The Cost of College

College costs in excess of $220,000 are a scam. I'm not paying that much for even an above average degree. Instead, I'm looking at graduate school...

The Cost of College

I have two requirements for college. The first requirement is that my child goes. The second requirement is that he exits college with zero debt so that he can go to graduate school.

College costs, like baby toys, health care, and homeowners insurance are a scam. If you want to feel like you're a better parent by spending more money, someone will help you do it. Unfortunately, decision making and financial literacy in this country are abysmally deficient.

This scam falls the hardest on the middle class. The deal for the middle class is this:

Agree to send your child to our school at the exorbitant price of $260,000. Then fill out these financial aid forms and we'll tell you what the real price is. We will calculate the real price by evaluating everything you've spent your life saving for, like your home and retirement, and then we'll take as much of it as we can.

The secret of top graduate schools in the US - I'm talking about University of Chicago or Stanford - is that most of their graduate students did not attend Harvard. Most attended OK but not great schools. Some attended downright crappy schools but got into Northwestern by getting a masters. They're all really bright and capable. You're child will feel like a real putz sitting in his graduate class with $200,000 in student debt.

What about the experience?

I recently had a discussion with a top ranked academic dad who argued that sending your child away to college is an important experience for their character. Living independently and all of that. I don't dispute this claim, but you'd have to be nuts to pay over $200,000 for your child to learn to live independently when a) they will anyway and b) there are cheaper ways to do it if you want your child to be independent by age 17.

I'm not recommending that my child get an online degree from the University of Online Degrees. I will point out, however, that the risk of your child not being able to live independently greatly diminishes after the age of 20. One quarter to one third of college freshman completely fail at living independently, to the detriment of their lifestyle, grades, and future. 'My kids are perfectly capable of being independent at age 17', you argue. My kids are even more independent than yours (see my blog's title). That is an additional reason I'm not paying over $200,000 so they can learn to be independent.

To help you understand how to make good financial decisions from someone who has accumulated decades of undergraduate and graduate training in financial decision making and the math behind it, here are some examples to warm up for the college decision.

Insurance companies will describe all of the safety and security you need at $2,000 per year to over-insure your house. I observed that in my densely populated neighborhood that there have been zero events warranting insurance in the last 100 years. If I could legally go without insurance, I would. 40 years times $2,000 is $80,000. That's a lot of money to cover a hypothetical accident.

When I graduated from college, I took my car into the dealer on schedule. I would get my car back after paying $500 to $1,000. After graduate school, I never took my car in ever. Plus, I have bare bones auto liability insurance. I save enough to buy a new car every 15 years. I would certainly appreciate zero risk on an over-insured well maintained car, but instead I spent a few hours reading the manual and looking at my engine. That's about $10,000 an hour for my time.

Here are three general financial decision making principles that we are going to apply to the college question:

  • If you observe that most people do something, don't do it because it's probably the result of financial illiteracy and laziness. Most people make the wrong financial decision most of the time.
  • If someone stands to make a lot of money by offering you advice - I'm thinking universities - do not take it.
  • You have to put a bit of thought into the alternatives.

Here is the alternative

As the graph above demonstrates, you can spend less money and obtain a superior result if you forgo the traditional 4 year university (option A in the graph above) and opt for a combination of a local solution for undergraduate followed by sending your child away for a masters (option B).

How will your child be regarded by employers, peers, and more advanced degree programs? Not special? Not gifted? On the contrary, this child is going to be gritty and unique.

Fortunately, we live in a large urban area with a cheaper, local option that is equivalent to the premier state school 4 hours away in farm country. Unfortunately, I'm not the only one who has identified this solution. Our premier state university's enrollment is down, but the local version's enrollment is up 37%.

Under no circumstances am I considering an undergraduate degree at any of the top 20 universities. It's not that I don't value an undergraduate degree from MIT, for example. It's just that I value a graduate degree from MIT more, and I value having a graduate degree from MIT with no student debt even more. The pedigree from an undergraduate degree has become pedestrian - it's so 1980. I don't know anyone who doesn't have a graduate degree.

What about graduating early?

We have the option to knock off 1 to 2 years of college credits during high school. I'm not against accelerated work, but this is not going to factor into my plans.

Passing an AP History exam as a high school senior is not equivalent to taking a history course as a college freshman. The former has a certificate, and the latter an education. The best high schools in the country can churn out AP students who spend their time mastering the material on the test at the cost of learning. There's something to be said about an older student - learning takes time. A student who memorizes formulas is useless to both employers and graduate programs.

Instead, the AP treadmill is useful to push a child into more advanced college courses. I'll let my child take AP courses, but each one will defer real learning until college. Testing out of BC calculus does not mean you avoid college math - it means that college math is going to be CD calculus or whatever follows BC. (Advanced series and real analysis in case you care.)


  1. Hello Norwood,
    I agree that the cost of top colleges are ridiculous, but wouldn't UofC/Northwestern offer a superior or better quality undergraduate education to UIC/Depaul/Loyola? I'm thinking that students would be exposed to a higher level of thinking, better professors, leadership skills etc, or is that just not worth the amount of debt incurred? It's hard not to get caught up in the hype when you have high achieving kids. Also would your strategy differ depending on the type of graduate education the student wants to pursue (ex. medicine vs. law vs. business administration vs. education etc.)?

    Secondly, what's the best plan for AP classes? Many GAT kids load up with AP classes even as freshmen which I hate the idea of. It feels like we're churning out robots. However it's confusing to know what is the right amount of AP classes to take and when, while still letting your high schooler feel like they're in high school and yet have a good enough resume for college.

    Thank you. I always enjoy reading your blogs and hearing your points of view.

    1. I'm currently right at the beginning of analyzing these questions.

      In terms of the quality of undergraduate education, I can't see under any scenario an undergraduate education worth $250,000. If my kids were educationally underpriviledged or lacked any of the skills you mention, I would be up nights trying to rectify it, but if I couldn't, a top notch university might fill the gaps. I doubt it however. It seems more of scam to me that they pick kids with those skills, see the kids graduate to success, and then take credit. Outside of the real world, a survey of top earners turns up very little correlation to undergraduate work except in certain recently created specialized programs.

      The question for AP courses is this. Do you want your child to emerge from highschool with a formidable set of learning skills, a great CV for college, or a deep understanding of college subjects? Each of these answers yields different results, but only under the goal of creating a college application would you load up on AP courses, to the detriment of the other goals. I'm looking for a 3rd way right now.

  2. Hi, I used to read your previous blog and have just found the new one. My family (I say my family because it was a combined effort stretched over two years and many calculations) was just admitted to the 4k student body AC and I have never done my research about it. It was second choice, just in case and "in the case" that was not supposed to happen, happened. I believe you have some insight in the school and would appreciate any input.

    About the undergrad edu, have you ever though about Europe? Check Germany, Austria, Norway, ...

    1. The only "4K student body AC" that I am aware of is the high school that my son attends. My friends teach at the top 5, and yes, I have things to share. Feel free to email me at getyourchildgat at

      I think I wrote an article on undergrad in Europe. I'm currently trying to push it. The cost is competitive or better, and the experience is something I wish I had. There's lots of upside and no downside. The only challenge is to convince the fledgling to get the heck out of the nest and go for it. I'm not having a lot of luck so far, but the kids are still young.