Is Your College Going Out of Business?
I've been getting a lot of questions from high school kids asking whether or not they should go to college. The answer is Yes.
College is where you find out about yourself. It's where you learn how to learn. It's where you get exposure to new ideas. For those into business, it's where you learn the languages of business, accounting, finance, marketing and sales.
The question is not whether or not you should go to school, the question for the class of 2014 is what is your college plan and what is the likelihood that the college or university you attend will still be in business by the time you want to graduate.
Still in business? Yep. When I look at the university and college systems around the country I see the newspaper industry.
The newspaper industry was once deemed indestructable. Then this thing called the internet came along and took away their classified business. The problem wasn't really that their classifieds disappeared. It was more that they had accumulated a ton of debt and had over invested in physical plant and assets that could not adapt to the new digital world.
When revenue fell, the debt was still there — as were all the big buildings they had purchased, all those presses they had bought and the declining-in-value acquisitions. But the debt accumulated to pay for them never went away.
They were stuck with no easy way out.
The exact same thing is happening to our 4 year schools. You can't go to a big state university and not see construction. Why ?
Why in the world are schools building new buildings? What is required in a business school classroom that is any different than the classroom for psychology or sociology or english or any other number of classes? A new library, seriously? What is worse is that schools are taking on debt to pay for this new construction.
Think about this from a business perspective. Schools are seeing state and federal funding decline, as they should. Why should taxpayers be paying for another building?
They are seeing their primary revenue source — tuition, once a number that was never really questioned — becoming a value decision by prospective students. As they should.
Unless your parents are wealthy or you quality for a full ride or something close, the days of picking a school because that is the school you always wanted to go to are gone.
The class of 2014 and beyond now has to prepare a college value plan. What classes are you going to take online that enable you to get the most credits for the least cost. What classes are you going to take at a local, low-cost school so you can get additional credits at the lowest cost.
Then, with your freshman and sophomore classes out of the way, you can start to figure out which school you would like to transfer to, or two years from now, which online classes you can take that challenge you and prepare you for the areas you want to focus on. If you have the personal discipline you may be able to avoid ever having to step on a campus and graduating with a good degree and, miracle of miracles, no debt.
For the smart student who cares about getting their money's worth from college, the days of one school for four years are over. The days of taking on big debt (to the tune of $1 TRILLION as I write this) are gone. Going to a four-year school is supposed to be the foundation from which you create a future, not the transaction that crushes everything you had hoped to do because you have more debt than you could possibly pay off in 10 years. It makes no sense.
Which in turn means that four-year schools that refuse to LOWER their tuition are going to see their enrollment numbers decline. It just doesn't make sense to pay top dollar for Introduction to Accounting , Pyschology 101, etc.
Of course, the big schools are going to argue this all day long. They want and need your money. They want to tell you how beautiful their campus is. The social aspects of going away to college. The amazing professors they have. The opportunities they create. The access to alumni and sports. All were great arguments in 2001 when tuitions were still somewhat reasonable. They no longer hold water.
So back to the economics of four-year schools. Before you go to college, or send your child to a four-year school you better check their balance sheet. How much debt does the school have? How many administrators making more than $200,000 do they have? How much are they spending on building new buildings — none of which add value to your child's education, but as enrollments decline will force the school to increase their tuition and nail you with other costs. They just create a debtor university that risks going out of business.
There will be colleges and universities that fail, declare bankruptcy or have to re-capitalize much like the newspaper industry has and long before the class of 2018 graduates.
The smart high school grad no longer just picks a school, borrows money and wings it. Your future depends on your ability to assemble an educational plan that gets you on your path of knowledge and discovery without putting you at risk of attending a school that is doomed to fail , and/or saddling you with a debt heavy balance sheet that prevents you from taking the chances, searching for the opportunities or just being a fuck up for a while. We each take our own path, but nothing shortcuts the dreams of a 22 year old more than oweing a shitload of money.
Now is the time to figure it out and avoid the mess schools are creating for themselves and for those who take the old school way to college graduation.
Tech/Media Investment Banking
7 年Your friend asks to borrow $5000. You know he needs the money to fix a piece of equipment that he relies upon for his business. You know there are some external factors in why he's low on cash. There is no timeframe set on when he'll pay you back, but he is a good friend and a hard worker. Another friend asks you to borrow $5000. You don't know how the money is to be used or when you will get it back, but he said it was for a 'really good reason'. Entitlement of education was so ingrained into how Millennials and Generation Z were raised. That entitlement has destroyed/slowed the collective career progression of those generations in that rate of return was never a concern on the front end. It was presumed that receiving an education (and spending upwards of $200k) would automatically turn into more. Education sounds good. It looks good. It's your friend. But what sort of risk is involved in giving money to a friend without any sort of guarantee? Could you imagine what some people might define as a 'really good reason'? There are two futures in education. First, universities have to provide environments of experiential learning. Education is a fairly subjective concept and isn't always relevant. Experiential learning illuminates specific actions to create the return on the $200k. Rather than teach a student to be a critical thinker through philosophy 101, show a student e.g. cases that management consultants might see. Second, children of Millennials and Generation Z entering the workforce will often bypass traditional learning environments altogether. I know many very successful people who have completely bypassed the traditional education system as it did not make them significantly better at what they do. They have done it harder/better/faster/stronger on their own. Investing $5k in a friend who has the vehicle to return the principal seems to make sense. Millennials and Generation Z have not completely understood that there HAS to be a guaranteed rate of return for it to make sense to loan/invest money in that friend. But they will raise their kids with that understanding and universities that do not adapt will struggle. Here are questions to ask yourself BEFORE enrolling: 1) How is job placement on the back end? Are the skills I'm taking from this experience relevant to me? Is my path clear enough or am I just buying time to 'figure it out'? Will I dedicate 110% to every opportunity within the experience to justify the cost? Can I confidently (and conservatively) quantify the rate of return?
CEO at Educating Diverse Learners LLC---Institute for Behavior Research---
8 年Mark ! Maybe I need to watch Pro Basketball more. Your feature article could not have been more 'on point'. "Brick and Mortar" four year colleges as well as many graduate institutions are a thing of the past. Most lay folks don't know that yet...it's amazing. I received my first doctorate degree from Columbia Pacific University [1994]. CPU was the very first institution of higher learning [ never had to go to an actual building,] Everything done on your timeline and fully accredited by the California Commission on Higher Education & the Post Secondary Education Board. The 'online ' educational process has now long been proven to be far superior to the ivy wall laden old type schools in three most important phases: One, learn faster and retains what they've learned longer. 2. when wanting to learn something new It has also come to the scientific core attention that 'reading out loud' when studying... is much more worth while/valuable than just 'thinking' the data of knowledge you are needing to grasp. And 3...the financial output is about one tenth of what it would have been at the 'old geezer' run schools. The 'old school way' had long been fighting [over the past 37 years] against incursion into their most sacred building domains. Finally now they've been given access to the multiple scientific data they should have known about decades ago. The results; at this time all the world class institutions of higher learning [Harvard--Columbia--Stanford--Rice--Oxford--Cambridge--Yale--Our Lady of the Lake University--the Saybrook Institute --Berkley--University of Paris--as well as multiple others offer graduate degrees 'online'. Those folks in charge knew they had no choice unless they wanted their sacred grounds and ways to pass quietly into memory. Since my first introduction to what then was insultingly called 'correspondent school--I've earned 4 more graduate or Terminal degrees; two from the fast fading brick and motor type schools [MIT & and the Rollo May Institute and two more from 'online' universities [Western Illinois University & the California Institute of the Arts. If I had not been lucky enough to garner and establish an impressive 'boots on the ground' scientific reputation early on, the chances are quite high that due to the multiple educational comrades who factually tried to destroy my 'gravitas' in the fields of clinical psychology--BioPsychology--and Bioengineering ---I would be teaching elementary school right now. [that's actually fun work...but you understand what I mean.] Instead...now in my older days my accomplishments are recognized the world over; my scholarly works can be found in virtually every major institution of higher learning in the Western Hemisphere; my list of endeavors [Life's Work] has been read before both houses of congress and inducted into the United State Library of Congress...medals for work for humanity have been awarded to me by two presidents and 4 governors and one of my 'inventions' has been recognized by MIT as 'potentially the most profound discovery of the 21st century.' And so it goes.
Serial Entrepreneur
8 年I have to agree with this post completely. I see an education bubble, only because the number of people going to college is too high. It is too high only because we have a saturated employment market for people with the skills obtained in college and a market of people with hands on physical labor experiencing a shortage. I agree with education passed High School, however the education that prepares you for a job, and a job that will allow you to build a career and good income. There are too many people with degrees that earn close to minimum wage, eventually people will wake up to the reality that what is the point to loading up on the debt if I will just earn the same, irrespective of the degree.
INTERN IN BUSINESS RELATED COURSES TUTOR at Nakuru Training Institute (NTI)
8 年awesome inspiration i support tha 100%
MD: We Find Talent & Khulisane | V20 Co-Chair l Commission for Employment Equity Chair 2014 - 2024 | Conscious Capitalist (Master Business Certificate in Conscious Capitalism) | Making this world a better place.
8 年This article is really eye opening. My kids are doing their honors degrees at varsity and I am wondering what the real value is of this in relation to the money spent.