (Commentary: Yes, I know that these days $25 million is literally nothing when it comes to federal government largesse but can’t we do something really useful with this dough like buy polar bears canoes or send out more free HDTV converter boxes?)

Expand Pell Grants for Low-Income Students: The goal is to achieve an increase in the Pell Grant to $5,400 over the next “few” years and will ensure that the award keeps pace with the rising cost of college inflation.

Community College Partnership Program: This is the majority of the proposal’s spend focusing on providing grants to “(a) conduct more thorough analysis of the types of skills and technical education that are in high demand from students and local industry; (b) implement new associate of arts degree programs that cater to emerging industry and technical career demands; and (c) reward those institutions that graduate more students and also increase their numbers of transfer students to four-year institutions”.

Eliminate Costly Bank Subsidies: Aims to kill the Federal Family Education Loan (FFEL) Program, which provides subsidies and guarantees to banks and other lenders and absorb all Federal lending into the Direct Loan program as a way to save billions of dollars.

In the end the Obama plan will probably send more people to two and four year schools. Hopefully many of those people will be able to parlay the education they receive into personal and national gain. Unfortunately history is not on their side. Most European countries take a realistic attitude towards advanced education and have no or very low cost secondary education. However, they also have vast apprenticeship and technical programs. Germany, for example, provides 342 apprenticeship programs where students work three to four days a week and attend classes for one or two days. Companies get skilled labor at the ready and the government doesn’t fund a lengthy college career.

Are we missing a golden opportunity to close the gap on many of those 10 hardest jobs to fill? Are we committing a vast misallocation of human capital by sending kids to college when they don’t need or want to attend? Are we stuck in an outdated mindset where a bachelors degree is always better than an associates or no degree?

Yes, yes, and yes.

Later

PS: Please feel free to comment on how people who go to college make X% or $Y more than people who don’t. I’ve got a garage full of data that says ‘maybe’.