How the College Scam Ruins your Kid's Future

And new ways your child can avoid this fate

Ric Edelman: It's Tuesday, March 28th. Let me ask you a basic, simple, fundamental question. Why are you going to college? Why are you sending your kid to college? Well, it's because getting a college degree helps you prepare for a career, right? And that career pays more money than the careers that are available to people who don't go to college. That's the fundamental thesis, isn't it?

Well, let me tell you about the 10 worst paying college majors. A study was recently announced, taking a look at college graduates who are in their 30s to 40s. These are people who went to college 10, 15, 20 years ago, and they discovered that the people who were working in careers that pay the lowest annual incomes, we're talking people who are earning $43,000 a year all the way up to only $60,000 a year, 15 or 20 years after graduating. Guess what jobs they have? Early childhood education, elementary education, special education, secondary education. In other words, schoolteachers. They're not the only ones who are among the worst paying degrees. Theology and religion. Social services and the leisure and hospitality industry. These occupations pay no better than $60,000 a year for people who are 40 or 45 years old. You know, we have to recognize that society is not properly rewarding people based on their value to society. How else could we justify professional basketball players making tens of millions of dollars and schoolteachers and social workers earning $50,000? Well, until society figures out that we're doing it wrong, this problem will persist. 

And that means you individually have to approach college and career in a whole new way. I'm not saying you shouldn't be a schoolteacher or that you shouldn't encourage your children to be schoolteachers. It's hard to find a more admirable, more valuable, more important role than schoolteachers, theologians, religious leaders and social service workers. Let's face it, these are pretty vital to our society.

My point is that since these positions pay such low salaries, we can't allow ourselves to spend $200,000 and six years of our life getting degrees in those fields. We have to figure out a cheaper way to get the education so that we can work in those fields. And there are a wide variety of new opportunities in this regard. For example, there's a new company called Study Hall that lets you earn college credit by watching courses from Arizona State University on YouTube. You pay $400 for the college credits and you can transfer those credits to any college that accepts Arizona State credits. They don't offer all that many classes yet, but the program is certainly going to expand. Think about that $400 for three college credits. If you were able to obtain your entire degree that way, you would spend only $16,000 for a complete college degree. And I don't think it would take you four years to watch 40 classes on YouTube. 

Another way you can beat the cost of college is doing apprenticeships. The number of registered apprenticeships has skyrocketed over the past decade. There are now 64% more of these than there were 10 years ago, according to the Department of Labor. In an apprenticeship program, the company pays you to get trained in some specific field, then they hire you to do the job. So think about this. You want to be a plumber, you want to be a specialist in heating, ventilation, air conditioning, HVAC, electrician, or a carpenter. Why would you spend years to pay tuition to learn a skill when employers will pay for you to get those skills? Because employers are in huge need of people who can do what they need you to do. So this is really pretty amazing. They pay you to go get the education and then they pay you a salary in the $60,000, $80,000, $100,000 range to do the job. This is a pretty exciting development. Consider an apprenticeship.

In fact, let's think about this. Why is it that college takes four years to get a degree regardless of the field of study? In fact, now the average student takes six years to get that college degree. Think about when you went to college. Think about all the classes you were required to take that had nothing to do with your major. They were elective courses. You had to pick something because you had to amass 120 college credits. Even though these classes had absolutely no relevance, no value, no significance, no interest to you, no importance in your life. How many of those classes could you have skipped?

I'll bet you could have skipped a whole year's worth. You could have graduated in three years. Been just as skilled at your job, and you would have saved 25% on the cost of college. You would have started your career a full year sooner. You would have enjoyed an extra year of income in your career, an extra year of retirement savings. How much extra wealth would you have been able to build? How much less debt would you have amassed? Well, it's crazy. Colleges still demand that you get 120 credits for a degree.

So let's just ditch the whole degree if that's what they're demanding. Don't put up with that. Instead of trying to get a degree, go get a certificate instead. You want a career in the hospitality field? Get a certificate in the culinary arts. Forget about a degree in architecture. Get a certificate in the trades.

When you go for job interviews these days, HR people don't really care if you have a degree. They want to know you have the skills to do the job.  SHRM, that's the Society for Human Resource Management, they did a survey and they found out that 94% of executives - pretty much everybody, 93% of supervisors - pretty much everybody, 91% of HR professionals, nine out of 10 of them say they see little difference between people who have a degree and people who have a certificate.

All of this is just yet one more reason not to go to college, and that's putting pressure on the colleges. If they can't attract students, they're out of business because students are how they generate revenues, right? Tuition. That's exactly in fact, what's happening. We're running low on high school kids because the boomers who are now in their 60s and 70s. Well, their kids are all adults. And their kids - the millennials, didn't produce as many babies as their parents did. Just since 2020, the college student population has shrunk by 1.3 million. Colleges have 1.3 million fewer students paying tuition. That's $65 billion in tuition revenue that colleges are not collecting this year that they were collecting just three years ago.

What are all these colleges going to do? Well, first of all, half of them are going to be gone. Yeah, it's widely projected within higher education circles that half of our nation's colleges and universities will close within the next 10 years. Some of them are closing this year. Presentation College in South Dakota. Cazenovia College in New York. Holy Names University in California. Living Arts College in North Carolina. 

All these colleges have announced that they are closing at the end of this semester. In the last 10 years, four times as many colleges have closed than in the 10 years before that. So now you have one more thing to worry about. When your kid is picking a college, will the college be open for the next six years while your kid is attending? Can you imagine that? Your kid goes to a college and in their junior year, the college announces that they're closing. Now your kid's got to scramble. They've spent all this money all these years trying to amass college credits. They've got to try to get transferred to another school, get admitted to another school and have all those credits be accepted or the kid has to redo all those classes, re-spend all that money simply because you didn't know that the college was in shaky financial condition. Because that's a fact that many colleges don't announce, and you can't assume that your kid is going to a financially safe school simply because they're at a big one.

Look at the Big Ten schools. Guess what? Penn State, Rutgers, University of Minnesota, University of Nebraska. These are all Big Ten schools and they've all announced that they're in financial trouble. Penn State University has a budget deficit of $140 million. The university's president says that Penn State is, "in a vulnerable state". At Rutgers University, their budget deficit is $125 million over the next three years. The University of Minnesota says they need $300 million more than what they have. University of Nebraska has a $13 million shortfall. If these Big Ten schools can't make it, how can the thousands of smaller schools survive?

Well, they'll do it by innovation and adaptation. Colleges need to cut to just three years to get a degree. That will cut the cost of college in half, and it will make a wider pool of students able to afford to go. They also need to start recruiting other people to go to college, not kids out of high school, but adults out of careers. Yeah. As people are leaving their work at age 65, these are prime candidates to go to college. Not necessarily because they need a degree to get a new job, although some of them do. Hey, let's become a lawyer. Let's become a doctor. Let's become an engineer. Sure, there's some of that. But a lot of people just want to go back to college because college is frankly an awful lot of fun. The enrichment, the learning, the cultural environment, all the access to the facilities and services of the university. A lot of retirees want to go back to college. Colleges need to go recruit retirees as students. There's a lot of these retirees out there. They want to stay active, keep learning, and they've got the money to go. 

Who doesn't have the money to go? Today's kids. And today's kids who are accumulating massive student loan debt. And that's a whole related political issue. As you know, of course, President Joe Biden wants to forgive $10,000 of student loan debt for tens of millions of people. Well, the Supreme Court has now heard oral arguments because there's a lawsuit against President Biden and his plan. And I fully expect the President to lose this case and frankly, he should lose it. It's unconscionable that he's proposing this. He doesn't have the legal authority to do it. The list of people who hate his student loan forgiveness plan is a long list. Five former secretaries of education, in fact, have filed briefs with the Supreme Court opposing the Biden proposal. Even Nancy Pelosi once said, "People think that the President of the United States has the power for debt forgiveness. He does not. That has to be an act of Congress". That was Nancy Pelosi saying this. Joe Biden himself once said that he lacks the power to cancel the debt. When he was asked about it, he said, "I don't think I have the authority to do it". Well, now he says he does. And the Supreme Court, I believe, is going to tell him this summer that he doesn't. So I think you can forget about your hopes and dreams of getting your student loan debt waived. 

And better yet, you need to avoid getting into student debt in the first place. You need to learn how to get a college degree that is far cheaper, far easier, far less time consuming than what you have probably been assuming. And in fact, I've got a really terrific way for you to learn about all this. Watch my masterclass, How to Prevent College from Ruining Your Life. The class is free. It's online. You can watch anytime.

Switching Gears: Hey, today at 1 p.m., I'm doing a 90-minute roundtable. It's hosted by Bitwise Asset Management. This webinar is all focused on how financial advisors are easily and effectively incorporating crypto into their financial planning practices. This is a virtual event. Only invited RIAs are allowed to attend and by the way, the event's full. But I'm going to be doing two more of these on April 26th and April 28th. If you're an RIA and you would like to attend one of these virtual events, you can learn how by checking out today's show notes. And if you like what you're hearing, be sure to connect with me on my social media channels, Facebook, Twitter, Instagram and YouTube. And don't forget to follow me and subscribe on your favorite podcast app.

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