As a pioneer in e-learning education who has taught over 250 courses online in the last 20 years, I realize the actual costs of education have come down dramatically in the last 30 years.
However, that hasn't prevented the expansion of student debt to about $1.5 to $2 trillion.
Most politicians these days are saying that free online college education should be available to everyone.
With over 44 million Americans holding student debt, the average working family's disposable income is now more than ever subject to the whims of the Federal Reserve's interest rates.
In case the politicians don't know, free education already exists. You may go to various colleges, online colleges, Coursera, Udemy and other sites such as University of the People and obtain education for free or it is heavily discounted.
Udemy boasts over 100,000 online courses of which many are free. Coursera actually offers top ranked college courses and diplomas online. Many of these educational companies and clearinghouses offer online courses to the masses. They are called MOOCs or Massive Online Open Courses. Some top professors have over 250,000 students in one class.
About 20 years ago, futurists were predicting the collapse of traditional liberal arts colleges because you can go online and enroll in a class, at little cost, that is taught by one of the top ranked professors in the world.
To make a long story short, college tuition and college courses are free right now and most people don't even know it. Anyone who wants to go to college can use a computer and the internet at home or at the library to take classes.
As for college loans, the typical funds borrowed for education is for tuition and expenses. However, the bulk of the expenses aren't just tuition.
Here are the top 14 typical costs of education:
- Forgoing income by not working
- Time or years invested into education
- Commuting to school
- Books (Digital Books are getting cheaper by day)
- State, City and Federal Taxes on Gas, Internet, Phone etc.
- Insurance on cars or other.
- Health Care
- Matriculation fees
- Costs to take care of children, disabled, or elderly while you are away at a school
In many states, college tuition has been free for decades for those who maintain a solid grade point average in school. Pat Taylor was one of the richest Americans living in Louisiana and developed and promoted the "Taylor Plan," adopted in Louisiana in 1998, which provides academically qualified students with state-paid tuition for college. In 1997, Republican Governor Murphy J. Foster, Jr. signed Act 1375, a plan which opened the TOPS tuition scholarships to all with a 2.5 grade point average and at least a score of 19 on the ACT.
Family income was removed as a consideration for eligibility. Those with higher grades received $400 to $800 in extra funding to help meet the costs of other college expenses. In Louisiana in 1998, TOPS paid the tuition for over 24,000 students in the amount of $54 million. During the 2014-15 academic year, the program assisted 50,000+ students annually at a cost of about $270 million. LSU Louisiana State University was ranked as a Forbes top 200 university in recent years.
US News has a list of tuition free colleges online. Many of these colleges require some contribution or to have a job on campus or pay exam fees; nevertheless, tuition may be considered free.
Examples of Tuition Free Colleges
- Alice Lloyd College
- Williamson E. Macaulay Honors College
- University of the People
- Webb Institute
- Williamson Free School of Mechanical Trades
- Barclay College
- College of the Ozarks
- University of the People
- Haskell Indian Nations University
- Berea College (KY)
Overall, the bulk of the costs of college are opportunity costs and costs of living; however, that is minimized if you take courses online and hold a job at the same time.
In the end, nothing of value is free, but a quality college education is priceless especially if you are devoted to learning how to do something of value that can be used in the real world.
Overall, most colleges and universities could probably survive without charging tuition while only billing students for exams, housing, food, services, parking and so forth as that may be enough profit already without even charging tuition.
The dirty secret is that many top-brand colleges are wonderfully overpriced at around $70,000 per year. As a note, the two areas of key inflation over the last 25 years have been health care and education. This is probably because the government subsidizes these industries,
In this political environment, the banks seem to have been demanding a normalization of interest rates and got their request from the Federal Reserve. The banks will now be truly profitable again for the first time in 10 years.
However, now that the student loan system is controlled by the federal government, President Trump may have the power to lower interest rates for the working families who hold this debt that was created over the last 30 years. As rates have gone up 9 times since 2015, student loan delinquency or default rates are now: 11.4% (90+ days delinquent)
We are at a key point in innovation and technology. With e-learning, prices may continue coming down for education, and e-learning continues to roll out new courses, new curriculums, and more skills related programs. However, many traditional colleges are maintaining outdated curriculums as their highest paid professors teach the existing courses and do not have experience nor know how to teach the new courses in areas of finance, marketing, or technology.
Some parents are sending their kids on GAP years to learn tangible skills in experiential areas of life. Some of these GAP programs include a year of travel or a year at sea. In contrast, many parents are still spending close to $300,000 to have their child graduate from a top tier university to prepare for business, medicine, finance, accounting, or law. Sadly, some parents are paying $70,000 a year for their child to complete a degree focused in niche areas of history or politics where these students are literally unprepared for almost any job.
As for sustainability of higher education, some bricks and mortar schools may not be sustainable if they do not remain competitive, well ranked, and convey great value.
Ranking conveys value and one top school actually was sued and lost millions for a ranking scandal.
Only time will tell as the education markets are changing dramatically, but if you are determined to send your kids to great schools for socialization and education, start saving early and contribute to 529 plans, pre-paid plans, or other government recognized plans dedicated to education.
Moreover, gifts direct to universities are still tax free. Also, your children can always apply for aid and subsidized loans. Happy hunting and never forget that there are free programs which are accredited and there are countless free courses online for you to take which can lead to diplomas, degrees and even masters degrees from accredited institutions.
George Mentz JD MBA CWM Chartered Wealth Manager ® is a licensed attorney and CEO of GAFM ® global education, which is an ISO 29990 Certified professional development company operating in over 50 nations. Mentz is an award winning author and advisory board member to several companies around the world in education, charities, and crypto currency.
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