Monday, May 23, 2011

The College Scam: 4 year colleges voted America's most overrated and overpriced product

Colleges and politicians tell students, "Your life will be much better if you go to college. Like the unveiling of the mortgage crisis, people are realizing that colleges are selling a C-rated product at AAA rated prices.

One common scenario, a student is told that they will make more than a million dollars more over the course of a lifetime with a college degree, so they borrow the average price of tuition or 24,000 a year. At the time the student finishes college he/she is $100,000 in debt.

Investment 101 Math

1. it takes on average 5 years to graduate college which is 5 years of lost income.

2. Students are coming out of 4 year degrees with $100,000 worth of debt

Assuming a loan payment rate of $10k/year on the student debt, the student is out 5 years of income for the time attending school and 10 years of paying back $10k in student loan debt. Assuming that instead of not-working and acquiring debt the student worked for 5 years and put 10k in an investment account where money generally doubles every 10 years. After 15 years, the non-student would have over $250,000 just from the money s/he did not have to go into debt to pay for college. In 25 the same non-student would have $500,000 and in 35 years, $1,000,000.

Not only does the college student lose out in lost earnings and interest for 5 years, but has to pay back money and interest after college so the time where money has the most time to grown in a person's early years, is lost.

Ask any retirement planner. A person that puts money away in their 20s and 30s will be much better off if they put in no money afterwards than a person that starts investing in their 40s.

It is no misstatement that "The bachelor's degree? It's America's most overrated [and overpriced] product," says education consultant and career counselor Dr. Marty Nemko (

Nemko is also a disbeliever of University claims that college students make a million-dollar bonus over their lifetime. "There could be no more misleading statistic," . First, just look at the numbers above. Secon, the statistic misleads because many successful college kids would have been successful whether they went to college or not.

The statistic is a false product of self-serving college presidents and politicians eager to buy political favor by burdening young people with debt. Higher enrollments and government loan programs may be good for them , but they are making lots of our kids miserable, indentured and poor.

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