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Sub-prime education

I looked into going back to school recently. I might still do it some day. In some ways it’s hard to see a financial benefit. Cost = ($30,000 annual tuition x 2) + ($40,000 in annual salary foregone x 2) = way more than the benefit I’d gain from Master’s-level government employment (Oh, didn’t you hear? Private sector job growth during the last decade was negative).

Still, I wonder if the current wailing and gnashing of teeth over the expense of undergraduate and graduate education fails to account for details. Take college. The average debt from a four-year degree is now $23,200. That’s either a little or a lot. It’s a little if you studied engineering at MIT. It’s a lot if you majored in Christian Studies at Hillsdale College.

Same with, for example, law school. People gasp about $140,000 debt incurred in the hallowed halls of the Ivy League. However, that cost is neither surprising nor excessive considering it gives one access to six-figure Biglaw salaries. If one doesn’t mind settling for a normal (probably government?) salary, it’s not too difficult for a reasonably intelligent person to get good LSAT scores, get scholarships to a decent law school, graduate with debt that’s not overwhelming, and go on to have a nice local career.

The problem is that Americans are making the same mistake with education as they recently made with real estate. We justify massive borrowing by blindly assuming that the investment will always maintain its value and pay a return. While this was perhaps true for education during the last several decades, it no longer is. Students must now make good choices to get good value.