If you are a Seattle sports fan, this was one very fun weekend. Huskies take the Apple Cup in style, Mariners sweep their biggest rival and all but lock up the division, the Seahawks win in convincing fashion, and the Savannah Bananas roll through town and entertain two sold-out crowds at T-Mobile. If you don’t know about the Bananas, look them up. It’s a phenomenon that we can all draw some inspiration and learning from, though (despite my best efforts), I haven’t figured out how to add that Banana Ball flair to talking about interest rates and education. But those are the topics for today, so perhaps pretend I’m writing this while wearing a bright yellow tuxedo (look it up if you’re scratching your head…I promise it will make you smile).
On the interest rate front, the FED cut rates last week, as expected (0.25%). And what did longer-term rates do? They went up of course (ugh).
The fear is still that tariffs create inflation and that the economy is too hot. Maybe I’m wrong, but I’m not seeing it that way. We will see how this plays out over the next six months. I certainly hope I’m right on this one, and that’s not for pride’s sake.
Moving on to the cost of a college degree. When I graduated from high school, it was just expected that I would go to college. I didn’t necessarily know what I was going to do, but that seemed like the smart thing. Of course, back then (in the old days) tuition was $10,000 per year at Seattle University, not including room and board. When I graduated, I had a loan of $29,000 for all four years.
Today, it’s a bit of a different cost. See the cost of Seattle University below.
Now I didn’t get a degree in math, but it seems to me that just tuition is $220,000 for an undergraduate degree. That’s a lot of pennies saved up! (And yes, I acknowledge that this is just one example and that prices are all over the board, but I think you get the point on the directionality of all of this). And this doesn’t factor in 4+ years of lost earnings, as you’re typically not working a career job while you’re pursuing your studies.
We have all heard about the ballooning student loan debt that students are racking up. Just updated a few days ago, student loan debt now sits at $1.6 trillion.
So, it’s no small wonder why students are reevaluating their need to go to college. You know I’m a big fan of Neil Howe (author of “The Fourth Turning is Here”), he has a free weekly blog called Demography Unplugged. I will link to the article here, but below is the chart that I think is interesting.
Not that I think college is unimportant, but it has become so expensive that you have to really consider what field you would like to go into and plan accordingly. It doesn’t make sense to me to just get a liberal arts degree and just wing it in this job environment. There are plenty of jobs and careers in plumbing, electrical, HVAC, mechanics, welders – anybody who does something with their hands. Have you tried to hire one lately? Expensive!
AI is not likely to take their jobs, unlike many “professional” jobs in downtown offices. It also seems like society has looked down on those jobs for decades in lieu of a more white-collar job. I have been saying for some time that if your child has an interest, it’s not a bad path to take (and yes, that 529 savings you’ve accumulated can now be used for trade schools).
I hope that our universities will adapt to deliver the kind of value that warrants four years and six figures, but this could certainly take time. Academia is not always known for being quick to change, but the world is changing quickly around them! As with most things, the right balance will eventually be found.
That’s it for this week. Please let us know if you have any questions or comments about this or any other topic. We will be happy to have a conversation.