My wife and I recently hired a financial adviser who is helping us map out our financial future.
“You have three kids,” he said. “Odds are at least one will go to college. It’s a no-brainer.”
We nonetheless demurred. I like shaving my tax liability as much as the next guy, but the truth is, both my wife and I have serious doubts about higher education. Though we both attended college ourselves, options today look less promising than they once did.
College might have been a “no-brainer” at one time for parents and students who could afford it, but that is no longer the case. Soaring costs, grade inflation, diminishing degree value, the politicization of campuses, and a host of other issues have made the once-clear benefits of college less clear.
Google’s Effort to Disrupt the College DiplomaIn July, Kent Walker, Google’s senior vice president for global affairs and chief legal officer, announced on Twitter that the company was expanding its education options.
It was a direct salvo at America’s higher education industry.
Google is launching various professional courses that offer training for specific high-paying jobs that are in high demand. Program graduates can earn a “Google Career Certificate” in one of the following positions: project manager ($93,000), data analyst ($66,000), and user experience designer ($75,000).
While Google didn’t say how much it would cost to earn a certificate, if it’s anything close to Google’s IT Support Professional Certificate, the cost is quite low, especially compared to college.
Unlike college, Google won’t just hand you a diploma and send you away, however. The company has promised to assist graduates in their job searches, connecting them with employers such as Intel, Bank of America, Hulu, Walmart, and Best Buy.
Is College ‘Worth It’?In economics, we use a simple term to talk about something’s worth: value. We know that value is subjective. But if consumers freely purchase something, it suggests consumers place a value on that good higher than the price.
Judging the value of a degree is tricky, however. It’s not like buying steak at a grocery store. Buyers are mostly shielded from the costs in the short term, and the benefits of the purchase are extended out over many years.
We know that for many students, college is a wonderful investment that increases their earnings, while for others it will turn out to be a poor investment because they don’t graduate or they acquire job skills that don't translate into increased earnings. (For example, I was a bartender after I received my undergraduate degree; I didn’t make more money because I had a degree.)
We also know that the prices and value change over time. In the case of higher education, prices have increased sharply in the last 30 years while the value has diminished.
For parents like myself, the idea of spending $350,000 to send my three children to university is, to be frank, slightly nauseating. All things being equal, I don’t see the value there. (As I tell my wife, however, this doesn’t mean I won’t send my child to Princeton if he or she is admitted, and I believe college is the right fit for that particular child.) Over the last couple of years, whenever I’d think about my children’s futures, I'd find myself growing more and more nervous.
The beautiful thing about free markets is that needs do not go unmet for very long. In a free system, innovation has a way of filling the gaps to fulfill what consumers want.
The value of degrees might have been diminishing for years, but parents and kids could still rationalize the excessive costs because there was a certain amount of status and recognition conferred simply for being in college and then graduating.
Major corporations like Google have more to offer than they realize. In today’s marketplace, having Google on a resume can offer the same prestige as a university—and arguably far more in terms of job skills.
At the very least, programs like Google Career Certificates will offer much-needed competition to the university system and additional options to young people looking to take their next step in the world.
Parents of the world, rejoice!