Sign in
Become a MarketWatch member today
Outside the Box
May 26, 2011, 9:55 a.m. EDT
By James Altucher
NEW YORK (MarketWatch) "” We can't deny it anymore: college is a scam and a bubble (see the reasons why below). But I'm the first to admit it's going to take years for that bubble to burst. And while college tuitions are still skyrocketing and student-loan debt is creating a generation of indentured servants, we might as well benefit from it
Many stocks will continue to go up from the multi-decade college bubble, even as it eventually bursts: The Washington Post Co. /quotes/comstock/13*!wpo/quotes/nls/wpo WPO +0.0073% , which owns Stanley Kaplan, gets all of its earnings from the education side of its business. Blackboard /quotes/comstock/15*!bbbb/quotes/nls/bbbb BBBB +0.48% , which is the firepower underneath online course management. Google /quotes/comstock/15*!goog/quotes/nls/goog GOOG -0.30% , which has all the knowledge of the world at your fingertips and also is trying to get into the online course management game. Apple /quotes/comstock/15*!aapl/quotes/nls/aapl AAPL -0.53% , because the increase in MacBook Air sales is due to more colleges buying them for their labs, and probably a basket of the cheaper online education schools like APOL /quotes/comstock/15*!apol/quotes/nls/apol APOL -0.20% , etc.
MarketWatch columnist Jennifer Openshaw offers some tips on how to save money on college tuition costs, including the benefits of community college and summer school. Stacey Delo reports.
¦ Student loan debt is now greater than credit card debt for the first time ever. After the huge debt crisis we experienced in 2008 and the financial bust in housing that ruined so many lives you would think we would be having more of a national discussion on this but we just aren't.
¦ As a result, for the first time ever we are graduating a generation of indentured servants rather than the entrepreneurs, innovators, artists, and inventors that America is known for. I have no self-interest in this (I'm obvious not shorting colleges. That's impossible). I just hate seeing American go down the drain.
¦ 44% of graduates in 2009 are either unemployed or hold jobs that don't require degrees. So in other words, these millions of young people are five years behind their peers and many are holding over $100,000 in debt. What a shame.
¦ People tell me, "school teach kids how to think". To that I say, "learn how to use a library." And while we're at it. Put more computers in the library. The knowledge is out there. We don't need to own the banks and the government $800 billion to get knowledge.
¦ People tell me, "there's a huge income gap between people with a college degree and people without a college degree." To that I say, "did you take Statistics 101 in college? That spurious statistic that is making the rounds fails the basic test of an accurate statistic. It has selection bias. It also ignores cause versus correlation. That's chapter one of Statistics 101 in college. A true test would be to take 2,000 people and separate them into two groups of 1,000. Group A is not allowed to go to college. Group B goes to college. 20 years later lets see how they are doing. Obvious this test will never get done but the basic idea is common sense. Take people who are equally intelligent and ambitious and give them a five-year head start and with no debt." They are going to do very well, I have no doubt.
¦ Some people say, "College teaches kids how to socially interact and network." That's great. But it doesn't cost (for example) $300,000 for little kids to make friends. Join Facebook for free. And start networking on LinkenIn.
¦ Well what about teaching kids the classics like Plato. How does art and beauty persist generation after generation. My answer: People with passion will read. I didn't read a book while in college. But I read several thousand in the 22 years since. If people want knowledge they will seek it out with a hunger like you can't even imagine. You can't force feed passion or knowledge.
¦ What about if you want to be a doctor? Clearly you need a degree. Maybe. Are you saying you want to heal people or are you saying you want to be an MD? Try working for a few years cleaning people's bedpans and learn a little about the medical industry. For anything you want to do in life, try it first rather than waste money and time learning something you ultimately never think about it again.
¦ Again, tuitions have gone up 10 times faster than inflation in the past 30 years and three times faster than health-care costs in the past 30 years. We need to have an active discussion on this as a society. Meanwhile, the greatest entrepreneurs, artists, and inventors in history either didn't go to college, were kicked out, or dropped out.
My story: I majored in computer science at a good school. I went to graduate school in computer science. I programmed every day for about six years straight. Then I went to work in the "real world." In order to program there they had to send me to remedial programming classes so I could learn to program as well as the rest of them at a real job.
For more on why kids shouldn't go to college please see my post on "Living life is better than dying in college.
This is all fine, you might say, but what are the alternatives? Please see my post on "Eight alternatives to college."
And yes, some of those alternatives cost a tiny bit of money but nowhere near as much as the debt incurred in going to college. And each one of my alternatives provides for real-life experience that will pay massive dividends for decades to come.
A lot of people have strong opinions on this topic. I have meetings from 10 am to 3 pm all week this week but I promise to be in the comments section as much as possible answering questions (if they are asked in a respectful manner). I hope we can engage in discussion on this.
"Hong Kong stocks rise, with Lenovo jumping after earnings; Hang Seng Index up 0.1% http://on.mktw.net/me5htU" 8:34 p.m. EDT, May 26, 2011 from MarketWatch
"Japan stocks open lower, with exporters falling on stronger yen; Nikkei Average down 0.6% http://on.mktw.net/jrH83L" 7:04 p.m. EDT, May 26, 2011 from MarketWatch
"Japan's April core consumer price index up 0.6%, for first rise in over two years http://on.mktw.net/kpY1Tk" 6:36 p.m. EDT, May 26, 2011 from MarketWatch
"From our new markets blog, The Tell, LinkedIn options start trading Friday. http://bit.ly/mCvEMo" 5:25 p.m. EDT, May 26, 2011 from MarketWatch
"Fifteen-year fixed-rate mortgages averaged 3.78% this week, down from 3.8% last week, and 4.21% a year ago. http://bit.ly/iI3JNw" 5:02 p.m. EDT, May 26, 2011 from MarketWatch
Market Medics
Why the BRICS should get the top job at IMF
Media Web
"?Hangover II': Look for $100 million weekend
Impact Investor
State Dept. marries investing, diplomacy
Vital Signs
8 tips for fun in the sun with less cancer risk
Commodities Corner
Speed bumps clutter copper's landscape
No-Nonsense Investing
Small-cap run is done but cycle will return
Your Portfolio
Why men are easy prey for investment scams
Al's Emporium
Read Full Article »