$1 trillion in debt for branding?

“Student loan debt outpaced credit card debt for the first time last year and is likely to top $1 trillion this year as more students go to college and a growing share borrow money to do so,” reports the New York Times. It’s supposed to be “good debt,” an investment in the future. Like mortgages.

“In the coming years, a lot of people will still be paying off their student loans when it’s time for their kids to go to college,” said Mark Kantrowitz, the publisher of FinAid.org and Fastweb.com, who has compiled the estimates of student debt, including federal and private loans.

It’s about branding, not education, writes entrepreneur Seth Godin. A college diploma “brands” the graduate as employable.

Does a $40,000 a year education that comes with an elite degree deliver ten times the education of a cheaper but no less rigorous self-generated approach assembled from less famous institutions and free or inexpensive resources?

That $1 trillion in debt is a lot to spend for marketing.

What would happen if people spent it building up a work history instead? On becoming smarter, more flexible, more self-sufficient and yes, able to take more risk because they owe less money…

I don’t worry about students who can get into elite colleges. They’ll get an education — and a high-class brand. It’s the students borrowing for non-elite private colleges who are at risk of going into debt for a brand of marginal value. Will they get an education? Depends on the student.

I have a nephew who’s graduated in computer science and a niece who’s about to earn a degree in cognitive science. Both are job hunting. So this cartoon hit home.  (Click on it to get a larger version.) Via Instapundit.

Pearls Before Swine at comics.com.

About Joanne


  1. Little typo. It’s Seth Godin not Seth Grodin.

    Awesome cartoon.

  2. superdestroyer says:

    There are a few things that high school students need to remember.

    1. Some companies and organizations have outsourced their recruiting to the admissions offices of the Ivy leagues and Ivy like. If people want a job with those firms/organizations then they must pay the price for the Ivy league degree.

    2. Some career fields are normally distributed (nursing, pharmacy, engineering, accounting). some career fields are log-normally distributed (consulting, law, punditry, publishing).

    If you want to pursue a log-normal career then one must pay the price for the elite university. A BS in international relations from Georgetown is worth the price. A BS in international relations from George Mason is a waste of time and money even though it is cheaper.

    However the price of a nursing degree from Georgetown is a waste since the starting pay is the same a a nursing degree from George Mason.

    3. The worth thing that someone can do is pay elite prices for a non-elite university. Paying $50K a year for Adelphi university or Robert Morris is a horrible idea.

  3. Michael E. Lopez says:

    In an economy that’s roboticized and automated and run by computer, we’ve got a LOT of surplus population. The rules of capitalism say that you have to work for your bread. Unfortunately, there’s simply not as many job openings because we no longer need to employ so many people to maintain our standard of living, or even improve it.

    So for labor — for fungible and oversupplied labor — marketing becomes just about the ONLY thing that matters.

    I’m a pretty hard-core capitalist, and I’m the farthest thing you’ll find from a socialist. But there is something going on in the modern economy which I think calls for a little re-evaluation in how we do things. Everyone could live a wonderful life with our current levels of technology working 20 hours a week. But people don’t: why hire 2 people for 20 hours and another for 10 when you can hire a single person for 50?

  4. I honestly think America as a whole is mesmerized by the possibilities of grandeur generated simply by being at the right place and right time. Most major firms recruit from their set Universities and Colleges. It’s not impossible to get a job with these firms if you haven’t went to one of the schools they normally recruit from, but it is definitely more difficult, since they lean more towards what’s familiar to them.

    Either way, no one should be selling their soul for the possibility of being associated with those successful. I might be going off on a tangent here, but in reality, everyone should be paving their own path for success rather than piggybacking off of a prestigious college’s degree. Knowledge is king in this world, and no one can take that away from anyone.

    Hard work and determination creates the luck you need to succeed.

    Innovate and people will take notice, not matter where you went to school.

  5. Some community college instructors I had were several notches below any of my high school teachers.

    The professors I had at my state college were brilliant, spelling-binding, inspirational, but my fellow students, by and large, did not contribute to a good atmosphere for learning.

    The institutions that were a cut above the state college level had no better instructors, but it was good to be around students of a higher caliber.

    Are the higher priced institutions worth the cost in terms of an investment for future earnings? No. Not at all. Not even close. It’s a racket, a cruel racket. A damn crime.

  6. I wonder if it’s partly an issue of discipline. In some fields, “what you know” or what experience you have (internships, research, etc.) are far, far more important than having gone to a “name” school. In others, perhaps the networking from a name school is more essential.

    I’m in the sciences, and I have to say, we have a pretty good track record in my department of placing people either in graduate/professional programs or in careers in their fields. One of the things we have done is looked into what the “stakeholders” (that’s what the future employers are known as, I guess) need, and trying to fulfill that need in our education, in terms of skills the students acquire and the experience they get.

    Of course, the students have to meet us halfway: someone who does crummy jobs on their writing or research assignments, who doesn’t take advantage of internships or opportunities like field trips, they’re not going to be as successful. (And sadly, a lot of the students who DON’T take that responsibility for their educations blame us when they don’t get jobs, even when their more gung-ho colleagues are getting jobs)

  7. Sean Mays says:

    (Michael Lopez sayeth):

    In an economy that’s roboticized and automated and run by computer, we’ve got a LOT of surplus population …

    Nail on the head. Productivity has been expanding pretty fast since the Industrial Revolution kicked off, let’s remember Adam Smith and his long discussion of pin manufacturing. Eventually, we’ll get from scarcity to over-abundance. For those interested, plenty of sci-fi authors considered this notion, especially Robert Heinlein (examples For Us, the Living and I Will Fear No Evil) and a nice short by Spider Robinson (Melancholy Elephants, also includes the notion of perpetual copyright). The presumption seemed to be that a large part of the population would be supported as “artists” of some type by a massive social safety net.

    I think the main reason we haven’t hit saturation yet is population grew faster than speculated and “needs” have grown as well.

  8. Chartermom says:

    As the mother of a high school junior, I’ve been following the ongoing discussion of the cost/value of college closely. Unfortunately the answers that look simple from an objective viewpoint don’t always look so simple from the personal viewpoint.

    State universities — my state has a very affordable system but the schools tend to be large and freshman classes often have several hundred students in them. Because the schools are in high demand the caliber of student is generally fairly good at most. However, given my son’s personality and a learning disability, I can see him getting lost and not being successful in that environment.

    Community College — an option but I really worry about the quality of our local “tech” schools. Classes would be smaller however and there is a guarantee that credits transfer to the state university system. But if he doesn’t learn what he needs then will he be successful later on?

    Private College/University — He’s not a candidate for elite schools so I definitely would be looking at the $40 to 45K price tag (the ones with $50K price tags are out) for one of those second tier schools that everyone talks about. However the benefit of small classes might just improve the educational experience enough to make it worthwhile. Plus he’d like to go into the medical profession so a smaller school where he could actually get to know professors might be of benefit when it come time to apply to the needed schools.

    Add into this personal soup the fact that without a college degree the opportunities for advancement in most jobs is greatly compromised outside of the trades or entrepreneurship. So I can rail “that it shouldn’t be that way” and actually wasn’t that way even in the 80’s when I started working but unfortunately it is the way things are in most workplaces. Plus as mentioned his current career interests absolutely require college.

  9. Roger Sweeny says:

    Michael E. Lopez,

    You are absolutely right that we don’t need nearly as many people as we used to in order to make things.

    However, if anything, we require more people to do things.

    For a long time before she died, my mother-in-law was in a nursing home, permanently because of dementia. The number of people required to care for her, and to keep the facility working 24/7, was enormous. Similarly, my wife was hospitalized recently, recovering from an operation. It didn’t last as long but it required more staff.

    We are not approaching over-abundance, a situation where people can work 10 or 20 hours a week. We are actually approaching the opposite, where 35 hours of work a week from age 21 to 65 won’t be enough.

  10. Sean Mays says:


    Several studies have come out along these lines, such as Aguiar and Hursts for the Federal Reserve Bank of Boston …

    In this paper, we have documented that the amount of leisure enjoyed by the average American has increased substantially over the last 40 years. This increase is observable across a number of sub?samples. In particular, women have dramatically increased their market labor force participation while at the same time enjoying more leisure. Moreover, less?educated adults
    have experienced the largest gains in leisure. The increase in leisure time occurred during a period in which average market work hours were relatively constant.

    Interestingly, and I can’t find the reference at the moment, upper income individuals, particularly since the early 1980’s have experienced slow or declining growths in leisure, which some econ folks tie to their relative increases in compensation and attribute to the Reagan tax changes.

    It merits further study, this over-abundance question. As an anecdote (it’s not data, no), when my 2nd child came along, I did the math and decided that I’d only clear about $1.50 an hour after taxes, daycare and incremental costs of working. I chose to become a stay at home dad because it just wasn’t worth it. At the time I was a 4th year teacher in a masters plus 60 lane. My point? I suspect there are a fair number of people who actually lose money going out the door to work, especially if they have kids. Doing things (the service industry) has exploded, yes because we have more demand (longer debilitating illnesses), but also because we have chosen to outsource some of these things because we’re “too busy”. It’d be nice to see some good sources on the phenomena.

  11. Roger Sweeny says:


    I don’t doubt the studies. I just think that we will soon be going in the other direction. Unless we can automate services like we’ve automated manufacturing.

    One reason for the increase in leisure is that people thought they were richer than they really are. In years past, it was inflated values of real estate. Now it’s a large government deficit (people are consuming a trillion dollars more than they are paying for) and the misconception that their social security is paid for in a trust fund, not something that will have to be taxed from younger people when they retire.

  12. Michael E. Lopez says:


    So what you’re saying is that we didn’t need as many people previously to care for the old and infirm? Is that because we’ve got proportionately more old and infirm now, or because we just weren’t taking care of them before?

    Because my first inclination — which I’m not certain is right, but it is my first inclination — is that the sorts of things that you’re describing have always been done anyway. We’ve always used armies of people for stuff like that.

    Only now they don’t need a room full of professional, trained secretaries to keep their records, they just need to kids and a good computer.

  13. Roger Sweeny says:

    So what you’re saying is that we didn’t need as many people previously to care for the old and infirm? Is that because we’ve got proportionately more old and infirm now, or because we just weren’t taking care of them before?

    Both. As people live longer and fewer people have babies, the ratio of old people to non-old people is getting much, much larger. Also, there is more use of institutions (though I think that is less important).

    It is certainly true that you don’t need an army of secretaries for routine typing and filing–but there’s a lot more record-keeping and reporting and regulations to follow.

  14. Two things. First, you can get a great education from a state university for around $10,000 per year (eg, Texas has two state universities in the top 25). They may be sort of large and the student is a small cog inside a great wheel, but that’s life, too.

    Second, there is just as much to do today as there was 100 years ago. The difference is that today’s jobs often require considerable skills, physical or mental. One hundred years ago, you could go to work in a factory for a modest wage, learn on the job and move up. Today, you can get a job for a modest wage by working in many white-collar jobs and move up – but only if you’ve got a fairly complete skill set (reading, writing, basic math, basic analytical skills) and some proof you can apply it, such as a college degree.

    Relentless efficiency has killed ever-more non-skilled jobs. Hardly anyone has a secretary any more. You hardly ever see typists or dictation-takers. There’s hardly any work for general laborers any more; if you want a job on a construction crew, you usually need to know how to do something: hang drywall, install electrical stuff, pour concrete or some other skill (preferably more than one).