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I have been swamped lately, and with bouts of a nasty bug moving slowly through my family.  Hoping to provide book review soon for two relevant pieces of nonfiction I've currently got my nose in.

For now, here's a link from TIME:  Why College May Be Totally Free Within 10 Years.

….if [author and entrepreneur Vivek] Wadhwa is right the student debt problem will take care of itself—at least as it relates to the next generation and those that follow. Online courses will proliferate to such a degree that acquiring knowledge will become totally free. There will still be a cost associated with getting a formal degree. But most universities, he says, “will be in the accreditation business.” They will monitor and sanction coursework; teachers will become mentors and guides, not deliver lectures and administer tests. This model has the potential to dramatically cut the cost of an education and virtually eliminate the need to borrow for one, he says.

… [Hedge fund billionaire Peter Thiel's] focus is on skipping college altogether unless you can get into a top-tier school and are certain to enter a highly paid field. He believes we are experiencing a “psycho-social” bubble in higher education. Everyone believes they have to have a college degree and so they will borrow and pay any amount to get one from any school.

Most families view a college degree as insurance; something they can buy to guarantee that they do not fall through society’s cracks, Thiel says. But what they are really buying is “a dunce hat in disguise” because employers have less respect than ever for a degree that comes from a second-tier university. Such a degree, in Thiel’s view, brands a graduate as mediocre.

What do you think?  Could the model of cheap online education for anyone, pay a university only if you need a diploma, ever supplant the traditional model?  If it can't supplant it, will — at least — another viable choice become available for the motivated, out-of-the-box-thinking, would-be intellectual?

A must-read post from MrsDarwin.

I let the pressure to get things “done” and to get to bed on time, plus my own desire to just have a break from everybody in the afternoon, squeeze out our reading-aloud time far more often than I should.

Here’s a question:

Suppose you were filthy, stinkin’ rich. You have so much money that you don’t even have to think about saving for retirement. So much that you can, effectively, pay cash for all of your children to take as long as they want to go to school anywhere they want, and to major in what they want.

The question is… Should you?

Should you write each of them a blank check?

Should you put conditions on the money?

Should you pay for some educations, but not others?

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Granted, this is a highly rare hypothetical. But maybe we can use it to get at some general principles.

What’s the stereotype of the rich kid whose parents paid for everything they wanted? Not so positive, is it?

But at the same time, isn’t there a stereotype against “stingy” wealthy parents who don’t help their kids out with college? We all understand that not everyone can afford to pay a lot towards college, but when parents can pay for it, is there an assumption that they should?

Well, let’s think about it. Is there ever a time when a parent (who can pay)…should NOT pay?

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Off the top of my head, a parent shouldn’t pay for university if he expected the young person would harm himself with the money or the opportunity. Suppose we’re talking about a young adult who has a problem with alcohol or drugs, or a history of dangerously impulsive behavior. Unless the parent has the means to keep tight control of the purse strings (so that money intended for college expenses can’t be diverted), putting that much money in the hands of someone so irresponsible could be a grave error.

But suppose it isn’t so clear-cut…

Since money isn’t an object, should the wealthy parent steer adult children to more prestigious universities? To religious ones? Should the parent steer the adult offspring to a college where most of the peer group will also be wealthy, or of the same religion? To a place where the peer group will be more diverse? Should the young person be allowed to choose whatever he or she wants? Is it necessary to have a concrete plan before beginning, since the family is wealthy enough to cover any contingencies?

Should the wealthy young person be made to come up with some of the money on his own, on the grounds that he needs to learn self-sufficiency and a work ethic? Should he learn how to make his own way in the world, at least somewhat? Or is that a pointless exercise for a kid who can afford anything, and ought he instead learn how to be a model rich person, busy with civic engagement and philanthropy, and passing down values to the next generation?

What do you think? What would you do?

Man, I've been using up all my energy in the comments here and at Darwin's and Jennifer's.  No post yet.  So here are some links that are rolling around.

Here is a paper with an interesting premise:

Many students in four-year-degree institutions do not graduate within the stipulated time period. In this paper, we address a growing student explanation for this phenomenon: A “conspiracy” by university administrators to deliberately delay graduation by implementing poor academic advising in order to profiteer from student haplessness. It draws upon findings from a larger study exploring undergraduates’ usage and perceptions of as well as satisfaction with academic advising. The study was conducted in 2011 at a rapidly expanding mid-size public university in the Northeast. 

Here's a different educational system:

Who Needs College?  The Swiss Opt for Vocational School

As young Americans contemplate the immense cost (and considerable indebtedness) involved in a college education, it may be worthwhile to consider the options available to the Swiss—and whether they are worth importing into the U.S. In Switzerland, even though university education is free, the vast majority of students opt for a vocational training instead.

And here's an article about parents taking out student loans for their kids' education which they can't afford, encouraged by the colleges, bien sûr:

[Aurora] Almendral had been accepted to New York University in 1998, but even after adding up scholarships, grants, and the max she could take out in federal student loans, the private university—among nation’s costliest—still seemed out of reach.

One program filled the gap: Aurora’s mother, Gemma Nemenzo, was eligible for a different federal loan meant to help parents finance their children’s college costs. Despite her mother’s modest income at the time—about $25,000 a year as a freelance writer, she estimates—the government quickly approved her for the loan. There was a simple credit check, but no check of income or whether Ms. Nemenzo, a single mom, could afford to repay the loans.

Ms. Nemenzo took out $17,000 in federal parent loans for the first two years her daughter attended NYU. But the burden soon became too much….Today, a dozen years on, Ms. Nemenzo’s debt not only remains, it’s also nearly doubled, with fees and interest, to $33,000. Though Ms. Almendral is repaying the loans herself, her mother continues to pay the price for loans she couldn’t afford: Falling into delinquency on the loans had damaged her credit, making her ineligible to borrow more when it came time for Ms. Almendral’s sister to go to college.

Maybe I'll catch up this weekend…

Darwin, sparked by a discussion in the comments at Jennifer Fitz’s blog, uses some debt data as a jumping off point.

Suffice it to say: A lot of people borrow a lot of money to go to college. More and more people are doing so, and they’re borrowing more and more. Should we advise people not to do this?

On the one hand, it is clearly possible to get yourself into a lot of trouble with college debt….So if you’re contemplating taking out debt to pay for college, you need to think about what the payments are going to add up to. Look at the financial offer letter you get from your college, see how much borrowing they expect you to do in your first year, then multiply that by 5 (to hedge and deal with the possibility they may change your grant to loan ratio in later years) and run that number through a loan calculator.

For the last 11 years, MrsDarwin and I have been paying ~$250/mo towards paying off her college loans…I certainly would not consider it too high a price to pay for the education we got. Even though MrsDarwin hasn’t worked for the last 10 years, I would not remotely consider that money a bad investment. That said, if your situation is such that you’re looking at very high monthly loan payments to service your student debt, you need to do some serious thinking.

…Another important thing to consider in this regard is why you’re going to college. If, like me and MrsDarwin, you’re going to college for the purpose of deepening and broadening your education, you need to think about how much getting that education is worth to you.

If you are going in order to get some kind of professional degree or certification, it becomes a much more straightforward and monetary task: You need to … decide whether this professional education represents a good return on investment. Since you’re not pursing a professional degree or certification simply for the joy of learning or for the experience, it makes sense to be very hard nosed about the analysis involved and determine whether the risks and costs involved are worth it.

Handily, he compares average debt at my and Mark’s alma mater with his and MrsD’s.

(Mark and I didn’t have to take on any student loans at all, so our distaste for nondischargeable debt is in part borne of not experiencing it much).

I can’t argue with what Darwin has to say, except to add that I wonder — if you surveyed people who went to college hoping for a broadened, deepened education — how many of them would agree 15-20 years later that they were still happy to be paying it off at hundreds of dollars a month. I suppose it depends on what they think they got for their money.

Because the other side of the value question is — do people who go into debt for their education usually get the quality education they were expecting?

(This post is part of the series on postsecondary education.)

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I spent a number of previous posts in this series discussing the purpose and scope of postsecondary education, the responsibilities that parents and their young-adult children have toward each other, and alternatives to going the “traditional” route.

Now I want to turn to exploring the price, value, and cost of an education.

They aren’t the same, of course.

• “Price” is a measure of dollars paid to an institution — either a total, or a per-year or per-credit-hour rate.
• “Value” is a measure of benefits gained.
• “Cost” includes price as well as expenditures of time and effort, and other benefits that are foregone in order to obtain the education.

I am particularly interested in the distribution of the cost among all the people who have an interest in a student’s education. So that begins today.

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I first thought I would consider the case of families who are wealthy enough that they could easily pay for just about any education that a student could want — so stinkin’ rich that all the kids could languish in private schools for years and still never come close to making a dent in the retirement nest egg or affecting anyone’s lifestyle.

Of course, these folks are rare, and I doubt any of my readers are among them. So why start there? Simple — it lets me remove one constraint, a very constraining one. Removing constraints by fiat (or at least by “what if?” is a fun way to see a new side of a problem. And even if what results is a Very Special Problem, you still might find a principle in there that can be generalized. It is sort of like assuming a frictionless surface in your physics class.

The first thing I did is go Googling around to look for opinions about whether rich people ought to pay for their children’s college educations, or whether they ought to make the young person work for some of the money. I was particularly interested in whether the answer varies with household income.

But I was immediately sidetracked by an extraordinary large volume of discussion about P. Diddy and his son. It seems that back in June — well, let’s let the LA Times tell the tale:

UCLA scholarship for Sean ‘Diddy’ Combs’ son raises eyebrows

When Justin Combs turned 16, his father, hip-hop mogul Sean “Diddy” Combs, gave him a $360,000 silver Maybach.

When Justin Combs decided to play football in college, UCLA gave him a $54,000 scholarship.

As UCLA confirmed this week that the recent graduate of New York’s New Rochelle Iona Prep would enroll on a full athletic scholarship, some questioned if the cash-strapped school should pay for the education of the son of a man worth an estimated $475 million — and whether the 18-year-old should have accepted the offer.

Google is full of titles like “Should rich kids get scholarships??” and “Should kids of the ultra-rich be ineligible for college scholar
ships?” and just as many answers ranging from “He earned it, he deserves it” to “HELL NO not as long as there is a poor kid who needs the money more.”

For the purposes of the discussion, it doesn’t matter whether we’re talking about academic scholarships handed out to kids with good grades and test scores, or whether we’re talking about athletic scholarships handed out to kids with skill and grace and confidence on court or field. Let’s call both kinds “merit” scholarships to distinguish them from “need-based” scholarships.

I do not think many people get the purpose that these merit scholarships serve.

Universities do not offer merit scholarships in order to reward hardworking or smart high school students for being hardworking and smart.

Neither do universities hand them out because they are good institutions and they wish to recognize deserving good people.

(If that was the point of merit scholarships — to reward merit — why not give away no-strings-attached cash awards, instead of tuition at their own institutions?)

Full disclosure: I fell for that line back in 1992 when I was a high school senior weighing multiple scholarship offers. I really didn’t think to question why someone wanted to give me a pile of money! All the adults around me were saying “Congratulations! You earned it!” and I believed them. This was not a belief that turned out to be good for me overall (although the money was sure nice).

But even if the age of print advertising failed to get it across way back then, the age of Internet media and the like should have rammed it home: when someone wants to provide you a service for free, chances are good that his real product is YOU and his real service is selling YOU to someone else for money.

We get to use Facebook for free because the owners are rewarding us for all our wonderful attributes, right? Heck no: the owners are selling our eyeballs to advertisers. And smart kids and good football players go to college for free because they’ve worked hard and earned it, right? Heck no: football players put butts in the seats and sell licensed merchandising, and the smart kids look good in the glossy charts describing the statistics of the student body population. Colleges routinely brag about how many National Merit scholars they capture, and test scores/GPA of the entering classes are a big part of the U.S. News college rankings which exert so much power over a school’s admissions policies.

Few people “earn” scholarships. “Win” is a better word; but “earn” is reserved for things you have a right to, like your wages. Universities have to distribute merit scholarships with some appearance of fairness, but otherwise they don’t have to offer them to anyone. If you are number 20 on the list at Big State U, whether you get a scholarship depends on whether Big State U decides to hand out more than 19 this year — it is out of your hands — so it can’t be something you “earned” because they don’t have to give it to you. You have given them nothing in return. They offer it up front in the hopes that, having been enticed to attend the school, you will improve their bottom line somehow (whether it be by rankings, or by football wins, or by demonstrating compliance with Title IX, or by enhancing their student body diversity, or some other measure the University cares about).

Universities offer scholarships because it suits them, and because they are competing with other universities for the high school seniors who will make their numbers look good. What will happen if the university takes away a rich high-scoring kid’s scholarship and gives it to a low-income, slightly-lower-scoring kid because he needs the money more, or because a low-income kid with a good score has demonstrated more “merit” than a rich kid with a good score? It will only result in the high-scoring kid going somewhere else and the school’s average admissions score going down ever so slightly. This does not help the university’s ranking, nor the bottom line. That will not change until U.S. News and World Report starts boosting universities’ rankings based on the number of low-income kids who go there and succeed.

Organizations do exist to give scholarships to aspiring postsecondary students who are at risk because they lack funds to attend school, or to provide incentives and rewards that recognize academic achievement or encourage study in particular fields. Most of these organizations are small ones, offering small amounts. (I help operate a very, very small one: a yearly scholarship offered in memory of my mother in the school district where she taught kindergarten for many years. The money literally comes out of the pockets of Mom’s family and friends. It’s about enough to pay for textbooks and supplies for one semester.)

Local and state governments also offer scholarships to promote the interests of their communities: to stop a brain drain, or to create positive incentives for at-risk youth, or to encourage study in some industry that is economically important to the area.

Both of these are fine things. But let’s not pretend that the universities have the same motives.

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More on the “But what if you were really really rich?” question next time.