Sunday, January 5, 2014

I'll Take the Ferrari, Thanks

I was perusing Instapundit this morning and saw this headline: "When Going to College is Like Buying a Ferrari on Credit.". Yeah, that caught my eye. It linked to this article on The Blaze, which references an article by Glenn Reynolds, aka Instapundit. If it wasn't such a good article I'd make some comment about shameless self promotion.

It is especially timely because I was talking to my nephew last weekend, and he mentioned some schools he was interested in, and at one of them a four year degree costs $200,000.00.

I checked. You can't get a Ferrari for $200k. At least you can't get a NEW Ferrari for $200k. That amount of cash will get a very nice 2 year old Ferrari however.

The thing is, the government will lend an 18 year-old kid that $200,000.00 IF he spends it at a college of their choice.

They will not lend an 18 year old kid that amount for a used Ferrari.

I think that's a shame. How about a little analysis?

Lets say I buy an indocrina... I mean 'Education' with that money. What will that education be worth in 10 years? How about a show of hands? How much of what you learned during your four years of undergrad do you still remember and/or still use? And I mean what you learned in THE CLASSROOM! How many of you are earning a living based on the field your degree was in? How many of you are using your Geology Degree as a basis for your management position in the growing field of fast food?

Now lets buy that used Ferrari!

First; having a car like that will open lots of doors. Not a member of the Hill 'n Dale Country Club? Roll up in a Ferrari; I'll bet they let you in. Roll up in your 10 year old beater Taurus and flash you degree from the University of Beer and Broads; my guess is they will hand you an employment application. For kitchen help.

Roll up to ANY hot spot in the city: Ferrari- you have a girl. Degree- you may get a free beer and some commiseration from the bartender, using his $200,000.00 Humanities Degree to mix drinks and change out empty beer kegs.

I could go on (And on. And on. And on...) but you get the picture. Plus; most, if not all Ferraris appreciate in value. Historically, the older a Ferrari gets the more it is worth. So your $200k investment today will net you double that in 15 years. Give or take.

Economists talk about something called 'Opportunity Cost of Money'; spending your cash one way means, as money is individually finite, you cannot spend it another way. Meaning every dollar you spend on rent is one less dollar you have for beer. Or vise versa. Every dollar you spend repaying that $200,000.00 in student loans is one dollar less you have for a house payment, car payment, 401k funding. Or beer.

I'm not against a college education. In fact, for certain positions I am positively for it. What I'm against is the ubiquitous nature of the college degree. One purchased at fantastic cost, on credit, and never used.

What are you buying for your Two Hundred Thousand Dollars and no sense (pun intended)? The piece of heavy stock paper with you name on it (which cost the college $1.45- it pays to buy in bulk) or the education that you allegedly obtained in your chosen field of study?

So; just how often will a discussion of the finer points of Women's Studies come up in the slack times between asking "do you want fries with that?"

I know some folks in the Payday Lending field. Before you can borrow $200 they must fully disclose the terms, interest rate and how much you will be paying back.

When you borrow $200,000.00 in student loans, some student- working at the school to avoid student loan debt- will advise you to "sign here to pay for next semester".

How many 18 year-olds would hesitate to sign if they knew the money they were borrowing today would still be coming out of their paycheck when they they are 40?

And that this debt will cost them that used Ferrari?

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