I’ve read a spate of stories today on how pursuing a college education is increasingly one of the worst life decisions an American can make. It’s even worse for people too poor to afford full tuition at a four-year school or too dumb to complete a bachelor’s degree. The Brookings Institution has discovered that college dropout rates are higher than ever and 20% of colleges result in a negative ROI for those who do graduate. I hope they included both of my schools, Notre Dame and USF, in that negative ROI calculation. Tons of serious policy research shows that America’s $1T student loan burden is destroying capital formation and preventing millions of graduates from raising their living standards. I never had any debt at all and I started building my nest egg with my first paycheck. Poor students who pay full tuition subsidize merit-based financial aid for affluent students. I got merit-based financial aid for both my bachelor’s and master’s degrees, so I’m one of the anomalous few who slipped through multiple cracks in a system designed to benefit anyone but me.
Don’t think that my claims of negative ROI and lack of debt contradict each other. My brand-name degrees didn’t help me build wealth because none of my employers ever cared about my education. I’ve had many non-productive, low-income years since graduating near the top of my MBA class. Being debt-free helped me build wealth more than any brand-name degree, because my meager earnings that would otherwise have gone to debt service instead went into my portfolio. The power of compounding in my 20s and 30s sustained me through many professional disappointments. My frugality built my wealth. My education did nothing for me.
I don’t want to read any more policy prescriptions advocating loan forgiveness, reduced borrowing costs, more subsidies, more remedial classes, or more of anything that hasn’t worked at all. The simple solution is that high school students who are too poor to pay for college or too stupid to succeed academically just shouldn’t pursue higher education. The poor kid who’s smart enough to qualify for full-ride merit-based financial aid can still grab the brass ring but that breed is very rare.
Poor people who avoid college have plenty of options. Trade schools and online learning offer credentials that lead to immediate entry into the workforce. Living simply and staying debt-free preserves income that poor people can productively invest.
Don’t go to college if you’re poor or stupid. You’ll regret it for the rest of your life. I’m neither poor nor stupid but I regret every single day I spent in college classrooms. I should have been working and saving instead, and I’d be much wealthier today without a BBA or MBA to my name.