98% of American families see college as a worthwhile investment, according to SalieMae. At the same time, the costs of higher education continue to skyrocket. College costs have tripled in the last 40 years. This leaves us an intriguing situation. The student loan default rate is an amazing 14% right now. Compare that to what most consider a 'high' default rate on residential home loans of 6%. It calls into question the actual value higher education is providing. There are other stats that seem to support these questions as well:
- A record number of young adults are still living at home after college.
- Pew Research tells us the number of employed 18-34 years olds has declined to 65%.
- College graduates remain underemployed, and often not working within their area of study.
Students are attending college for growing amounts of debt so they can live at home upon graduation. That's not a great value proposition. Where has all the value disappeared to in higher education? At one time, a college education nearly guaranteed career success. Or so it seemed.
Students are attending college for growing amounts of debt so they can live at home upon graduation.
There are likely many factors that go into solving a problem like this. The health of our economy is one of those factors. With a healthy economy, there will be more jobs, but who is going to create those jobs and that healthy economy?
The health of the economy may not even be the most significant factor in this situation. The reality is our economy is changing. The industrial age is over; the information age is here. Our education system has not yet adjusted.
The idea of having a job is only a few hundred years old. It all started in the Industrial Revolution. As Seth Godin puts it, "in the 1500's there was 0% unemployment because there were no jobs". Everyone worked for themselves or the family business. Then capitalism created large corporations, which made it common to work for someone else.
Our entire education system became geared towards preparing people to work for others. We began developing students from the earliest years to work a job. In fact, we have career counselors to help you decide which of these jobs you should have. Then you select a degree to get this specific job. When we're five, we think, "I'd like to be an engineer". When we're 25, we think, "I'd like to be an engineer for General Electric". Do you see the shift?
The education system is tuned for the wrong outcomes. Still, the wrong idea here would be to abandon the education system altogether. Fixing the system itself is a topic for those much smarter than me. The intention here is to discuss what students should do within the system. There's always a transition period, and though the system isn't ideal, it's the only one we have. What students need to do today is learn to create value.
The education system is tuned for the wrong outcomes.
The major problem with learning to get a job is that students never learn to create their own value in the marketplace. They learn how to create value for an employer, but nor for a customer. There is little reason for so many American students to remain unemployed or underemployed! If they can't find a job, why not make a job. If you can create value in this world by solving problems, people will pay you. This might mean getting paid by a corporation, or a small business, or by your own customers. The shift is focusing on a different outcome. Don't try to get a job. Try to create value.
In an earlier post, I looked at what's going on in small business today. To summarize, we need more people to start businesses in our economy. We need more people thinking about how to create value, solve problems, and work directly with customers.
The prevailing mindset is that you need a job to make money. That should go away. The reality is we all need to solve problems to make money. It doesn't matter whether you solve those problems in a major corporation from New York or a small startup company in a garage.
The prevailing mindset is that you need a job to make money. That should go away.
I believe our changing economy will continue to drift towards more small business. We're going to start floating back towards the pre-industrial marketplace. Although this marketplace will be amplified by the internet. You can make millions of dollars from anywhere in the world with just a few employees. Students would do well in college to learn as much as they can about creating their own value.
Start a business, try new ideas, and learn to bring new concepts to life.