Sorry (Poor) Kids: The Road From Rags To Riches No Longer Passes Through College

Tyler Durden's picture




 

... at least statistically speaking. Yes, outlier cases will always exist and there will always be a rags to Geology 101 to riches story somewhere, but as the following fascinating and very much damning (the entire higher learning industry of the US) diagram from Reuters demonstrates, colleges, in their once vaunted role of a "great equalizer for the classes" as defined over a century ago by Horace Mann, no longer exist.

The chart in question?

What does the above chart imply? Nothing more than that for the vast majority of people, college degrees are the modern-day equivalent of very, very expensive snake oil.

Yes: colleges are sold to you as the critical stepping stone on the path to wealth and prosperity, but sadly the empirical evidence demonstrates that when it comes to an actual, demonstrable income effect, only the wealthiest people actually benefit from a degree! The lowest fifth of household by income see their change in income decline by 10%, while the middle fifth sees an incremental 2.1% drop. Where do incomes rise? When you are already wealthy and belong to the highest fifth of households by income: there, going to college boosts your income by an additional 15.1%

And since for the great majority (excluding the richest of course), a college education is funded by even more implied poverty, i.e. debt, which is merely the opportunity cost of future income and wealth, the simply math works out as follows: college - a tool for making the rich richer, the poor poorer, and virtually everyone (excluding the richest, again, of course) a debt slave into a system that beguiles impressionable youths with dreams of money and power, and cheap low interest private and Federal student loans, only for the illusion to shatter upon graduation and all those wonderful jobs demanding a piece of paper procured in exchange for 4 years of debt-funded classes, turn out to have been a mirage all along...

In short: the only hope for a great many people is nothing but a debt trap.

From Reuters:

Just to stay even, poorer Americans need to obtain better credentials. But that points to another rich-poor divide in the United States. Educators call it the scholastic "achievement gap." It has been around forever, but it's getting wider. Lower-class children are getting better educations than before. But richer kids are outpacing their gains, which in turn is stoking the widening income gap.

 

"Now, we're in a situation where we need to educate everyone at the level of the elite in the past," said Paul Reville, Massachusetts secretary of education. "We don't have a system to do that."

 

It's an academic arms race, and it can be seen in the sharply contrasting fortunes of Weston, a booming Boston suburb, and the blue-collar community of Gardner, where a 20-foot-tall chair sits on Elm Street as a monument to the town's past as a furniture-manufacturing hub.

 

* * *

 

This correlation between educational attainment and financial fortune is clear statewide. In the bottom fifth of Massachusetts households, the average income dropped 9 percent in the past 20 years to $12,000. They fared worse despite a sizable gain in educational attainment: The share of people 25 and older in the group with a bachelor's degree rose to 18.5 percent from 11 percent.

 

The same thing happened to the middle fifth. Their average income slipped 2 percent to $63,000. The share of adults with a bachelor's rose to 43 percent from 29 percent.

 

But the top fifth saw their average income leap 17 percent, to $217,000, as their education levels soared far higher. Three-quarters had a bachelor's, up from half. Fully 50 percent had a post-graduate degree, up from a quarter.

 

* * *

 

"All the evidence shows that children born to two highly educated, high-income people tend to obtain the highest level of academic achievement," said Sum. "At the bottom, where the mom is not that well-educated and tends to have lower income, children tend to do worse."

 

* * *

 

Curtis Dorval, works at Walmart as well. When he was a senior at Gardner High School, Curtis was class president. He was accepted by Northeastern University, a private school in Boston.

 

But Northeastern cost $50,000 a year, which Curtis, then 17, felt he couldn't afford. Instead, he enrolled last year at the state-run University of Massachusetts Amherst, studying mechanical engineering. With the help of a scholarship for graduating in the top quarter of his class, Curtis paid $10,200 a year.

 

He got some help from his father, who had saved up $10,000 in stocks and bonds from his days in the hospital job. This summer, that money ran out and Curtis left UMass to enlist in the Air Force. He will serve as an airman - and hopes to use military benefits to pay for parttime university classes.

 

"The main reason was I needed a way to pay for college," he said.

Most don't go that route: most opt for cheap, low-rate debt. Debt which as of this moment, merely at the Federal level has by now surpassed $1 trillion, and which, as we reported first, and as subsequently was confirmed by the media, is seeing its delinquency rate explode, now that the clash between hope and the sad jobs reality is front and center for ever more once hopeful students.

Just like with the "gun-control" debate, there is no simple solution.

Tanner Skenderian, president of this year's Weston High graduating class, joked in a speech about her town's hyper-competitive students. "Welcome to Weston, where third graders take AP Physics, middle-school students sleep for 42 minutes a night, and the most competitive race run by the 2012 boys state champion track team was the race to get the cookies in the cafeteria," she said.

 

Competition in high school was fierce. In one advanced placement physics class, she said, six of the 12 students were the children of professors at MIT, America's premier science university.

 

But Tanner thrived there. She also found school to be a source of support after her father died while she was in middle school. This fall, she headed to Harvard, after spending the summer interning at the governor's office. Given the job market, she said she may apply to business or law school after graduating.

 

Weston, in short, gave her an education that raises her odds of joining her mother - who owns a marketing and event-planning company - at the top of America's economic ladder. 

 

"We're very fortunate that we're rather affluent," she said. "We have more opportunities, more technology, more classes and more teachers."

And that's just it: if you are affluent, if you had opportunities, you will still and always be successful, and college will merely emphasize this. For everyone else, degrees are rapidly converting into an almost instantly amortizing piece of paper paid for with tens of thousands of student debt which, incidentally, is non-dischargeable.

Unfortunately, and just like with "gun-control", the fundamental issue at hand is not education, not even the pursuit of the American Dream (or lack thereof), but the gradual realization that the myth of American exceptionalism is just that. And in a world as globalized and interconnected as ours, breaking from the middle (or, heaven-forbid) lower classes, into the upper strata os society is becoming virtually impossible.

It goes without saying that any society in which class mobility is shunted, and in which classes (already engaged in class warfare based on wealth, sex, race, religion, background, job, or any other vertical that served America so well during its "melting pot" days) are denied even the ability to dream and hope of improving their lives through hard work (either current, or deferred - and prepaid for by student loans) is one whose days are numbered.

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Wed, 12/19/2012 - 18:56 | 3080620 Rainman
Rainman's picture

This is all absolutely true. The only roads to success are luck and treachery.

Wed, 12/19/2012 - 19:03 | 3080634 nope-1004
nope-1004's picture

I wasted 5 years in college.  Taught me how to memorize questions that I thought would be on the test, how to think open mindedly (a bit, anyway), and most importantly taught me how to drink.

Looking back it was a waste of my time.  I could have learned to drink like that on my own.

 

Wed, 12/19/2012 - 19:04 | 3080649 Oquities
Oquities's picture

i got an advertising degree in 1975 and never worked in advertising.  if i had not gone to college, i would be 4 years richer.

Wed, 12/19/2012 - 19:15 | 3080690 Careless Whisper
Careless Whisper's picture

The kids today have been totally brainwashed to think that going to college is the key to success. The middle income, and lower income parents just want to brag to their friends that their kid is in college, as if they're wonderful parents or something.

Wed, 12/19/2012 - 19:39 | 3080784 fonzannoon
fonzannoon's picture

It's the parents more than the kids. The kids just do what they are told.  I am 35, I compare notes with my friends who all have kids that are 1-3 years old. They are still completely brainwashed on the 4 year college plan, even if it is Poli Sci or communications. It's amazing.

Wed, 12/19/2012 - 19:47 | 3080798 Muppet Pimp
Muppet Pimp's picture

The market will solve this with private side education that is harder, faster, stronger, and teaches the values required to be free and prosperous.  Deviate from the truth at your own peril.  BTW, there is enough to go around. 

 

I continue to believe those who pursue teaching are altruistic.  Beware of exorbitant pay structures in these area.  Shephards do not seek to fleece their people, for the alumnus happily pamper those providing the truth to them.

Wed, 12/19/2012 - 20:27 | 3080933 economics9698
economics9698's picture

Yep I noticed this years ago when I got my bachelors and nobody cared.  Not family, employers, ex-spouse, no one.  It was “so what” and get back to work.

When you apply for government jobs, your only hope, if you are not a black, female, Muslim, homosexual, liberal, is to be the flavor of the month, if not you are out of there.

Degrees are for the rich to brag and that’s about it.

 

Wed, 12/19/2012 - 20:32 | 3080956 Joe Sixpack
Joe Sixpack's picture

A solid technical degree makes a difference (imho)- engineering, computer science, etc. This is the only real step-up route for the middle and lower class. Medicine is great, too, but you end up with a quarter million or more in debt to get it.

Wed, 12/19/2012 - 20:48 | 3081006 economics9698
economics9698's picture

My kid got a chemical engineering degree and it took him a year to get a job cutting up cadaver arms for the military. 

Wed, 12/19/2012 - 20:59 | 3081049 The Alarmist
The Alarmist's picture

Is this part of that new GeeWhiz project with autonomous weapons systems that refuel themselves by burning carbon fuel scavenged from the battlefield?

Wed, 12/19/2012 - 21:04 | 3081070 economics9698
economics9698's picture

Who knows but he thinks it's cool.  Don't know how long that will last but at least he has a job.

Wed, 12/19/2012 - 21:30 | 3081144 francis_sawyer
francis_sawyer's picture

Yeah ~ but if they're hot chicks & have some 'TEAM SPIRIT', they can still show us their tits... [& get a job at Hooters until the economy turns around]...

Wed, 12/19/2012 - 22:54 | 3081395 strannick
strannick's picture

 

 

College is where you go broke, being indoctrinated in the dogma of Progressives like Obama and Bernanke. Dear Students. Instead of assuming the prejudices of Progressive idiot-snobs, learn to be a farmers, and so value self reliance and freedom.

Thu, 12/20/2012 - 09:39 | 3082163 jerry_theking_lawler
jerry_theking_lawler's picture

you can thank the .gov for outcome. high taxes and even higher regulations push chemical manufacturing (along with other manuf) offshore......it used to be a good profession, however, the .gov took care of this as well......

Wed, 12/19/2012 - 20:56 | 3081041 The Alarmist
The Alarmist's picture

I could have come straight out of the military 20+ years ago as an Air Traffic Controller without any need for college.  I would be earning $137k per annum now and looking very shortly at a $100k or so in pension benefits.  I went on to B-School and am doing a bit better than that, if you don't do a NPV analysis that would take the original "investments" in time and money that went into the time spent in school ... if you count those, I screwed the pooch.  

The real answer, however, is not so much to skip college, rather it is to get a government job. 

Wed, 12/19/2012 - 21:06 | 3081073 economics9698
economics9698's picture

You were a ATC in the military?  Awesome dude.  I got stuck as a weapons controller, booooring.

Thu, 12/20/2012 - 05:11 | 3081884 Dugald
Dugald's picture

Make some real money, with potential to lead on to big money.......get your hands dirty......

Wed, 12/19/2012 - 20:10 | 3080876 August
August's picture

"They are still completely brainwashed on the 4 year college plan, even if it is Poli Sci or communications."

Don't knock it.  One of those kids could be the next Chris Matthews.

Wed, 12/19/2012 - 20:13 | 3080883 nufio
nufio's picture

Ah an apt thread to post this link !!!!

http://nces.ed.gov/programs/digest/d12/tables/dt12_286.asp

Its all about the field of study i think.

 

if you look at the table you will find that psychology alone graduates as much as all engineering + computer science combined!

Wed, 12/19/2012 - 20:33 | 3080958 Bicycle Repairman
Bicycle Repairman's picture

"but the gradual realization that the myth of American exceptionalism is just that"

During a college summer (1973) I lucked into a union job (Teamsters) driving a fork truck.  I left it at the end of August to go back to college.  I graduated in 1977. It took me until 1990 to earn the cumulative amount of money as a financial engineer with an advanced degree as I would have if I kept driving that fork truck.  I'm not counting the union pension or the real estate I would have bought years earlier.

I worked my way through college, so there was no added debt which would only make the picture worse.  Even then it was a long process to make it all work.

 

Wed, 12/19/2012 - 19:43 | 3080793 SimplePrinciple
SimplePrinciple's picture

" . . . going to college is the key to success."  You got it.  It's going, not learning.

The colleges sweep in the students off the streets.  The students skip class half the time, only caring about their grades, degrees and such credentials.  The profs are incentivized to sweep them along to avoid too high of a "D-F-W" percentage.  The schools promote the grade inflation so as to receive better rankings and more funding, which is withheld if too many Ds, Fs, and withdrawals.  To bring in standards, some central planners map out what should be taught in a "no child left behind" sort of way.  Creative or cutting edge thinkers on the faculty leave to escape the new high school.  Colleges promote group learning as if there is some collective mind.

Result:  The college degree becomes the new high school degree.  It just costs more.

Wed, 12/19/2012 - 19:53 | 3080824 IllusionOfChoice
IllusionOfChoice's picture

This all rings true to my firsthand experience. +1

Wed, 12/19/2012 - 20:39 | 3080968 Winston Churchill
Winston Churchill's picture

I have heard many college educators moaning about the remedial work required to

even bring undergraduate student just to the level they should have been at before attending.

The compromise is always decreasing standards at all levels.

New graduate teachers then exacerbate the situation into a negative feed back loop.

Dumber and dumber students at ever escalating cost.

Wed, 12/19/2012 - 19:59 | 3080847 IllusionOfChoice
IllusionOfChoice's picture

Yeah, as soon as the mothers of the world became the purveyor of college as life necessity, it was bound to be treated as high school 2.0 by the students. While they may previously have viewed college as a time and effort investment worth the money, it has become work to be shirked for the other experiences available around campus.

Wed, 12/19/2012 - 20:01 | 3080852 smlbizman
smlbizman's picture

i did not attend college for a degree... i think like always its who you know, not what you know.  its the contacts and coat tails that count.......

Thu, 12/20/2012 - 00:41 | 3081629 brettd
brettd's picture

Graduated Northwestern.

Went to Hollywood.

Started at the bottom, taking out the trash with one friend who graduated from 

Villanova and another who graduated from Harvard.  

Nobody asked about "my education."

They only  cared that i served their needs.

Wed, 12/19/2012 - 19:29 | 3080749 kalasend
kalasend's picture

College didn't teach you how to drink.

You looked for drinks

Wed, 12/19/2012 - 20:09 | 3080819 tallen
tallen's picture

I'm 3 years into an engineering degree at a top uni, can't agree more. (This is meant to be a degree that is useful too!).

I'm actually mindlessly cramming past papers at the moment. Real useful life skills in the making. At least I've built up close to $30k in investments while at uni with a bit of work, should come out with more than I started even taking into account paying tuition fees. Tho, if I'd actually focused on my business I'd probably have a real living by now and a house. University, what a gigantic waste of time. Better drink all those problems away...

Wed, 12/19/2012 - 22:01 | 3081237 Freddie
Freddie's picture

Good for you.

I think college helps people prioritize, teaches some discipline to sit down and do the work, to show up to class, teaches some organization and to get things done.

A lot of people cannot do these type of tasks that high school kids learned 40 years ago.  I would guess that 45% if the kids in college should not be there.  It is a 4 years baby sitting program now.

Hope and Change.  Kids and their moms voted for this.

Thu, 12/20/2012 - 14:15 | 3083422 BooMushroom
BooMushroom's picture

Is college even teaching prioritizing, learning some discipline, doing the work, showing up to class, organization and getting things done even being taught in college any more?

I mean for -studies majors, film school, etc., do they have do do those things?  Aren't all those things part of the white, Judeo-Christian patriarchy?

Wed, 12/19/2012 - 20:58 | 3081038 ImReady
ImReady's picture

I skipped college and started a business instead. Kind of  missed out on the slutty college chicks though..(They're all fat and ugly now) 

Wed, 12/19/2012 - 23:35 | 3081492 surfersd
surfersd's picture

I came from a decidely middle class family. I was wasted for most of my five years in college at a California beach school, but got a degree in Economics. Then answered an ad in the LA Times and went to work for an oil company, moved to Chicago - NYC to get into energy futures. Rode the elevator at a major white shoe firm got off the elevator before the implosion. Now back to surfing and have a handicap in single digits.

All by buddies who rode the same wave in the eighties and nineties are perfectly aware that the money we made was partly because we were smart. A big part though happened to be the times. A rate of return where your saved capital grew, taxes that were someone reasonable and the markets were not manipulated at every level. Still I used my education continually and while nope - 1004 was memorizing I learned critical thinking. Critical thinking that allowed me to realize that the talking heads on CNBC in the morning who we then drank  beers with at Morans in the afternoon, were pinheads. You have to look within yourself trust your intellect take your best shot (with the appropriate stops) and go for it.

The poor kids getting out of school today be them from low to upper class families will be destroyed by the system as it chokes off any attempt to succeed. The debt, devaluation, taxes on marginal income etc etc will prevent most of them from moving to the next level. Just think Warren Buffett the guru of the last century is for dividend taxes at 40% and high inheritance taxes, all of which he has been dodging forever. I guess his view is pull the ladder up I am on board. Fing Bastard. 

As I tell my college kids learn critical thinking, think outside the box, continually educate yourself about the world and read Zero Hedge. 

 

 

Thu, 12/20/2012 - 00:46 | 3081638 brettd
brettd's picture

Critical thinking:

Obama thinks the middle class should pay higher taxes so Warren Buffett can continue to recieve Social Security and Medicare Benefits.

That's the logic you learn at Columbia and Harvard....

Homeschool!

Wed, 12/19/2012 - 19:03 | 3080644 SafelyGraze
SafelyGraze's picture

for those young men who choose to stay at home (i.e. basement) to get educated by the internet, it's frustrating to watch llyster interview bill murphy only to have mom come down and ask who is that woman and how come she's not wearing anything under her halter top

http://www.youtube.com/watch?&v=omVd1dY2010#!

if you find yourself in this situation, say something to turn the accusation around. maybe like "don't you think journalists should be free to decide their own dress code". or whatever. 

Wed, 12/19/2012 - 19:09 | 3080673 HappyCamper
HappyCamper's picture

I don't have the numbers, but it seems to me that the reason for this depressing story is because so many young people these days are getting degrees that are not really valued by the marketplace; like the social sciences.

I made a big mistake to my children by telling them to get a degree in something they would enjoy.  Looking back, I should have told them to get a degree in something that was in demand and marketable.

Wed, 12/19/2012 - 19:29 | 3080745 spinone
spinone's picture

Exactly.  The lower class students are getting social science degrees, which don't help them get a job.

Wed, 12/19/2012 - 19:44 | 3080795 spastic_colon
spastic_colon's picture

the wealthier students have better connections to the higher paying nepotistic system of employment....nothing else

Wed, 12/19/2012 - 21:32 | 3081156 Yes_Questions
Yes_Questions's picture

 

 

Advantage: nepotism.

Until of course actual problems have to be solved and during lean times like these, the problem solvers (many who've been able to get by on much less money) are a bargin for the boss and out goes the inbred wunderprick!

 

Advantage: Skill

The pendulum swings

Wed, 12/19/2012 - 20:19 | 3080916 blunderdog
blunderdog's picture

Nah.  If you just want a job or money, don't bother with college.  Just pal around with rich folks.  Suck up to them, compliment them, be their best bud. 

The most effective way to earn a good income in the USA is to have someone with more power give you the opportunity.  This is how it's always been, too.  The guy who really "beats the odds" through hard work and talent is the rarity compared to the guy who just happened to be friendly with someone in the right place who could help.

Anyway, obviously if you don't care about education, you shouldn't be giving advice about it to your kids.

Wed, 12/19/2012 - 20:52 | 3081032 dhengineer
dhengineer's picture

You are right.  I floated the following idea past a nephew of mine, who lives in North Carolina and is now wasting his time at NC State.  I suggested that he hang around Duke where a few of his friends from high school are wasting their time, make friends with some of the richer kids, and then become a kind of valet, working for cash.  He could be a professional designated driver, for $25 apiece on weekends (cash only please), or he could clean their dorm rooms, or pick up books or laundry, or run errands, or even finish their homework for them (this kid is scary smart).  In four years, he could have amassed quite a pile of cash, and could have learned enough embarrassing secrets to be able to call in favors for the rest of his life.

He looked at me as though I were nuts.  His mother, my sister-in-law, won't speak to me any more... oh, well...

Wed, 12/19/2012 - 21:52 | 3081213 Mr.Bigfoot
Mr.Bigfoot's picture

That's right. I know plenty of MD's from poor backgrounds who are doing very well.

Wed, 12/19/2012 - 19:51 | 3080818 ball-and-chain
ball-and-chain's picture

No big surprise.

The only thing I learned how to do in college was get drunk.

Unless you're planning on going into a profession like teaching, medicine, engineering, or law, why not give university a pass?

Then again, what do I know.

Peace.

http://www.angrysinner.blogspot.kr/2012/12/yesterday-dragon-lady-served-beef-and.html

Wed, 12/19/2012 - 21:22 | 3081127 Things that go bump
Things that go bump's picture

So, should poor kids go right from high school into crime?

Thu, 12/20/2012 - 14:23 | 3083441 BooMushroom
BooMushroom's picture

They should go into a trade like plumbing, construction, electrical, etc.  What's the point of going $100000 in debt for film school if you don't even know the people you have to suck up to in order to get parts as an extra?

Wed, 12/19/2012 - 20:43 | 3080995 BraveSirRobin
BraveSirRobin's picture

The correlations are only degrees to income. It does not demonstrate what types of degrees or source of degrees correlate to income.

Wed, 12/19/2012 - 19:00 | 3080632 The Gooch
The Gooch's picture

Or Hollywood pedophiles.

 

Wed, 12/19/2012 - 19:04 | 3080636 hedgeless_horseman
hedgeless_horseman's picture

 

 

College still costs about the same as it did 100 years ago, when priced in gold.

http://pricedingold.com/college-tuition/

 

I am going to still recommend a college education to the little horsemen.  It is one of the few assets that is portable, and cannot be easily taken away from you.

Wed, 12/19/2012 - 19:11 | 3080674 SafelyGraze
SafelyGraze's picture

as if college student have gold.

cost of college has skyrocketed, measured in ounces of weed

Wed, 12/19/2012 - 20:15 | 3080903 Missiondweller
Missiondweller's picture

Maybe the point is that "dad/mom" is stacking to pay for college in fiat when the time comes.

Wed, 12/19/2012 - 19:27 | 3080736 NotApplicable
NotApplicable's picture

But what does college have to do with an education? Cost is one thing, value quite another. They're nothing but adult daycare for tenured faculty, while depending on being a diploma mill to hide that fact. Then there's the insane amount of waste associated with all of them (thanks to the debt trap funding).

I'm teaching my kids to understand value in the form of entrepreneurship, while providing them with book after book after book that they use to educate themselves.

College is where stupid people go to get a piece of paper that says it doesn't matter. For the smart people who go, that fact totally diminishes the value of the degree. Sure, it may be a portable asset, but it is no longer a valuable one. Especially once the only decent jobs left will be in the government sector.

But then again, you may be high enough on the wealth scale that your social connections override this reality (as evidenced by the graph). In that case, well... good luck.

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