Content: Page 75-81, BECOMING YOUR OWN BANKER – The Infinite Banking Concept.
When I began my career in life insurance sales in 1964, we were taught to show our clients and prospects how much more their child would earn if he had a college degree compared to his twin brother who did not graduate from college. In those days it cost $2,000 per year to go to the University of Alabama or Auburn University and $2,500 per year to go to Samford University or Birmingham Southern College (private schools) in Alabama.
The average college graduate was projected to earn $80,000 more during his working career than one who did not get a degree from college. Hence, $8,000 invested in sending the child to University of Alabama would yield $80,000 more in living benefits. “You just can’t get a better return on an investment than that,” they said. The emphasis here was all on the monetary value of a degree.
I have been around the academic community for many years now and would like to shed a little more light on the foregoing assumption. Among other things, there are a number of sources today that will tell you the average BA Degree from a college is now the equivalent of a high school diploma in 1947. (I graduated from high school in 1948).
The cost of a degree has gone “out of sight” and the quality has “fallen off a cliff!” I have the distinct feeling that the college degree is the most over-rated item in America.
Please note that, up to this point, I have not used the word “education.”
Education should be an on-going thing – we should be continuing to learn and study throughout life. My mentor, Leonard E. Read, was the most educated person I have ever met, but he had no degrees from anywhere. Neither did his associate, Henry Hazlitt. And up until recently, neither did Bill Gates.
Professor Herbert Rotfeld at Auburn University says, “Most of the students today are not in college for an education – they are there for credentials! If they could go to a machine, put in money, and get a diploma, they would do it in a heartbeat.” Rotfeld quotes IBM chief executive officer Louis V. Gerstner, Jr. at a two-day national education summit in Palisades, NY “…. Business leaders do not (and should not) want business education to be vocationally oriented. It is not in the interest of business leaders to turn public schools into vocational schools. We can teach them how to read balance sheets. What is killing us is having to teach them to read and compute and communicate and to think.”
What’s more absurd is the subjects that are taught in so many of the colleges today. For some deep insight into this I recommend that you read The Fall of the Ivory Tower by George Roche. One of these days the consumers are going to wise up to the fact that they have been “conned” and the house of cards is going to come crashing down. When the perceived value of anything has no real basis, a return to reality is inevitable.
Just where did the idea of “everyone needs a college degree” come from? I think it has its roots in the period just after WW II with the advent of the GI Bill. When the war was over the Socialist thinking “economists” of that period promoted the idea of “All of these GIs coming home from the war will wreck our economy because there are no jobs for them. Let’s send them to college.” And so, the colleges became “diploma mills.” I was in college from 1948 through 1952 and was able to observe the brunt of that effort. The GIs had the very best of books and equipment, they drove cars, and they had a stipend on which to live. Others, like me, had to buy used books and equipment, we walked to classes, and we had part-time jobs to make ends meet.
Since that time, Parkinson’s Law has taken effect – a luxury, once enjoyed, becomes a necessity. And now the cry is that, “Everyone deserves a college degree.” Notice that the cost of doing so has risen much faster than inflation in the rest of the economy. This is always the pattern when government gets involved in anything. Contrast this with things left to the market, such as the personal computer. Quality and performance have increased so rapidly that whatever you have now is obsolete within a year or two and prices have gone down dramatically.
So much for the major reason for looking askance at the value of a college degree. In the next lesson we will look at its monetary value as compared with an alternative – teaching the child the value of banking through the use of dividend-paying whole life insurance.