Cheap college: Ten Tips

If you’re about to embark on your undergraduate education in the US or Canada, you probably have a good chance of ending up owing some money to pay for your studies and expenses. Can you avoid financial disaster and still end up with a pretty good “education” section on your CV? I believe so, and I’d like to share with you a few tips on cheap college education. They might turn out to be useful, whether you want to go straight to the job market after graduation or whether you have further studies in mind.

I did my undergraduate degree in Brazil. Then, I moved to the UK and completed my graduate education there with a very generous stipend. I also taught in higher education in both countries, including two top universities in the UK. I worked part-time for an institute attached to a university in Europe. Now I work at a major university in South Africa. I know a few things about higher education, and here’s a list of tips for you.

1. Accept a full-tuition scholarship.
If you’ve received an offer of a full-tuition scholarship, go for it. As long as it’s not a loan. No brainer. You’re being subsidised to study full-time. This is your job now. Do a little bit of networking and career skills training, but focus on your degree. Try to do as well as you can. The problem with this strategy is that, quite frankly, the vast majority of students aren’t offered scholarships that get even close to covering full tuition costs.

2. Avoid the athletics trap.
Don’t count on your prowess in sports to put you in a position where you earn full tuition to study. Athletics scholarships cover at most a fraction of the college cost. At most, you’d be able to combine an athletics scholarship with some other source of funding, but even if you get to that stage, you’ll have to figure out a way of earning B+ or A on average with little time to study.

3. Split your degree.
This is the oldest trick in the book. Yet, not enough students seem to follow it. I didn’t know the North American system very well, and I owe this point to Gary North. He explains it on this video. In the US, you can save a lot of money by doing the first two years of your degree at a community college or some other low-cost higher education institution. You can earn an Associate degree and then transfer credits to a four-year college to complete your Bachelor’s degree. One advantage (apart from the financial factor) is that you could do it in the evenings, while you earn some money during the day. Another advantage is that permanent teaching staff in a small college or a community college are gifted teachers – that’s why they were given their jobs in the first place – whereas at a major university professors are rewarded according to their research achievements and teaching might not be terrible, but it’s not necessarily the best you can get either.

4. Try distance learning.
This is emerging as a major alternative to traditional university attendance. You can either earn credits (which you can, later, transfer) or a whole degree at a fraction of the normal cost of university attendance. You can also combine this with point (3) above.

5. Stay with your parents.
Okay, as a Brazilian I didn’t see any problem in staying home for another four years during my university education. There are advantages and disadvantages to this, and it’s up to you to decide if this strategy is worth it, depending on your family’s culture and habits. But the fact is that, even if your parents charge you some rent, they won’t charge as much as the average university dorm would. This means you can save. Plus there won’t be any learning curves related to living in a completely new locality. This strategy requires you to do either a distance-learning degree or to attend your local college, and you can combine this with points (3) and (4) above.

6. Distance learning abroad.
This can be combined with (3), (4) and (5) above. The truth is, most employers don’t care very much about where you got your undergraduate education, except if the place is one of the top five or ten universities in the country. Higher education in the UK is slightly cheaper (on average) than in the US, and often much cheaper if you’re doing it online. You can register at the Open University, or at the University of London’s international programmes. Depending on the area of study, you can even do a distance degree part-time while you work, paying for each course at a time. The University of Aberdeen, for example, offers a distance degree in Religious Studies along those lines. If you give up halfway, you can still earn a CHE degree after completing the first year, a HE Diploma after two years, and the undergraduate course in the UK normally lasts for three years (except, normally, for Scotland).

If you want to save even more money and benefit from favourable exchange rates, you could also apply to study at the University of South Africa (UNISA), one of the world’s largest universities. UNISA has a very good reputation. Remember Nelson Mandela? He earned a degree there. For South Africans, each year of study costs around 1,000 dollars, and if you live abroad, you need to pay extra, but not a whole lot more. There are no classes. Normally, you use multimedia material, lots of written material, and travel to some place in your country where you can do the exams. So you need to factor in the cost of travel, but it still might be worth it. Other South African universities, such as North-West University, also offer distance degrees for certain fields.

7. Move abroad.
This is also becoming more of an alternative for North Americans. In Germany, for example, you can register at a university, as long as you can prove you know the German language well, and get a degree from some of the top universities in the world. The downside is the learning curve of moving abroad, visa bureaucracy and, perhaps, the cost of living in Europe might not be worth it. For example, you could pay low tuition fees in Finland, but it’s not that cheap to live there. For a tuition fee of around 1,000 Euros per year you can also do a degree in Portugal or Spain. Tuition fees in France and Italy are also relatively cheap. All this assumes you can prove you know the local language well enough to register. Depending on where you go, the case for doing a degree abroad is even stronger. In Portugal and Spain, an undergraduate degree normally takes four years. In Italy and France, it depends. In Germany, it normally takes three. This means you save a whole year of expenses.

8. Erasmus+.
If you decide to do your degree in Europe, you can still end up experiencing campus life and networking in North America. The reason is that students at European universities can be selected to do a year abroad under the Erasmus+ programme, and some of the partner universities are from North America. This is not very easy, but what I mean to say is simply that going abroad doesn’t mean abandoning any hope of experiencing student life in North America.

9. Cut corners while still following the rules.
You should thank Gary North for pointing this out. In a North American degree, you must do a number of credits, including electives or credits you can choose, as part of the total number of credits you must earn to obtain the degree. You can cut corners and save time and money by learning independently and then doing a credit-awarding exam. Some of the exams you can do are for general courses you’d end up doing as an elective anyway.

10. Make sure you do French and German.
How does this relate to “cheap college”? I confess there’s no direct relation. But I’d still urge you to do French and German as electives, particularly if they’re “for reading knowledge“. Those are intensive courses that get you to be able to read scholarly work in French or German by the end of a semester. This might not in itself make your college life cheaper now, but it will get you some skills you can use in the future. It gives you a head start in applying for the top, well-funded, PhD programmes in the US and Canada, in case that’s what you’re planning to do. Most PhD courses require you to have reading knowledge of at least one, if not two, of these languages. You might as well do it now. Moreover, if you just want to go to the workplace after you graduate, this can also give you a little advantage over the competition. While it doesn’t necessarily make your college any cheaper, this strategy will make your life easier by adding another relevant item to your CV which might turn out to be very useful in the near future.

I hope those tips can be useful. Maybe you’re even reconsidering whether you should really get deep into debt in order to earn a degree. Well, here’s my appeal. Please reconsider. Student loans may be common. Some even call this kind of debt an investment. But it’s not healthy to owe tens, if not hundreds of thousands of dollars when you’re just 22 or 23 and under pressure to find a good job to pay that money back. You want to be free. Maybe you want to go to a well-funded graduate programme without that stress. Maybe you want to get married. Who knows? Before accepting a loan to finance your education, please consider these alternative options. I urge you.

Before concluding, a disclaimer. I’m not saying any of these tips will work in every case. Be responsible and make sure you understand the details and implications of any decisions you make. Check, for example, if your target university or college will accept credit transfers from the place where you obtained those credits. Read the small print. But this is more or less what you’d be doing if you accepted a loan – you’d read the small print, right?

Could there be a college bubble?

The essence of a bubble is that you can flip an asset one more time before the bubble bursts. Most people know it will burst, but as long as prices are still rising, we might be able to fleece one more sucker. But we have to get the timing right or we might be that sucker.

But what about college? I can’t sell my degree (and there are other things that Jon Lajoie can’t do with it, but that’s neither here nor there), so I can’t flip it. But I can get rents on it. I give up $100,000 to get a degree with a present value of $300,000, and I feel peachy-keen. That’s a recipe for increased demand leading to higher tuition, sure, but could there be a bubble?

Let’s start with equilibrium so we have a counterfactual. Basic supply and demand here: higher incomes for college grads increase demand, and increased demand increases prices. In equilibrium the marginal student’s value of the degree will be equal to or greater than the opportunity cost of getting the degree.The student’s value is the benefit of cool college parties, mind/horizon expansion, reduced expected unemployment in the future, and higher expected income. Their opportunity cost is tuition, loan interest, stress from doing homework, and time not spent working. The question of going to school is different for different students; some will enjoy college more, will get more out of it, will have an easier time of it, etc. And the financial return isn’t the only relevant variable. At this point I’m thinking that maybe the current market is actually pretty sensible… we can ask questions about the sustainability of subsidies, but given everything, it’s likely that the students going to school are making the right choice, as are the ones who don’t go. Mistakes will be made, but it isn’t necessarily the case that there are systemic, wide-spread mistakes.

Now let’s think about what it might mean for the bubble to burst. First off, there would have to be a bubble: too many people paying too much to be in school; too little incentive for any individual to change their behavior. Then all at once, there is a flood away from the market, and recent grads are left holding the bag. During the bubble, I can get financing for my degree and I can reasonably expect (even if I see that there’s a bubble) that I will come out ahead, as long as I jump ship soon enough. Let’s say that during the bubble, I pay $10k to get a degree and I earn an extra $1k per year (and lets also assume, for simplicity’s sake, that we don’t have to worry about discounted values… a bird in the hand is worth one in the bush). My behavior is rational as long as I expect to keep getting that extra grand for the next 10+ years. So our bubble has a weirder time dimension than, for example, a beanie baby bubble where I can buy and sell rapidly.

Also, our bubble requires that my income is inflated compared to it’s post-bubble level. That would certainly be the case for me as an academic; if that bubble bursts, my income will drop. Will that be true of someone getting a business degree? American employers are keen to hire people with degrees, and so there’s a de facto licensure system. The assumption is that if you don’t have a degree there must be something wrong with you. As long as everyone holds this assumption then all would/could-be students will have to get a degree. But if no degree means ‘idiot’, that doesn’t mean that degree means ‘genius.’ Employers could well figure out a better vetting procedure, and students could get sick of undergoing the opportunity cost of attending school. But if this is a gradual change, then ‘bubble’ doesn’t seem like the right word. Even if the change in hiring practices is instant, the change in the labor market won’t be. If every 30 year old has a degree and suddenly degrees become unimportant, companies won’t rush out to replace them with 20 year-olds. The supply of lightly-experienced, qualified workers won’t change in the short run unless there’s a reserve army of qualified but un-credentialed labor currently in limbo as baristas.

So is there a bubble? It certainly seems like enrollments don’t reflect underlying realities. It also seems like there are profit opportunities for entrepreneurs able to improve hiring procedures; placement services could vouch for a candidate’s abilities, employers could accept non-college interns and hire from that pool, would-be students could become self-employed. I think the market is far away from equilibrium. But I’m doubtful that re-equilibration will happen rapidly. There isn’t room to “burst” a bubble, so much as there is room to avoid wasting a lot of 18-24 year-olds’ time.

Some interesting links on post secondary schooling

A Conservative Defense of Tenure

This article raises the important point that tenure is a form of compensation, and one that can reduce budget pressure. It also raises the point that tenure allows a more open-ended approach to schooling which, in my mind, frees teachers and students to engage in genuinely educational but non-measurable activities. At the end the author writes, “we conservatives are especially alive to what is lost when we transform all of our institutions according to the logic of the market.” I agree that conservatives (properly understood) are not pro-market, but as a pro-market libertarian, I also agree with him on the value of tenure. Really what it boils down to is that education (the result we hope students will attain in schools) really is unmeasurable and so can’t be neatly provided in a market or a bureaucracy; schools can be provided on a market, but there is an important civil-society element to them.

From Tennessee, a Solution for Mission Creep

One of the core insights of economics, simple though it appears, is apparently not understood by schools (or even economics departments): everyone doing the same thing is unproductive. Diversity (no, not diversity of melanin content) is the basis of gains from trade, and product differentiation is the way to advance oneself. But what schools tend to do is try to imitate “better” schools by doing a worse version of the same thing. Imagine if restaurants did this; McDonald’s would sell budget foie gras, Applebee’s would sell slightly better foie gras in a kitschy atmosphere, and the only places you’d actually want to eat foie gras would (still) be the same restaurants that sell it in the world we actually live in.

The state of Tennessee has set up an incentive structure that ties funding to measurable outcomes, but makes that funding contingent on a school’s Carnegie rating. The effect is that trying to move up the prestige ladder will result in reduced funding unless a school is actually able to deliver results. “Take one of the state’s regional colleges, Austin Peay State University. If it tried to become more like Middle Tennessee State University by awarding doctorates, Austin Peay would very likely lose 4 percent of its state funds.”

Competency-Based Degrees: Coming Soon to a Campus Near You

If more institutions gravitate toward competency-based models, more and more students will earn degrees from institutions at which they take few courses and perhaps interact minimally with professors. Then what will a college degree mean?

It may no longer mean that a student has taken predetermined required and elective courses taught by approved faculty members. Rather, it would mean that a student has demonstrated a defined set of proficiencies and mastery of knowledge and content.

Sounds good to me! Although, as the author points out, we’re still left with the problem of how to evaluate students. It makes sense to allow someone to test out of an accounting class, but certification of competency isn’t the whole story for a liberal arts program.

If you want to learn skills, then a technical college with a competency-based degree makes a lot of sense. If you’re looking for an immersive environment  that expands your appreciation for philosophy, art, and deep thought then you’re dealing with something unmeasurable. A BA from Wesleyan should communicate that you’ve experienced something like that, but that’s a different product than what most students are looking for (a piece of paper to help them get a good job). This goes back to the conflation of education and schooling. I’m not sure that credentials for liberal arts even makes sense; a better measure of a student’s success in lib arts would be the books and essays they write.

Betting on Vetting

The author is concerned with the current state of affairs in social sciences where hiring and tenure decisions are based on a cumbersome publication process resulting in new research being kept unavailable until it has finally survived the publication process. But there’s an unexploited opportunity: have outside experts evaluate unpublished manuscripts and assign grades. These grades can be used for faculty evaluation, but they can also reduce transaction costs on the publishing end. Instead of a round robin, manuscripts (or articles) are evaluated once, and publishers compete for publishing rights. “The new slogan for upward academic mobility would be ‘produce or perish.’… Publishing was yesterday’s problem, vetting is tomorrow’s.”

Subsidy and accreditation

I’m working on a paper on subsidy and accreditation of post-secondary schooling and the Chronicle of Higher Ed, conveniently, posted an article on the City College of San Francisco’s upcoming loss of accreditation. This article highlights a few key thoughts from my paper. But let me start with a general statement of my argument, and the key insight driving that argument.

In my paper (Accreditation: Introspection Turned to Incapacitation), I argue that call for college subsidies overlook important costs that reduce the educational effectiveness of those subsidies. This is because public discourse confuses the distinct concepts of “education” and “schooling”. A school is an organization with certain features that we hope will advance the education of students. Education is a nebulous concept, a sort of general intellectual improvement and growth, that is inherently unmeasurable and comes from many sources besides schooling. For this reason, I refuse to use the term “higher education”, instead opting for “post secondary schooling” (PSS).

Accreditation of some form or another is inescapable as long as there is subsidy. A subsidy for schools requires a definition of what a school is, and the voluntary accreditation system that already existed in the U.S. was designed to do just that. The original accreditation agencies (now the Big 6 regional accreditors) arose to define what exactly PSS was, how it related to secondary schooling, and set general guidelines defining what sort of schools could be accredited members of these organizations. This created some standardization as well as minimal quality assurances that helped students to understand what to expect from these schools. This standardization and quality assurance prompted the commissioner of education to leave eligibility for federal aid up to the Big 6 when the second GI Bill was instituted in 1952. This was considered necessary when the first GI Bill (of 1944) lead to a proliferation of low quality schools intent on profiting from the sudden availability of free money.

The current accreditation standards set requirements such as including certain types of courses in the curriculum, academic standards (to be evaluated by the institution in question!), and availability of certain resources to students (such as a professionally staffed library). For the most part, there is a focus on inputs rather than outputs. And as the CCSF incident makes clear, “institutions must meet standards in areas that include financial solvency, and that student achievement alone is not a sufficient means of retaining accreditation.” It’s rare for a school to lose accreditation, but when it happens it’s usually for financial reasons rather than quality or standards. Obviously this leads schools to be more conservative and less entrepreneurial than they might otherwise have been. Schools can only change as the accrediting standards change. That is, innovation must beat the system level for any schools intent on maintaining access to subsidies that make up around half of the industry.

There’s a lot to talk about here so I’ll leave the rest for another post.