The Nearly Free University

With millions of third party payers artificially boosting demand for higher education it's very difficult to estimate the real cost of a college degree.

In this clip from the Tom Woods Show, author Charles Hugh Smith speculates about the cost of "higher education" in a free market.  Do you think it's closer to $120,000 or $5,000?

To learn more about the declining costs of education be sure to check out Charles Hugh Smith's new book "The Nearly Free University"...

College Endowment Funds in Perspective

Harvard University's endowment fund value has passed $32 billion.

The National Association of College and University Business Officers and Commonfund Institute released endowment values of colleges across the U.S. and Canada.  Here are the most richly valued endowment funds from the study:

1. Harvard - $32 billion
2. Yale - $21 billion
3. University of Texas - $20 billion
4. Stanford - $19 billion
5. Princeton - $18 billion

So how much is $32 billion?  One of the largest health insurance companies in the world is Aetna.  They employ 48,000 people and have over 22 million members.  The total value of Aetna is $27 billion.  

Harvard University is worth $5 billion more than Aetna.      

It's Not the College Degree That Matters

Walt Hickey at FiveThirtyEight.com posted a piece about research done by Payscale on the value of a college degree.  Of little surprise Payscale found that the total ROI from a degree handed out by a "top" school was significant.  They claim a twenty-year earnings difference of over $800,000 for someone graduating from these "top" schools compared to someone who only graduated from high school.

But there is one major flaw in this comparison.  On average the person who goes to work full-time right after high school versus the person who is accepted into MIT or Stanford will have different personal attributes which dramatically effect lifetime earnings.

Generally, there will be differences in:

• Previous school performance 
• IQ
• Work ethic
• Upbringing
• Household income
• Books read
• Essays written 

Of course there are other differences which are not quantifiable at all.  Many of these factors are determined well before the future high earning college graduate steps foot onto campus.

A more honest (and difficult) study would attempt to estimate lifetime earnings on these multitude of factors as opposed to one blunt outcome like being handed a piece of paper by the dean from MIT.    

The full 538 article can be read here.