Economics Film Philosophy

College Education: The Largest Scam in American History!

The last 60 seconds of this documentary is a bit off, but 99% of it is spot on and demands attention.

The cost of an American college eduction was once “well worth the cost.” It no longer is (for a vast majority of reasons).

The promises of $1M more in aggregate salary over a person’s lifetime post-graduation are a lie. The ROI of a college education is now negative. WHY? – because of the supply/demand curve and federal government policies influencing the educational system. The value of a college degree used to actually MEAN something – now it is an overpriced piece of paper that no longer guarantees you a good job (as it once did in the 70s-90s) but in fact turns you into an indentured servant; you leave college with the weight of a home-mortgage sized pillar of debt in your name as soon as you step off the graduation podium.

Short story – freebies and “no collateral” subsidized school loans spike up the demand curve for education. The reason for this flood of free money is due to philosophical disillusion and sheer economic idiocy by law makers in Washington.

Unfortunately, No, not everyone “deserves” a college education in America. There, I’ve said it. Just like not everyone deserves a home, a car, a boat, or unlimited iPhone use. Ability to pay for something is critical—especially when that thing is as important and as fundamental as education. When you mess with the demand or supply curve you impact that “thing”’s price and quality. Nothing is more tragic as when that happens to one of our most important institutions: our higher-ed educational system.

This ill-founded philosophy (government owes me free stuff) has once again gotten us into a frightening economic mess. It’s the new mortgage bubble all over again – only potentially worse!! Just like when that bubble popped when homeowners couldn’t pay their mortgages, so this bubble will pop when students aren’t able to find good jobs (because their diplomas are worth less and less) and default on their loan payments. In the end this means the tax-payer will pick up the tab and/or the economy will go into a deep recession. Afterall, college debt in this country is even larger than mortgage or credit card debt.

Handouts skew the demand curve. When that happens, prices soar. Case in point: college education. In the 70s the annual cost of a college education was between $2000/yr – $5300/yr. Now it’s $27,293/yr. Why? No – it’s definitely not inflation. It’s because the good ol’ government says “here’s free money for college loans. No proof you can pay them back nor guarantee of a job when you graduate? No problem!”

Thus – here we are today. The now-astronomical cost of a college education is (on the whole) far beyond the value it might provide (i.e. negative ROI) and it’s all because the government decided as part of free loan programs to displace the free market with a handout.

This truth is sadly the greatest of ironies. In an attempt to do good for many, the federal government instead corrupts, disrupts, and steamrolls the exact system and people they hoped to help.

Sean Dempsey
I support, personal freedom and the ideology which gives the most freedom to the most people. There are no exceptions and no valid reasons for loss of freedom, no matter how much the supposed "left" and "right" may try to convince you there are.

3 Replies to “College Education: The Largest Scam in American History!

  1. Some Key Takeaways:
    Like with many of its programs, Big Government’s intentions here are GOOD (give everyone a shot at an education); however, the unintended results are extremely BAD (increased cost of education for everyone).

    With all the recent technological advances, the cost of a college education should be getting CHEAPER!

    It is now cheaper to purchase a plasma tv or laptop computer because the government does not SUBSIDIZE purchase of these products.

    If there was a true free market in college education, they would try to be innovative and bring tuition down.

    By guaranteeing student loans, government DESTROYED the free market in education

    The government needs to GET OUT of the college education market. All together. This will allow banks to get back in and bring down costs

  2. The main takeaway in the documentary is that college used to be extremely valuable and quite affordable–before government began subsidizing everyone’s payment. One could (and often did) actually work to “put themselves through college.” Back in the 70s it was actually possible to know what you wanted to do, realize that a college education was the only way to get there, and work full or part time to pay for that education. Today that’s changed. For one – the costs are prohibitive: it’s impossible to work full time and go to school full time. Now Big Government simply hands you free money regardless of your credit score and ability to ever pay it back (i.e. subsidized college loans). As a result EVERYONE can now, with government’s noble assistance, afford and receive a college education in America. Sounds great, right?! However here’s the rub – now because of all the increased demand, colleges have to build more classrooms, expand their dormitories, and in the end drastically INCREASE the cost of tuition for everyone. So the end result is this: college gets more expensive! In fact, even though inflation has gone up only 1-2% a year, average college costs have increased more than 4-5x since the 1970s! And has the level of education gotten better as a result? No, in fact as the documentary goes into – it’s gotten significantly worse (on the whole)! But is this fair to everyone? To bring everyone down to create some level of parity and egalitarianism? I argue no. And the fix is to REMOVE government from the equation and allow the free market to bring the cost of education back down to rates that are fair market and not artificially increased.

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