Tuesday, September 6, 2016

You MUST Send Your Kids To College

Increasingly folks, even those with kids, are asking "Why?" By the time many mortar-boreders walk under the arches they're pushing tens of thousands of dollars in debt out ahead of them. The college degree that had been touted as the gift that keeps on giving turns out to be one that keeps on taking.

But it does give, right? Right. Well that is the widely held belief but the understanding you have to ignore is that correlation is not causality. This particular universal truth is one that is quickly glossed over by academia, particularly the for-profit universities named after a far away city or state. Not only is a degree with their name on it not entering into a causal relationship with your future income, it probably will not correlate very well either. This is mostly because as schools (using the term very loosely) they are masters of convenience and do not produce graduates with much mastery of much of anything else.

So the real problem is just these new-age diploma millIs, right? Right.

Turns out so-called legitimate higher education has something of a bubble going on. They are producing, at almost every level, a number of graduates exceeding what industry can absorb. It isn't just those folks whose passion led them to an advanced degree in "Post-Coital Haiku Studies" this is true with the much Ballyhooed "STEM." TOD has already recounted the GT-EE-PhD who could not find a job until he dropped the PhD from his resume (and quit calling it a "C" "V") but this happens in the STEMiest of STEM: Mathematics. A PhD in Math should be a ticket to anywhere you wanna go, right? So long as you don't actually want to go into academia. For the past several years US universities have awarded between 1800 and 2000 Math PhDs yet a search on EIMS for tenure track Math positions a total of 32. Hardly one tenth the number of new PhDs given you discount the thousands more waiting in the wings with "Visiting Professor' (IE: post-doc) on their C.V. You think you don't even use your high school algebra? How much work you think is out there for Algebraic Number Theorists? Don't save all your pity for the poor English major.

And when it comes to education (rather than training) other STEM areas fair no better. The answer lies in the hyperbole of the high tech execs wringing their hands over the lack of skilled tech workers. They dare not say so but they are really looking for programmers not computer scientists or engineers of any stripe. That's one reason, indentured servitude being the other, they love H1B. They want training, not education. They want certificates not diplomas. Their jobs need skills, not credentials.

So is that university credential really a sound investment? Like any other investment it's relative--you have to compare to an alternative. Any public school sophomore who has endured "STEM" classes ("Here's a spreadsheet, it can add numbers. Numbers? Oh, they're a concept. We'll do that when we get the toothpicks.") should be able to drive a spreadsheet well enough to calculate the net present value of two options: "investing" in college, deferring income, or entering a trade, or the military taking an earlier salary (and making ROTH IRA contributions). Of course these models must be parameterized to adjust for starting salaries, annual raises, periodic promotions, taxes with tax increases, and the time value of debt and investments (like those ROTH IRAs). Extra credit for a pretty graph on the summary sheet showing how long the model has to run before Net Present Values cross--assuming they ever do.