Cigarette advertising was banned from radio and television in 1971. In addition, while not legislated, many television networks have made it a policy to eliminate advertising of alcoholic beverages… or restrict such advertising based upon the age of program viewership. Both of these actions were intended to eliminate negative influencing of impressionable audiences. With such massive amounts of advertising dollars eliminated, other industries with available budgets were destined to fill the revenue voids.
Alcohol, Tobacco, Prescription Drugs and Higher Education
Two notable industries who rushed in to fill the void were prescription drugs and higher education. It was estimated that drug manufacturers spent $2.7 billion on radio, television, internet, and similar advertising. This made me wonder what higher education was doing. What I found was, according to the Educational Marketing Group, that colleges and universities purchased over $570 million of paid advertising in the United States during 2013. That made me think… Have we swapped alcohol and nicotine for prescription drugs and higher education?
With this rolling around somewhere in the back of my mind, I was driving down a major artery in Atlanta the other day and noticed a billboard advertising an MBA program from a little-known university. A few minutes later, I saw another billboard advertising an MBA program from one of the top universities in town. Later, I pulled behind a public transportation bus that was wrapped in advertising for a third university. Although I have yet to see a PhD advertised above a men’s urinal, I have a sneaky suspicion that it is only a matter of time.
Higher Education: A 20 Year Payback?
Which brings me to the subject of this, my third and final installment in this series: Universities are failing their graduates by overselling the value of the products they are vending. When a consumer is experiencing disappointment with a purchase, they sometimes feel that the seller “overpromised and under delivered.” I believe this is the case with higher education. While smoking the same cigarette as a dromedary was once considered chic, consuming the same higher education as your parent or friends appears to me to be the new chic.
According to The Economist, a whopping 43% of all grades given college and university students were A’s. The same article also noted that young graduates have seen their incomes decrease by more than 15% over the last decade, despite the fact that the percentage of the U.S. GDP spent on higher education has tripled since 1962. If this information doesn’t yet have you squirming in your seat, I sincerely hope that this quote from a 2014 WSJ article titled A College Education Still Pays For Itself, Fed Economists Say will:
Although there are stories of people who skipped college and achieved financial success, for most Americans the path to higher future earnings involves a four-year college degree. We show that the value of a college degree remains high, and the average college graduate can recover the costs of attending in less than 20 years,” wrote San Francisco Fed economists Mary C. Daly and Leila Bengali.
Yes, you heard it right. The WSJ and Fed economists actually think that it is a good thing that you have an average shot at breaking even on an undergraduate degree in less than 20 years!!!!! While I don’t have the underlying data to be sure, I’ll bet that this analysis did not take into account the time value of money. If that’s true, then the payback could be more like 25 or 30 years.
I don’t want you to be suckered by the university hype. So, here is my question to you. If I offered you a financial investment that would break even in 15 or 20 years, how excited would you be to make that investment? And what if I told you that there was a decent chance you would not complete the investment (degree) and hence get a poorer payback. And what if I told you that you would also have to invest four years of your life, when you could otherwise be learning real-world job skills while earning a living?
Let’s get real. The idea that a college degree pays for itself is, at best, a matter of debate regarding the number of decades. At it’s worst, you fall for a sales pitch promising career success and come up empty handed.
Dinosaurs are dead. Is higher education (as we now know it) headed for a slot beside them in the Museum of Natural History? You tell me.