 What's happening guys? It's Shane here. So a really common comment that I get on a lot of my videos that are about college degrees Are people that are from outside of the US that are just extremely confused about why Americans would spend $80,000 you know to go to college and go on average about over $35,000 in debt just to get a degree that isn't necessarily even going to help them get a job and whenever I've traveled or met Somebody that's outside of the United States. They're always extremely surprised that student debt is such a huge issue here in the US Student debt is running it over a trillion dollars a trillion dollars and it's true The student debt crisis is a huge issue right now You hear about it all the time on TV and it's becoming a bigger and bigger problem And really the only way you can avoid it is by smashing the like button on this video Thank you. No, but seriously, I would truly appreciate it if you did tap the like button It really does help with the algorithm. Meanwhile, there are people who are getting unbelievably rich off of the hopes and dreams of young people In fact education and by that I mean either starting a school or starting a business that has to do with the Loan servicing is one of the hottest industries around right now Whereas people in many developed countries are either able to go to college either completely free or most of it is paid for and Even just a few decades ago college was much cheaper than it is now and going to college and getting just about any degree out There would open doors for you that wouldn't have been available otherwise So in this video, I'm gonna go over the differences between the United States and the rest of the world when it comes to college And how absurdly expensive it is to go to college here And this is why I have the somewhat controversial opinion that if you are going to get a degree here in the United States You should only go to college for a degree that you know what you're going to be able to make money from now in the 1970s the cost of tuition was so low in the United States that you could work a part-time job and Pretty easily pay for all of college without having to go into debt now You might be thinking well Shane, you know inflation has made college a lot more expensive because the cost of everything has gone up And that's a really good thought But if you look at this graph it shows that the cost of college if it only went up as the cost of inflation went up Would only be around $10,000 or so whereas the actual cost of college is nearly three times as much so why the Discrepancy why did the cost of college go up so much faster than expected well in short It's mostly due to a rise in tuition costs as you can see in this graph The US has the world's highest tuition fees now on top of the extremely high tuition fees One third of developed countries completely pay for all of the tuition fees for their students And then another third of them keep the tuition fees extremely low and by low they define that as less than $2,400 a year now one of the most common arguments that I see on the internet when I was doing research for this video is that Education here in the United States is better than the rest of the world and that's why it costs so much more You basically get what you pay for and to be honest with you. You can't really measure how good Education is in one place versus another. I don't think that's actually possible for you to measure it But I think a close comparison that we can basically look at is the cost of Harvard in the United States is about $47,000 a year now Harvard is one of the best universities in the entire world It's easily one of the top three universities in the United States But let's look at a comparable university that is in Great Britain Oxford now Oxford actually ranked ahead of Harvard It was apparently better than Harvard last year anyways, and they're only charging about $11,700 a year. Wow. That's a good message That's less than one-fourth what Harvard is charging for a comparable Education and there's a ton of different examples like this and you know This video is not going to go over all of them because the video would be extremely long But you compare different universities that are ranked around the same and for some reason the ones in the United States are much More expensive than the ones in other parts of the world So again, why did tuition go up so much if our education is about the same as what's offered in other developed countries? Well, if you ask the universities, they would probably justify this by saying that the college Experience in the United States is different and more unique and better than anywhere else in the world After all, they do spend a lot on their campuses as well as different activities that happen on the campus For instance, Texas A&M recently did a $485 million renovation on Kyle Field, which opened in 1927. Are you kidding me right now? And it's true. United States universities do spend a lot more on their campuses. They even spend more on food for instance I can't stop eating But where the heck did they get all of this money to spend on those activities? According to a 2018 study by OECD Americans are spending on average $23,000 per year per student on a category known as routine educational operations Now, this is a very blasé title. I mean, it's just routine, right? But when you look into it a little bit more deeply The majority of that money is going towards the staff and the faculty at the university And this is more than twice as much as other developed countries such as Sweden, Finland or Germany And while you could make the argument that hiring better staff and faculty is going to increase the educational experience in general I think that most people who have actually gone to college would probably argue differently Oh, no! A lot of colleges for instance spend a ton of money on research professors And their job is to research first and basically teach second So they don't even really care that much about teaching They do giant lectures with 300 400 people and I can tell you that at least in my experience and most people I know his experience. This is not a very great environment for learning And it still doesn't explain why it's so much more expensive than other countries that offer a very similar education So the real reason why universities have increased the cost of college in the united states is because they can In the 1990s the federal government basically just gave up control of the student loan program And gave all the control to banks and large corporate entities And by doing this they essentially made student debt and college into a business Now this combined with the fact that student debt is guaranteed by the federal government and on top of that You cannot forfeit it and bankruptcy means that it's very attractive to particular businesses out there And this basically means that colleges had a blank check They could write whatever they wanted on it and the government would be totally okay with it This is especially apparent when it comes to private universities Some of which are 10 times the cost of community college Now looking at that last infographic you probably notice that non-profit private universities were actually the most expensive ones And without going into too many details here just because it's non-profit and it doesn't make a profit That doesn't mean the people who run these universities aka businesses Can't make a lot of money from their salary because any excess profits they have would go towards routine educational expenses And as for the for-profit universities a 2014 analysis by george washington university And nber found that for-profit universities that were eligible for student aid Basically charged 78 percent higher than the ones that weren't Meaning if they could charge more because the government would basically write them a blank check To give the students than they would so it's time to ask the age-old question Who benefits? And go through the age-old process of following the money Now we've already established a little bit that these schools are benefiting Especially the private schools and according to the chronicle of higher education reports A survey was done on private universities and they found that 64 presidents were earning more than a million dollars a year And three of them were earning over five million But who else is benefiting from the crippling debt that students are racking up? Well, it's the people who are servicing your debt, but it's actually extremely difficult to tell who owns your debt Your loans could have been originated by one institution serviced by another Guaranteed by another and owned by yet another so there could be four middlemen Taking their profits off of your student debt Now the majority of lenders are going to be big businesses such as banks third party servicing companies Or government or government related agencies now some examples of the big businesses are going to be discover financial services And wells fargo and company. Hmm sound familiar I'm not going to tell you but if you found out on your own That would be okay. And then we could talk about it, right? And many of these large banks or large companies are actually incentivized to sell your loans to an intermediary Because it basically improves their capital ratio and it allows them to take on even more loans Now to make things even more complicated Many of these student loans are owned by Semi-governmental agencies such as sally may so they're a part of the government, but they're not a part of the government It's all extremely confusing So we've established that they're way higher than they should be you cannot disclose these loans in bankruptcy They're also guaranteed by the government and then on top of all that Some of them have ridiculously high interest rates such as the grad plus loan at seven percent interest And then if that wasn't enough you have to pay a 4.3 percent servicing fee when you first get the loan So more or less what was done in this case is by privatizing the student loan program Which was meant to give americans access to higher education What they ended up doing was creating another cash cow for wall street So basically what they did is they took something that is basically a part of the american dream They made it three times as expensive as it should be and then they made it to where you can't forfeit it It's guaranteed by the government and it costs a lot and you have to pay extra interest on it Now my channel is all about making good financial decisions as well as just good life decisions in general And if you're thinking about getting a college degree if you want to play the game of loans I think it's so important that you make sure that you're going for a degree That is going to lead to you getting a good job Don't go to college for a degree that is not going to directly increase your chances of getting a really solid career It's not worth it. Just don't do it You're going to be entering a debt trap and you're going to be making some douchebag on wall street Extremely rich check out my videos right here. I made them just for you. Go ahead. Smash the like button Hit the subscribe button ring the little notification bell And then comment down below any ideas you have about the video or your opinion or comments Thank you so much for watching and bye for now