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Financial Freedom: Education and training

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The other day, Funny about Money started a series on making your way toward financial freedom, the state where you find yourself independent of the day job and free to do what you want to do with your life. We identified several components in this project, all of them having to do with personal finance.

Today, let’s start with the first of those: Education

One issue we should bear in mind is the difference between true education and vocational training. A bachelor’s degree in business, engineering, or nursing (for example) may line you up to get a decent job, but it may not make you an educated person.

Education furnishes your mind. Broad reading, writing, thought, and discussion make you a wiser person and cultivate your ability to think logically, to recognize flim-flam, and to make good decisions. For that reason, a good undergraduate degree in the liberal arts is useful—maybe even indispensable—to anyone who hopes to take a leadership role in industry, government, education, and the  law. Those of us who aspire to high-powered careers in any of those need a strong undergraduate degree in the liberal arts followed by a graduate or professional degree in business, law, science, or technology.

Some graduate degrees are scams and should be avoided. A master of fine arts in writing, for example, will leave you fully unemployable while teaching you nothing that you wouldn’t have learned by spending the same amount of time applying your bottom to the seat of your desk chair. Graduate degrees in vague new pushmi-pullyu programs with no real entry requirements, such as Arizona State University’s “master of liberal studies,” are similarly suspect: if you want a degree in the liberal arts, take the GRE and get yourself into a solid program such as English, history, or mathematics.

Undergraduate technical degrees are useful in that they provide high-level vocational training for young people whose cast of mind is not especially academic. Often the resulting job opportunities are better paid, at least at the entry level, than a bachelor’s degree in the liberal or fine arts will generate. Over time, however, people with bachelor’s degrees in subjects like business, education, and technology may need master’s degrees or professional certifications to move up in their trades.

On the college level, vocational training—which defines a large number of undergraduate and graduate-level programs—will set you up to get a job, assuming jobs in your major are available by the time you graduate. Vocational education includes degree programs in business, nursing, medicine, engineering, computer sciences, graphic arts, education, and journalism, to name a few. It must be remembered that none of these guarantees high-paying work. To the contrary,  some, such as journalism and education, pretty much guarantee their graduates low pay. Some, such as accountancy, provide entrée to trades that make a good living but that may bore the pants off you.

Many people truly are not suited for higher education. Sometimes this has to do with the student’s level of maturity—some should delay college until they are focused enough to profit from it. Having to earn a living for a while speeds maturity and creates a much better college student. Others are more likely to succeed in the trades than in low-level white-collar jobs; in the case of young people who are not interested in school or who find study painfully difficult and discouraging, a short stint in a community college and a decent apprenticeship may be a smarter strategy. A person with skills in the trades is likely to earn as much as or more than an ill-educated college graduate. Remember that most millionaires in the United States are owners of businesses that provide services like pest control and plumbing. The beauty of the trades is that the work can’t easily be offshored. Even though some of these jobs pay little more than minimum wage, an ambitious young person can learn the trade well and then build his or her own business. Once you’re hiring someone else for minimum wage, you’re in a position to make a good living.

Choose wisely and choose well: consider first what you really want to do; then whether you want to do that for the rest of your life; and finally what you can earn with the credentials the degree provides.

None of this, as we all know, is likely to be cheap. A young person who’s savvy to personal finance or an older but wiser person who’s going back to school can find ways to minimize the damage. The idea should be to avoid a heavy burden of student loans, which can saddle a young person for years—even, possibly, for the rest of one’s life.

One obvious strategy that many people overlook is simply to take your first two years of undergraduate work at a community college. These schools are much cheaper than universities and are often close enough to home that you can live with your parents for an extra couple of years. Yeah, we know: what a drag! But have you priced apartments lately? Lower-division courses at community colleges are usually staffed with professionals who are dedicated to teaching, in contrast to universities, which often foist the scutwork courses onto exploited graduate students, underpaid junior faculty distracted by the grinding quest to attain tenure, or senior faculty more interested in their research than in teaching.

It’s important to be sure that courses you take in a community college will transfer to the university of your choice. Many state universities have articulation programs with local colleges, and some state legislatures have mandated that their universities accept credit from community colleges; however, these rules may not apply to out-of-state colleges.

If you’re an excellent student but can’t afford an expensive private college, seek “Ivy League public schools,” such as Michigan or Berkeley. If you’re fortunate enough to live in a state that hosts one of these institutions, by all means try to get in. Savings can be huge, and the quality of education is good. If you have to go out of state, consider living and working there for a year or two to establish residency before enrolling—most state schools require a local driver’s license and evidence that you or (if you’re still a minor) your parents have paid state taxes.

Whether you go to a community college or an in-state university, living at home can save a great deal of money, lightening the load of student loan debt by many thousands of dollars.

Working your way through school is a hard row to hoe, but the reward can be huge: freedom from student debt. The federal government has a work-study program designed for students in need. If your family’s relative affluence renders you ineligible for this program, most universities and colleges have their own work-study programs or part-time job opportunities that provide a small salary and enough flexibility to work around class hours.

Summers offer you the chance either to take on full-time work temporarily, racking up some savings for the following school year, or to speed your way toward graduation by taking coursework. Two summer sessions of six credits adds up to twelve credits, the equivalent of a full semester. In your lower-division years, consider a community college for summer school—just be sure, before you sign up, that your university will accept transfer credits for the classes you take.

An alternative to work-study is a regular 50% FTE job at a university or college. Most institutions provide a tuition waiver for employees. Pay, especially in public schools, is usually abysmal, but it should cover studenty lodging and help pay the other bills. Jobs not considered part of a work-study program may have rigid hours that preclude attending certain classes. However, schools are famously flexible (it’s part of political correctness), and so you often can obtain work on campus that will allow time to take your courses. Pay, though poor, is usually better than student work, and you get a full range of benefits.

Look for scholarships, fellowships, and grants to help underwrite the cost of college or vocational training. A surprising amount of free money goes unused, simply because people are unaware of the opportunities. Some are offered by local groups, service clubs, communities, and churches and are so specific that even candidates who qualify for them don’t think of looking for them. Check websites that aggregate information on scholarships, and ask at college and public library reference desks for leads to funding opportunities.

Some students come up with enterprises to help underwrite costs, such as the guy who realized he could make a profit buying back students’ used books for more than the bookstore paid for them and then reselling them for less than the bookstore charged. Find a need and fill it: this requires some ingenuity, but a microbusiness run out of a dorm room or an apartment can go a long way toward defraying the cost of education.

Speaking of dorm rooms and apartments, refrain from regular drinking, partying, or drug use. These cost a ton of money. You’re already spending enough to keep you in the traces for the rest of your life. Why make things harder on yourself?

Book publishers, seeing a captive audience, have turned textbook publishing into assembly-line fleecing of the sheep. Textbooks are so expensive that some colleges are seriously considering abandoning books altogether and having students use websites. This is a recipe for further dumbing-down of America’s already dumbed down educational system, but that’s another topic…  Consider ways to keep at least some of the wool on your back.

First and foremost: buy books anywhere but at the campus bookstore. Amazon.com is almost invariably cheaper than college bookstores. Try to get your books used, and sell them back through Amazon, using the bookstore’s repurchasing program as your last resort. Look online for sellers and buyers; some online outfits offer a better deal than either Amazon or the bookstore.

A cheaper but less convenient alternative is to use the library. Many texts are put on reserve and so can be accessed during library hours; others are available for check-out and often can be re-checked for the better part of a semester. If a course’s texts are not on reserve, ask the professor if she or he will put them in reserve.

I don’t recommend asking the professor if you really need to buy the book. It’s extremely annoying. Faculty know about and dislike the cost of textbooks. If the professor didn’t think you needed the book for the course, he or she wouldn’t have put it on the syllabus! This strategy flags you in the professor’s mind as someone who’s in school for a rubber-stamp degree and who doesn’t care about the course, its content, or its value. It starts you off on the wrong foot: avoid!

Starting off on the right foot, though, is what adequate education or vocational training will do for you. Even if you have to go back to school later in life to obtain the training you need, a degree, a certificate, or an apprenticeship will help you to earn enough to position yourself for your future of financial independence.

Financial Freedom

• An Overview
• Education
• Work
• Debt
• The health insurance hurdle
The roof over your head

Are college degrees overrated?

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On Monday, NPR’s Talk of the Nation chatted with career coach Marty Nemko, who recently published an article in the Chronicle of Higher Education arguing that the bachelor’s degree is one of America’s most oversold products. He stops short of calling the marketing of undergraduate degrees to those who are unqualified for university work a scam. But after twenty years in academe, I surely would go that far.

Nemko points to the vast numbers of college graduates who end up in jobs they could have had with a high-school diploma, and then goes on to cite figures showing that only 23 percent of high-school students who take the ACT are prepared to perform at the college level in English, math, reading, and science. That just about accords with my experience. As I’ve explained in earlier posts, I organize students into groups, each of which is led by a classmate who, in the absence of grade inflation, would genuinely be an A student. Any given class of thirty students will have at most six who really do perform at the A level: that’s 20 percent. The rest are folks who tell me that Wisconsin is a Rocky Mountain state and World War I occurred in the nineteenth century, and who turn in papers with their own names misspelled.

According to Nemko, of the four-year college students who graduated in the bottom 40 percent of their high-school classes, two thirds had not managed to finish the bachelor’s degree after eight and a half years! Meanwhile, however, universities merrily collect these kids’ tuition, running them deeper and deeper into debt as the young people continue a fruitless pursuit.

And fruitless, he suggests, is le mot juste. The claim that workers with college degrees earn more over their lifetimes is, he says, “misleading”:

You could lock the collegebound in a closet for four years, and they’d still go on to earn more than the pool of non-collegebound—they’re brighter, more motivated, and have better family connections.

While that is not 100 percent so—thank goodness, we still do have some social and economic mobility in this country—the truth is that class matters. Students who do well in school often are those whose parents were well educated and have provided their kids with a fistful of educational, social, and economic advantages. Not least of those is Dad’s old college chums now in a position to hire Junior. The uphill climb for a first-generation college student is a lot steeper than it is for a kid whose parents have graduate or professional degrees.

He adds that as increasing numbers of decently paying jobs are sent off-shore or converted to part-time, the pool of good opportunities drops. So, many college graduates are forced to take blue-collar work, driving trucks and waiting tables.

Then there’s the question of whether college students get what they pay for. It’s a big question, since many university graduates start their working lives with five- and six-figure student loan debt. Graduates surveyed in recent studies are understandably dissatisfied with the quality of instruction in environments where an average of 28 percent of their courses are taught in classes of thirty or fewer.

But did they learn anything?

Apparently not much. A 2006 study underwritten by the Pew Charitable Trust showed that 50 percent of tested college seniors could not follow the argument in a newspaper editorial or compare credit-card offers. Folks. That’s half of them! Twenty percent had such weak math skills that they could not estimate whether their car had enough fuel to get to the gas station.

Think it can’t get worse? Think again, says Nemko:

Unbelievably, according to the Spellings Report, which was released in 2006 by a federal commission that examined the future of American higher education, things are getting even worse: “Over the past decade, literacy among college graduates has actually declined. . . . According to the most recent National Assessment of Adult Literacy, for instance, the percentage of college graduates deemed proficient in prose literacy has actually declined from 40 to 31 percent in the past decade. . . . Employers report repeatedly that many new graduates they hire are not prepared to work, lacking the critical thinking, writing and problem-solving skills needed in today’s workplaces.”

What to do?

Nemko suggests that colleges should be held to the same standards as, say, tire manufacturers: at the least, they should be required to provide applicants full data on their performance in areas such as graduation rates; average costs for every year, broken out by race and gender; and employment data for graduates. He also suggests that a high-school graduate in the bottom half of his or her class consider more profitable alternatives, such as associate-degree programs at community colleges, apprenticeships, the military, and on-the-job training with a successful small-business owner.

The national campaign to enroll every body that’s still breathing in four-year bachelor’s degree programs is a rip-off. It rips off the young men and women who are unprepared to succeed in universities, and it rips off the ones who are prepared, by siphoning resources away from them. Not everyone needs a four-year degree. In fact, some people are likely to find more success by using those four years in vocational training and on-the-job learning.

3 Comments left on iWeb site

BeThisWay

I think that a degree isn’t necessary, per se, and you can certainly have success, even great success, without one.

That said, I don’t think Nemko is right if he says that many of the jobs could have been landed without the degree.Degrees are actually required for more jobs above a certain pay grade than not, especially in corporateland, and having one certainly gives you the edge when all other things are equal.That doesn’t mean there aren’t plenty of other industries where great success can come without that degree.

To me the issue isn’t how many people are going for degrees, the issue is the commitment of each individual student to learning and getting what they’re there for in a university setting. Many kids go for the social aspects instead of the educational aspects, and view it as a way to delay having to take responsibility for their own lives.

That’s why I agree with Nemko’s suggestions.College isn’t for everyone, and parents IMO should look at who their child really is and what they are really capable of and committed to.Otherwise it’s just a waste of time and money, and it dilutes the quality of education for those that are really committed.

And the lackluster way these uncommitted grads approach their jobs has far-reaching effects and dilutes the quality of life for us all.

Wednesday, May 14, 2008 – 10:47 AM

Strid

I’m not an American, or going to university in America, but I’ve seen the relative worthlessness of bachelor’s degrees all around me. I’m not sure if it’s so much more of a scam than a high school education was back in the past, though. You know, when only the rich or the scholarship kids went to uni?

Nemko’s right, class does matter, and I’m pretty sure that it’s really one of the few constants in this whole education-employment system. If you’ve got parents that went to uni, you’ll get a decently paying job. If not…be prepared to struggle. And as for the upper class, it’s unthinkable that you could NOT have at least a bachelor’s degree from somewhere (the quality of the degree…well…it only really matters that you can say you went to university).

Here (in the Caribbean) if you don’t have some kind of degree, you’re simply not going to get an ‘acceptable’ middle-class job. Sure, you can be a tailor, or a carpenter, or a maid or whatever without a degree, but you’ll never be higher up than a bank teller, really. Many more people go to university now than ever before.

However…since everyone has one…bachelor’s degrees aren’t worth much any more. University graduates are jobless because lower-end degrees won’t get you the pay you want…but you’re not going to go into a trade or some such ‘menial’ labour because you went to uni, darn it!

It’s definitely true that many people are getting ripped off by the system and preconceived notions of status in relation to a certain type of education. Really, there SHOULD be some attempt to expose high school graduates to the various options open to them, and to emphasize that an excellent mechanic will be more successful than a pass-degree BA Literature grad will be. However, people in general aren’t stupid. They figure things out sooner or later. Many people drop out, work for a few years, and when they settle down, do their degrees successfully. And I know many people that only started to shine in uni…moving from simply passing in high school to really maturing and buckling down (and being really successful) in uni. There ARE positives to the huge increase in enrollment in the university/college system; more people have more opportunities, and a greater chance of realising their full potential.

Friday, May 16, 2008 – 01:35 AM

vh

It’s true that for certain kinds of jobs, a bachelor’s degree is key. It’s also true that an undergraduate degree in the liberal arts enriches your life immeasurably, in ways that far surpass the financial cost of obtaining the degree. And a bachelor’s degree in an academic subject prepares you for graduate study in professional programs such as the law, business, journalism, and education; in that sense, the bachelor’s degree does eventually pay for itself monetarily.

However, when you’re actually in the trenches, you come to appreciate Nemko’s estimate that 40 percent of students who are sucked into the university system are not prepared for university-level work.

Persuading those kids that they need a bachelor’s degree to have a decent life is probably a scam. When they finish the four-year degree, too many of them end up in low-skill, low-wage jobs that DO NOT REQUIRE A COLLEGE DEGREE. I have a nephew, for example, who got a bachelor’s degree in construction (don’t ask!) some years ago and to this day drives a delivery truck for a paint company. He could have driven the delivery truck with his high-school diploma and got a four-year leg up in experience and wage increases.

Advertise for a $28,000/year secretarial position and you’ll get a slew of applications from people with bachelor’s and even master’s degrees. You don’t need a college degree to push papers and answer the telephone. Give me a break! Why have these people wasted their time and gone into debt up to their schnozzes if jobs like this are what they have to look forward to?

I argue that for many young people, there are alternatives that may serve them better than marking time for four years in a bachelor’s degree program. For example, a two-year program at a community college could very well land you in a job that will earn lots better than the $28,000 secretarial position—or at least no less. Many trades are well paid, and you can’t off-shore a plumbing or an electrical job. A paid apprenticeship could prepare a young man or woman for a decently paying job—and possibly prepare the person to own a business—without leaving him or her in five-figure debt.

I also argue that filling up our universities with students who are academically unprepared dilutes the quality of the degree for every student. When faculty have to deal with gigantic classes, 40% of whose members cannot keep up with the work, attention that should be given to those students who belong there is diverted and wasted. We would not be sending college graduates into the workplace with subminimal skills if we were not having to grant degrees to people who come to us with subminimal skills.

Should we flunk out every freshman who arrives in our classes with subminimal skills? What? Send away 40% of our little cash cows? Not and keep our teaching jobs!

By and large, as a college instructor you are ill-advised, indeed, to fail students whose skills and performance do not come up to par. Promotion and tenure depend largely on semester-end student evaluations—if you give these students an honest assessment of their performance, they blow you out of the water. If you fail them, they and their parents show up at the dean’s office. If they are members of minority groups and you are not, you’re likely to be accused of discriminatory practices. If their politics are conservative and yours are liberal—or vice-versa—you may be accused of vindictive behavior.

The system as it is currently set up is designed to churn huge numbers of students through to the bachelor’s degree. Because some 40% those students are unprepared and stay unprepared throughout their four-year experience, a large proportion of those degrees are fraudulent. It is a system that cheats the students and cheats employers. And because it defrauds strong students as well as weak ones by diverting resources away from the truly qualified, over time it weakens our country’s economy.

Monday, May 19, 2008 – 09:59 AM