Wealth Creation without Student Debt

"The higher the amount you put into higher education, at the Federal level particularly, the more the price of higher education rises.  It's the dog that never catches its tail.  You increase student loans, you increase grants, you increase Pell grants, Stafford loans, and what happens?  They raise the price." - Bill Bennett

"I would get my student loans, get my money, register and never really go.  It was a system I thought would somehow pan out." - Ray Romano

"By making college unaffordable and student loans unbearable, we risk deterring our best and brightest from pursuing higher education and securing a good paying job." - Mark Pocan

There is a lot of debate going on over the massive $1 trillion student debt that hangs over the heads of all demographics in the United States.  This is not a unique situation as global student debts are rising rapidly.  There is a concern that this debt level is stunting economic growth as these people struggle to afford to purchase houses, cars and other items that are required to stimulate the economy.  Removing this debt, it is thought, would have a massive economic benefit because unlike other forms of debt, student loan debt is unable to be written off through bankruptcy (there are some cases where some of it can be eliminated but for all intents and purposes it is there until paid back).

The issue is that with the government providing loans to almost anyone, more and more people can pay (not necessarily afford) to be educated so the schools are able to continue to raise the cost of education without impacting enrollment.  Think about it, if you own a school and you have 100 seats available but 5,000 applicants one way to reduce the number of applicants is to raise the fees until you are left with with only 1,000.  From this group you can pick the top students keeping your standards high while increasing your profits significantly.

If governments stop intervening in the school process then school fees suddenly are left to the free markets.  Loans would be far harder to come by, student enrollment would drop and schools would be forced to reduce fees.  This is a very simple but effective method of taking care of the price of education but what about the students that now do not have access to higher education?

In a very interesting spin on this studies have revealed that higher education does not create wealth but rather hinders wealth creation.  Now this flies in the face of consensus which says that the way to prosperity is to get educated.  Furthermore this is also the drum that is beat by universities around the world but considering the source of the drum beat questioning it is probably valid as academics are experts at creating formula and science to fit previously created conclusions and calling it their own.  In the business world there are too many examples to name but a few that spring to mind are Bill Gates of Microsoft, Steve Jobs of Apple and Mark Zuckerberg of Facebook, none of whom finished their formal education, all of whom have created significant wealth.  In an aside Bill Gates received an Honorary Degree from Harvard once again showing how the academic world loves to take credit where none is due.

Now while schooling is required to become a professor, lawyer, engineer or a doctor the question that needs to be asked is does this create wealth and is there another way outside of a formal schooling to get you where you want to be financially?  It turns out that most of the really successful people in the world relied far more on a mentorship or apprenticeship program than on any formal education.  Thinking back to my formal education I have to say that there were plenty of classes that were of absolutely no value to my education, in fact I could point to a few classes that were beneficial but those could all have been taught in a few months rather than three years.  The expertise and skill I have derived have all been post college and I would expect that for most of us it is similar.  Take accounting for example, do you really need a degree in accounting to learn your way around a spreadsheet or a financial statement?  Business is the same, do you really think that you will learn more or even anything about how to run a business effectively at Harvard versus a three year apprenticeship under the personal tutelage of a successful local entrepreneur?   What you will get are a lot of very powerful contacts which you can use to your advantage but education about business will come from trial and error in the real world.

Now while you may not get paid much during your apprenticeship you will be far better qualified to maximize your wealth outlook through this program and you will not be saddled with mountains of student debt.  The problem is that society has bought hook line and sinker into the formal education sector rather than embracing the model of apprenticeship.  It is almost impossible to get a well paying job unless you have a degree but the question to ask yourself is do you want a well paid job and massive debt or the opportunity to create a massive amount of wealth by learning and using that money spent on education to jettison you into orbit?  If you want the latter then you might want to follow the steps of those before you and certainly turning our government support off may not be such a bad idea after all.