You Have GOT to Be Kidding..

No, we aren’t living in Superman’s Bizarro world… we’re living in a fantasy world called Academia. After all, in the normal world when a company like Toyota makes a faulty product (like those bad brakes a few years ago), the public is outraged, the company has to fix the problem, and heads roll. The stock price of the company drops dramatically, there are news stories and major fallout from this lack of performance.

But in the world of Academia, colleges aren’t responsible at all for the product they provide… at all! It’s a wonderful business model… if you own the business.

The Unemployment rate for people under 25 is reported to be as high as 54%, yet people are still applying to school in record numbers even as tuition costs continue to rise.

It’s like people swarming into a burning Best Buy to pick up televisions that explode on contact, then limping around with gaping flesh wounds and wondering “how did this happen?”

It’s a mess. A mind boggling mess. How do colleges continue to get a “free pass” from accountability, and why are people so hell bent on digging themselves into debt to get a degree?

Forget about the insipid cultural assumption that “getting an education” makes you a better person or gives you an advantage in life. Forget about the nonsense that a college degree gets you ahead of other job applicants and starts you on a path to a rewarding career.

It’s simply because colleges are not scrutinized like a normal business. And that’s what they are: businesses.

What if: A major corporation says  ”Give me $200,000 over 4 years”, and you say “What for?” And they say “We’re gonna teach you some stuff and give you a nice piece of paper with your name on it, and some calligraphy? It’s gonna help you get ahead in life”

If you say “‘Sure, let me take out a loan!” you’re a fool.

If they accept your money,  they’re a crook.

At least, according to the SEC. The SEC forbids companies from making unsubstantiated claims when selling stocks or even in a private offering of a company. They also cannot sell any shares in a private offering to a person who is not a qualified investor, meaning they have enough money to withstand a bad investment.

Colleges are the worst kind of business, and if they weren’t run under the guise of “education”, they would all be shut down. Allowing people without financial means to take out huge loans or invest their life savings in a product that has an 85% failure rate. This is the financial equivalent, for many middle and lower class people of committing financial suicide.

It’s criminal.

But I don’t blame the colleges anymore. I blame people who buy into this myth without looking further, when all the facts are right there over and over again.

After all, the overhwelming “reasoning” people use when sending their kids to school or applying themselves is that they “need college to get a job”, “need college to have a future”, and all sorts of similar nonsense.

How then is it that 85% of college grads are moving home? Is it because they just missed Mom and Dad so much, or is it because they have staggering student loan debt and can’t find a job.

That’s the colleges failing their students. Profiting from a ridiculous dream that is long gone. And students and parents failing to wake up to reality.

Students would be better off skipping college. I’m working on coming up with a course to help guide younger people on what to do instead of college. Travel is fun and good for the soul, but at the end of the day you will have to learn how to make money.

I suggest reading Stephen Gruber’s Never Get a Real Job and learn how to be an entrepreneur. Learn how to create a website. Visit uncollege.org. Think for yourself, and don’t be tricked into thinking that college is an answer. It isn’t. The old days of the “safe route” in life, where the good boy or girl goes to college and gets a regular job is long gone. Entrepreneurship is actually the smarter and more economically feasible path to financial security in the coming years.

Besides, even if your websites or businesses don’t take off at first, you’ll probably have better than an 85% failure rate.

Seth Hymes is the creator of the subversive film school alternative website Film School Secrets. He also blogs about movies, filmmaking, and the best dslr for video.

CLICK HERE for the Wall Street Journal article

Similarly, colleges are divided into non profit and for profit categories. “Non Profits” are the classy, big name schools that command so much respect. Harvard, Yale, Brown, Stanford. Schools can be public or private, but most of the big name 4 year Universities are “not for profit”.

We tend to associate the term “not for profit” with charities and Cancer fighting organizations. But does this mean the schools don’t make money? Hell no. They make a shitload of money through endowments and tuition. Colleges are highly profitable business entities. Their “not for profit” status simply means the money just goes back into the school. It can be used to purchase real estate (NYU owns half of downtown Manhattan for instance) and into the salaries of the officers working at the colleges. In fact, many college presidents make $700,000 a year and up, while their students struggle under the burden of student loans.

But like the Senate, these schools are still regarded with a degree of reverence and respect simply because they have some kind of a noble history. Meanwhile, there is another, newer, even more insidious category of school that does just as much damage: the “for profit” colleges.

These are the newer schools we’ve seen popping up in the last 20 years, including vocational schols and art schools. Unlike traditional 4 year colleges they are most often classified as “private, for profit” business entities. This reflects the reality: these schools are in business to make money. In one way, its a little more honest than the 4 year “not for profit” schools because they are up front about the fact that they are here to make money.

But because they are still looked at as “educational institutions”, they still get away with charging young people hundreds of thousands of dollars in tuition without being held accountable for the quality of education they provide or the plight of their graduates in the current job market.

In recent years, for profit colleges have become a booming business. And they have been able to dial into the same unlimited source of funds as their not for profit older brothers: Federal and private student loans.

Art Schools in particular have exploded in popularity, even as the demand for the jobs in these fields is dwindling. The Art Institutes are a multi million dollar subsidiary of Educorp, a BILLION dollar company that just sets up colleges all over the place. It’s a simple formula: buy a building, hire some out of work artists as Professors, build a simple curriculum. Get accredited, and you suddenly have a license to charge students $30,000 a year and up and receive student loans as payment.

One film school has used this business model to bring in more than $50Million a year in profits. The history of the school is revealing. It was founded in the 90s, when some people looked at a prestigious film school’s curriculum and said to themselves “kids are willing to pay $30K a year for this? We should do the same thing!”

And they did. Across town, in a run down building, this other school was set up to attract young people who couldn’t get into the big film school. They could now attend college, for a price. At first it wasn’t taken seriously, but then something happened. Did one of their graduates make a big movie? Did they get ranked in the US News & World Report College Ranking report?

No. They got smart with their marketing.

Reinvesting the millions of dollars they were making from student tuition, this school now spends $10 Million a year on marketing. They advertise themselves on billboards, TV, and spend more than $10,000 a day on Google ads. They use this money to hire famous actors and directors (who have no affiliation with the school) to speak at events, lending them the appearance of credibility.

This marketing blitz has exploded the popularity of the school. And like so many for profit colleges, its a winning formula:

1. Find an uninformed group of desperate consumers (young people who dream of making movies, but have no knowledge of how the business works).
2. Promise them a dream career and a degree.
3. Hook them up with a generous student loan lender and help them get approved
4. Take their money
5. Buy some crappy equipment, hire out of work artists for the school, and print up some certificates of completion
6. Graduate them and look for new suckers

Film Schools have become masterful at this. Student orientations are more like time share events or rock concerts. They bring out the best equipment (that isn’t used by 1st year students) and put on a huge show. “Advisers” from the school are actually skilled salesmen pushing the school’s agenda: sign up as many students as possible and get their money, cram them into a classroom, graduate them and get them out.

Within the film industry, film schools are known as a “chop shops”. As more and more young people get dazzled by the school’s marketing, few realize the reality: the demand for “film school graduates” is virtually nil. More and more graduates come out of the school with few job prospects and mountains of debt.

It isn’t only art schools where this is happening. Grads of many vocational schools and business schools run into the same problem.

“Not for profit” colleges may never come under scrutiny for misleading business practices, as society still looks at them as above the law. But what about these “for profit” colleges and their promises of a career? The SEC protects consumers against misleading business practices. What about film schools that promise a better career, charge student’s hundreds of thousands of dollars, but leave so many of them without a job? Isn’t it time these schools be treated like scams?

College students are a huge cash cow in this country. Only recently banks selling credit cards for college students on college campuses were forced to be more transparent about the risks and consequences of their credit based products. Isn’t it about time that student loan companies and colleges be held accountable for the same thing, to protect students and their parents?