College as Casino

The House Always Wins

This is a story about a moral failing of colleges and universities.

I’ll be curious if you are as mad about this as I am when you are done reading.

A large number of name-brand colleges and universities offer graduate programs— master’s, law degrees, and Ph.D.s at public and private non-profit intuitions— that operate like Las Vegas.

Universities are the house. The students—adults that have been successful at every other academic endeavor in their lives and have a feeling that they will again prevail—are the gamblers.

Like Vegas, the house always wins.

And, like Vegas, the colleges and universities know the odds are stacked against their students but don’t care.

They want the money and the cheap labor that comes with grad students. Too bad if students are screwed with massive debt and questionable career options.

Allow me to elaborate.

Never Tell Me The Odds

The Wall Street Journal and others have been doing excellent reporting on how colleges, especially private non-profits, are using their reputations to lure graduate students and then hold a vacuum to their wallets.*

Here is a fun quote:

Recent film program graduates of Columbia University who took out federal student loans had a median debt of $181,000.

Yet two years after earning their master’s degrees, half of the borrowers were making less than $30,000 a year.

So, let’s see how this works. Columbia University, member of the world-renowned Ivy League, considered one of the top universities in the world, home to great thinkers and researchers, with a $13.3 billion endowment, screws over students with impunity because it—checks my notes—needs the money.

Congratulations Columbia! You should put those stats in your next fundraising letter. We are proud of you for upholding the best principles of higher education.

You might be asking, as I have, is two years enough time to determine a payoff? Hard to say, but it is highly suspect that you would go from $30k per year to $100k in short order.

Now, according to the Journal, Columbia has the most extreme example of debt versus payoff.  

Let’s look at others, like private non-profit colleges offering master’s degrees in Social Work.

The median salary of a social worker in 2021 was $50,390 which is about $24.23 per hour. Now, medians are helpful but are not a sophisticated way of looking at data. The pay will vary depending on the region and type of social work.

Take the University of Denver, for example. Getting a two-year master’s degree in social work has a sticker price of $104,000. That doesn’t count for books and fees, nor room and board if they are a full-time student.  

Yes, they have financial aid to bring that price down, but it can be safe to assume that most students will acquire some, if not a significant amount, of debt for that program. That is likely on top of whatever debt they are carrying from their undergraduate work.

The University of Southern California put its hand deep in the master’s of social work cookie jar. Who wouldn’t want a degree from the venerated USC? This time it was a fully-online degree that cost $115,000. It’s the same price if you got it in-person. Again, the Journal reported,

Recent USC social-work graduates who took out federal loans borrowed a median $112,000.

Half of them were earning $52,000 or less annually two years later,

Well done, USC and DU! I mean, soaking well-meaning social workers is easier than getting elderly people’s social security numbers off the dark web, am I right? I’m sure that extra cash you got is needed for some greater purpose.

Is it okay to do this to law school students? Not if we think that people that want to be lawyers are trying to use their skills and talents in the best way they know how—just like the rest of us.

Again, the Journal (they were on a roll) reported that the worst offender in taking in students with limited prospects is the University Miami of School of Law, a top 100 law school.

[Those] who used federal loans borrowed a median of $163,000.

Two years later, half were earning $59,000 or less.

Graduates from a host of other well-regarded law schools routinely leave with six-figure student loans, then fail to find high-paying jobs as lawyers.

A law professor at the [University of Miami School of Law], Anthony Alfieri, said law schools “foster this kind of cruel optimism” in students, letting them think six-figure salaries are attainable, when in reality, those high-paying jobs are largely reserved for students at only the top-ranked law schools.

“Law schools encourage a kind of magical thinking in order to keep the lights on,” he said.

Curious, that professor Alfieri doesn’t seem to mind working for the tobacco company equivalent of law schools. And, if his comment is correct, nor do other professors at law schools throughout the country.

“They Bought their Tickets. They Knew What They Were Getting Into. I Say, Let Em’ Crash”

--from the movie Airplane!

Graduate students are college-educated individuals that are rational agents with the ability to do a cost-benefit and risk analysis before they make a decision to enroll.

We let all sorts of people make dumb decisions that have long-term consequences. Why should this be different?

Excellent question.

I have no issues with adults gambling at casinos. However, colleges and universities should have much higher standards than caveat emptor.

Many students enrolling in these insanely expensive programs are likely succumbing to the known psychological phenomenon of “success bias.” That’s where people think that previous success will equate to success in the future. 

Universities know what the student's likely success will be—like casinos know the payouts from a slot machine—but don’t post those stats on their Web site.

Those sobering statistics could help students make more informed decisions, yet the schools hide what they know.

And, we need to acknowledge that these individuals are not always gambling with their own money. They are doing it with taxpayer-backed, federally secured student loans. About 40% of all college debt is held by graduate students.

While many of the above examples are from private non-profit universities, I’m sure if we dug, we would find plenty of examples of similar practices at state schools as well.

So, now what?

Time for a Revival Meeting

Repent, I say, REPENT!

While I am sounding like an old-school tent preacher, I don’t know how else to get the attention of faculty and administrators that benefit from this nonsense.

They might need a sermon to wake up to how they trash their own values and hurt all of higher education in the process for a few extra bucks.

I’m sure they mean well and have justifications, but they are just excuses for unconscionable behavior.

As a society, we have to be very clear and very loud: you will lose our support, our donations, your tax-free status, and your ability to accept student loans if you continue with these predatory practices.

Live up to your values.

Be better than Vegas.

We expect more from you.

So should you.

*The arguments in this column are limited to those advanced degree programs that are intended to help individuals gain or further employment in a specific professional field. This is not to suggest that education is “wasted” if it does not have a professional application, nor am I suggesting that advanced degrees are only valuable if they have a specific return on investment formula. Nor does this address those that pursue advanced degrees for personal enrichment.