Home Real Estate PERSONAL: Is College Necessary, or Even Desirable?

PERSONAL: Is College Necessary, or Even Desirable?

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This post has nothing to do with real estate. Go ahead and skip over if you’re one of my readers who only want the real estate stuff.

For as long as I can remember, my parents drummed into my head the idea that college was not only important, but the most important milestone of my (until then) young life. Even starting in elementary school, the deep assumption was that I would work hard, study, do my homework, and prepare for college. The question wasn’t college or not, but which college.

I was fortunate, and hard working and studious and very much a nerd in every way, so I got into my first choice. I still consider Yale University to be the finest undergraduate educational institution on the face of the planet. And I can say for certain that my life would have turned out very, very differently had it not been for that experience and that milestone and that… what to call it… cache of the ultra-elite diploma.

So naturally, when I had children, like most educated and professional Gen-X parents, my (ex-) wife and I opened a college savings account. We have raised my two boys with the firm understanding, the taken-for-granted assumption, that they would not only go to college but probably get one or more advanced degrees. Like our parents before us, our assumption was never college-or-not but which college.

In recent months and perhaps even years, I’ve started to question that long-held belief. In the 21st century, is college necessary, or even desirable? I’m not so sure anymore.

You have to understand. Coming from an Asian-American immigrant Ivy Leaguer with a degree from NYU Law… where every single person in my immediate family (and my ex’s immediate family) has advanced degrees… that’s kinda like the Pope questioning the validity of eucharist. Let me explain.

Why Go to College?

I went to college because. Just because. As I said above, not going to college was an option for me on par with playing center for the Knicks: never even occurred to me. But I chose Yale for a very specific reason.

I wanted to be a playwright. Yale had, and still has, the best undergraduate drama department in the country and the top graduate drama program in the School of Drama. It also had, and still has, the best English department in the country. Each of the twelve Residential College (what other schools call dormitories) has a troupe that puts on plays roughly once a semester, plus you have private student groups who do, plus you have the Theater Studies program, and then you have Yale Repertory Theatre, and then down the street, you have the Shubert Theatre. If you want to be a playwright, I can’t think of a better environment. (Maybe, possibly, NYU because of its proximity to Broadway and Off-Broadway… but I doubt it.)

Obviously, I’m not a playwright today. That is a long story in and of itself. But suffice to say that I still loved by four years at Yale. The unofficial but undisputed school song of Yale University is Bright College Years (the song from the video above):

Bright College years, with pleasure rife,
The shortest, gladdest years of life;
How swiftly are ye gliding by!
Oh, why doth time so quickly fly?

That fits me to a T. Those four years were the shortest, gladdest years of life, without a care in the world where I could stretch my brains to the fullest extent and do things that I never could before, and never have since. I sucked the marrow from the bones of my college experience in just about every way a student who wasn’t an NCAA athlete could. I stayed up all night debating whether the Kantian categorical imperative or the utilitarianism of John Stuart Mills was correct. I’ve spent hours discussing literary theory with friends dressed in black, complete with Gauloise cigarettes (only French smokes lend the proper aura to a discussion about Jacques Derrida) and black coffee. I made friends, led social movements, loved, lost, then loved again, then lost again. I got drunk; I threw up. I got sober; I grew up. I did it all and have zero regrets. (Actually, I do regret not learning how to sail while at Yale….)

So I have every reason to recommend college, especially to my children. Yet I hesitate today.

The reason is the why of the thing. Why go to college at all?

Most people, students and parents alike, will say that it’s about setting oneself up for a successful career. The paradigm is, get into as academically renowned school as you can, major in something “practical” like STEM or business or whatever, and then get an entry-level job at a prestigious firm where you begin climbing the ladder to success.

Certain careers are pretty much closed off to anyone who doesn’t have a four-year college degree: law and medicine, for example. Most of those actually require advanced degrees after college, which then means you need that sheepskin from a four year institution.

But what my parents never told me, and what most parents never tell their children, is that there is a big reason why those things are called JOBS and why people have to pay you money to get you to do what they want you to do: they suck. Otherwise, they would be called VACATIONS and you would have to pay them to be able to do what you want.

The fortunate few get to do something that everybody wants: to get paid for doing something they love doing. I’ve heard a saying about the NFL that seems to apply: “I love football; I’d play on Sunday for free. It’s the practice Monday through Friday that you have to pay me for.” I feel like I’m one of those lucky few who gets paid for doing something he loves to do. (In my case, it’s figuring out clever solutions to difficult problems and trying to see them implemented.)

But in the 20+ years since I graduated, I feel like the economic and employment environment has utterly changed.

I’m Not a Businessman, I’m a Business, Man

For one thing, the revolution in communications and computing has forever altered the landscape of employment. Some of the more forward-thinking people have been talking about the impact of the Internet and VOIP for a while, suggesting that outsourcing isn’t just going to impact call centers and low-level tech support folks. We’ve already seen huge outsourcing for software engineering, but did you know we are now outsourcing legal work as well?

If the profession that most exemplified the rewards of hard work, study, four years of college and three years of graduate school, prestige and social importance can be outsourced to India… what white collar job is really that secure?

Think about that.

Even the business guys, those midlevel marketing managers climbing the corporate ladder, or the Director of Accounts Receivables, or some such thing… what stops them from being replaced by someone who is (a) far more credentialed, (b) harder working, and (c) far cheaper? This passage from a post by Mark Hermann, Chief Litigation Counsel and Global Chief Compliance Officer at Aon, should send chills down any white-collar worker’s spine:

Are you sitting in your office cranking out nondisclosure agreements for clients to use in their M&A deals?

I have some terrifying news for you: There’s a native-English-speaking law school graduate in India who’s willing to do that work, too.

And he costs about $25,000 a year, all in.

How does that compare to what you’re making?

“Wait,” I hear you shouting, “He’s too many time zones removed from you!”

If time zones matter for NDAs, then I can get a gal in Poland, who graduated at the top of her class from a respected law school, for less than $60,000 a year, all in. (She’s not a native English speaker but, if she’s under age 30, she’s fluent.)…

“Wait,” I hear you shouting, “Only someone with my specific skills can negotiate an NDA!”

Don’t kid yourself. How many key issues arise in these negotiations? Ten? Twenty?

Explain those issues to a well-educated non-American, show her how they play out, supervise her work for a week or two, and set her free.

There’s really no magic to it.

That’s for lawyers, I know, but I can imagine it applying to just about any midlevel white collar job. In the Internet age, of globalization, is there some reason why an accountant can’t be located in Bangalore? A HR Director located in Belfast or Dublin? A stockbroker in Poland? A Marketing Manager in the Philippines?

For that matter, in the age of Khan Academy, tutors who can teach your child from someplace overseas, and telemedicine, how secure are even “unassailable” jobs like teaching and even being a doctor?

The scariest thing is what this competition from overseas looks like. Even though I’m Korean-America, and know firsthand just how intense the pressure is for education and getting into the right school, until I visited China in 2001, I did not, could not, internalize the sheer scale of the issue.

Consider this. Beijing University, the top college in China, has over 15,000 undergraduates. Not so large, compared to some of our larger schools like UT-Austin (38,000 undergraduates), Univ. of Michigan (28,000 undergraduates), etc., right? Thing is, the acceptance rate at Beijing University is simply unbelievable:

Peking University, among the most prestigious, does not release admission rates, but Mr. Zhong said on his television program that a student from Anhui Province had a one in 7,826 chance of getting into Peking University, while a student from Beijing had one in 190 odds, or 0.5 percent. (Harvard had a 5.9 percent acceptance rate this year.)

It is ten times more difficult to get into Bei-Da than it is to Harvard. Those students study like crazy, as if their lives depended on it… because they sort of do:

Mr. Yang, the student in Kunming, said he spent 13 hours a day in his senior year studying, and his parents even rented an apartment for him near his school so he would not have to waste time traveling back and forth to his parents’ home.

When was the last time you ever saw an American teenager study 13 hours a day?

Those skills, that threshold for suffering, that capacity for working your ass off… would those just disappear once these kids get into college? Or do they carry that with them into the global workplace? I’m betting on the latter.

Now consider that there are 1.5 billion people just in China, and a billion people in India, and hundreds of millions throughout the rest of the world who want to make a good living too. And they’re not all that interested in majoring in Women’s Studies and Comparative Literature, because they know that’s not where the money is. They’re all interested in majoring in STEM (Science, Technology, Engineering, Math).

So even the idea that college is fantastically worthwhile as long as the young man or young woman majors in STEM is somewhat suspect to me, because the competition for my boys won’t be Johnny from down the street, but Yang Taoyuan or Anil Gupta or Boris Spassky from across the world. By all means, it’s more practical to major in STEM, but the idea that STEM = security and success strikes me as mid-Nineties thinking.

The world is flat now. What’s coming is quite unlikely to be all that familiar to us.

Path to Riches

So, here’s the thing. After the past couple of decades in the workplace, I’ve come to realize a couple of things about financial success. (I say financial success, because success itself is a personal definition, and some folks are extremely successful by their own measure of success, no matter what anybody else thinks.)

Except for extreme cases (i.e., professional athlete, star entertainer), there are only two ways to wealth and success: create something, or sell something.

If you can create something, make something, that people want… you have a great chance of being financially successful. Whether that something is Facebook or a screenplay or a little piece of machined aluminum that sells for $264, creation is a path to wealth.

The other path to financial success is to learn and become really good at sales. Being in the real estate industry, I’m well familiar with great real estate brokers and agents who make millions of dollars a year with no college education. But some of the richest guys in the world work in finance, where they sell securities or even whole companies. Even on the investment banking side, the people taking home 8-figure bonuses are those who have sold their firm’s services for a huge M&A deal or one massive bond offering after another: they’re “rainmakers”, which is but another term for salespeople.

Who knew that more and more, Jay-Z’s lyrics would describe what it means to be rich in the 21st century: “I’m not a businessman, I’m a business, man, so let me handle my business, man.”

It’s not about working for somebody else in the Internet Age, unless you’ve got a piece of the company. It’s not about job security; to me, that seems like a convenient fiction in the Globalized age. It’s not about being a businessman, but a business, man.

And I can’t think of a single class I’ve ever taken in college, or heard of someone taking in college, that can help a young man or woman become a business. Not one. Not even in those “entrepreneurship” classes. (As if entrepreneurship and risk-taking are things that can be taught in classrooms….)

Path to Security

But financial success doesn’t have to mean up close and personal with Robin Leach. Most parents, myself included, aren’t worried that their kids aren’t going to make the Fortune 500; we’re worried that they won’t be able to support themselves and their (future) families. A man’s gotta make a living, no matter what.

Yet, we’ve just gone over all the reasons why job security is an illusion in the Internet Age, and why global competition is going to be unimaginable by the time my kids are having kids. If you’re not one of the Creators, and not a great Salesperson, what then?

Well, there are two possibilities in my mind. One is to get a government job, especially in the Federal government. The only thing that resembles eternal life on this earth is a Federal bureaucracy, so that’s one way to have job security. The other possibility, however, is to pick up a trade.

Tech guys can go on and on about the Internet of Things and how that will change everything. The refrigerator can talk to the TV that can talk to your car that can talk to your cellphone to make sure that your beer is cold and the game is on when you pull up to your driveway. But when that refrigerator’s compressor burns out, all the data transmission and communication in the world ain’t gonna get that fixed. Somebody is going to have to do physical things with physical objects (tools) using physical items (parts) to get it going again.

We may live in the Internet Age, and Amazon may be the largest retailer in the world, but we still can’t get our hands on the stuff we bought without the UPS truck driving up and somebody dropping something off. The physical world is not subject to negotiation.

The skilled trades, or even the “unskilled” trades, require that physical things be done to physical objects. Yes, manufacturing can be outsourced, and will be, but it’s awfully hard to outsource the trades.

Take plumbers for instance. When a pipe bursts in your house, there’s no outsourcing that work. There’s no data protocol that can help, and no algorithm that stops the flooding. Someone is going to have to come out to your house, with tools, and actually fix the pipe. Period, end of story. Yang could build you an enterprise CRM system, Anil could do your legal work, and Boris could do your taxes from overseas, but not one of those people can come to your house in time to fix your broken pipe.

Unless you set up your own business, you’re working for someone else, so you’re not going to be fabulously wealthy. But if job security, and the ability to make a living, is the top consideration… I’m leaning towards the skilled trades.

The Cost Factor

Thing is, to get formal training in the skilled trades takes a fraction of the time and cost of a college education. Take plumbing, my example above, for instance:

At the low end, a Certificate in plumbing can be earned for less than $1,000 at online schools in self-study programs. At the high end, an Associates degree can cost over $20,000 in a full-time, 2-year program.  Between these two extremes there is a wide range of possible program costs.

$20,000 for a full two-year program seems like a real bargain compared to the cost of four year college.

You do have to serve an apprenticeship for 4-5 years, but hey… you get paid (crap wages, true, but you get paid) while learning. Oh, and check this out:

Plumber_I_Salary___Salary_com

That’s for an entry-level Plumber I with no experience; that’s an apprentice, still learning on the job.

So even if little Johnny were to graduate with $20,000 in student loan debt from plumbing school, his median salary is $42K, and as long as he’s not an idiot, he has a pretty good chance of paying that back before he’s 30.

Contrast that with some of these highly educated college grads who can’t even dream of buying a house because they’re carrying six-figures of student debt. Have I mentioned that 50% of of college graduates in recent years are working at jobs that don’t require a college degree (e.g., Starbucks barista)?

And once again, for emphasis, that accounting job at some big company that required a four year degree… can be outsourced. The down-and-dirty and disrespected plumbing job… can’t.

So, Why Go to College (Part 2) and My Current Thinking

This brings us back all the way around to that question: Why go to college at all?

As a liberal arts major who went to a liberal arts school, that supposedly believes firmly in the value of a liberal arts education, I think the best reason to go to college is to grow as an intellectual. I have never once used anything I have ever learned in my four years of Yale in any job I have ever held. And it isn’t simply because I didn’t major in STEM. The guys who did major in STEM and got jobs that required STEM degrees? Every single one of them ended up going back to school to get their Masters or Ph.D.s in order to learn the real stuff they needed to advance in their STEM fields. So ultimately, it’s not about a job, or about a career.

The best reason to go to college is to have that Bright College Years, the four shortest, gladdest years of life, when you as an individual, as a person, can be free to really live the life of the mind. For anyone who has never lived that life, it’s impossible to understand the appeal, and I get it. It’s not for everyone. In fact, I’d argue that it’s not for the vast majority of people. Even at Yale, most of the students weren’t interested in staying up all night arguing philosophies of long dead white men. They were there to get a degree, move on to Wall Street, put their two years in, then get into Harvard Business School, so they can join the elite Masters of the Universe types who run the world and summer in the Hamptons.

But for those few people who really love that life, who get into it, who find a weird joy and satisfaction in gleaning meaning out of some really obscure piece of text, or get jazzed about finally understanding quantum mechanics, or spend hours of quiet satisfaction comparing religious iconography of medieval Italian painters… there’s nothing like college. Even if those people then move on to have productive careers as lawyers, doctors, real estate agents, or even plumbers, if the life of the mind is its own reward, then college is an oasis where you know nothing, are expected to know nothing, and are not expected to be productive in any way shape or form. All you are expected to do is to learn for the sake of learning itself.

If my boys are that type, then I would want them to have that experience. Because they will never have it until they walk through those doors, and they will never have it again unless they decide on a life in academia. The experiences and the memories, however, of those four years will sustain them for the rest of their days and let them enjoy life in a way that those who don’t understand and don’t appreciate the intellectual life will not.

Is that worth $250K and student loans and debt slavery? Actually, yes, it is.

But the life of the mind doesn’t sustain the life of the body, or the life of the family. Remember, the physical world is not subject to negotiation.

So my current thinking/plan (that my ex hasn’t agreed to, so it’s nothing more than rambling at this point):

  • Military service. A lot of people I’ve spoken to about this have said that college is a time of growth and maturity, where young high-school graduates learn to live away from mommy and daddy, have responsibilities, and figure out what they want to do with their lives. I’m all for that, but I figure a tour of duty in the military is equally well-suited to give a young man (or young woman) time to grow and mature, to learn discipline and responsibility, and figure out what they want to do with their lives. Plus, they get paid while learning about who they are, and they serve their country. Oh and yeah, GI Bill baby, should they decide that college is indeed for them. Win-win-win, as far as I’m concerned.
  • Do not pay for college. Instead, give them the money I would have spent for college, and let them make the decision whether they want to spend that money for college, or to pursue something else. If they’re one of the creative types who have a passion for something, four years of financial freedom is a long time and an unbelievable opportunity to pursue the dream. If their passion, however, is to become a neurosurgeon, well, then they can write the check themselves out of their bank accounts to the school. At the very least, they’re far less likely to blow off classes and slack off if they remember the pain of writing that very large check.
  • Do pay for them to acquire a trade. Even the more expensive 2-year Associate program is a fraction of the cost of college; but to start out, and as a fallback position, I imagine the cost is something more like a few months to get a Certificate and get an apprenticeship job somewhere. Having a trade gives them a security fall-back that cannot be outsourced if all they need to do is to make a living. I’ll gladly pay for that. So if they skip college, spend four years working on a screenplay, but fail miserably, at least they can put food on the table and a roof over their heads as the most literate plumber in Houston.

Who knows, at the end of the day, what the world will look like in seven and ten years when I have to really cross that Rubicon. But if you stuck with me to the end of this long-ass essay, that has nothing whatsoever to do with real estate topics, well, I imagine you’re a parent like me wondering similar things, and worried for your kids and their futures, as I am. Well, fellow traveler on the nervous road, well met indeed. May your path be clearer than mine, but if not, perhaps we’ll figure it out together as we go.

-rsh

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Rob Hahn
Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

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