The Dorm-Key Ritual

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For some of you, this report will put more after-tax dollars
in your bank account than anything you have ever read. But for
others, this information will have come too late — possibly
decades too late.

strategy that I discuss here can work for a few people only
because almost no one knows about it, and among those few
who do know about it, or at least some of it, almost none of
them will take advantage of what they know. This presents a unique,
low-risk opportunity for the Remnant.

have already discussed the general problem in a previous
. If you have a child headed for college, you had
better read it.

a decade ago, I gave a presentation to a conference of conservative
college students. I told them this:

the person at the front desk of a college dormitory building
an incoming freshman the dorm room key, the parents’
authority over the student symbolically and operationally

There are three important symbolic events in this life: birth,
marriage, and death. There are three rituals that match these
events in Christianity: baptism, wedding, and funeral. In some
Christian traditions, confirmation is a fourth. Jews have circumcision,
bar mitzvah, wedding, and funeral.

All groups today face a new ritual: the ritual of the dorm


For a majority of educated American Christians, the ritual
of the dorm key has replaced confirmation as the more significant
rite of passage. It takes place definitively only once, and every
parent of a college freshman senses the finality of this rite
when it takes place, or soon after. With the steady increase
in the divorce rate, the ritual of the dorm key, which happens
as a rite of passage only once, has replaced the ritual of the
wedding, which may happen more than once.

A parent may go through a few additional motions, such as helping
the student with luggage, a computer, and the stereo, but then
the final moment of passage takes place. The student, key in
hand or pocket, says goodbye, and the parent walks down the hall
toward the parking lot.

The parent may briefly notice that the person in the room right
across the hall is not of the same sex as the child who has just
been left behind. But he shrugs, swallows hard, and keeps moving,
eyes straight ahead.

Mixed dorm halls had not appeared in my antediluvian era. But
in the college days of today’s parents, this arrangement had
begun. What goes around comes around. The ritual that not so
long ago provided a sense of liberation in the departing parent
now provides a sense of foreboding.

From this event on, a parent has virtually nothing to say about
the student’s collegiate experience, other than writing the checks.

There will be many, many checks to write, all large. If you
are like the vast majority of American parents of college-eligible
children, you’re going to write them.

We hear about peer pressure on teenagers. Kids’ stuff! Such
pressure doesn’t rival the pressure of this comment:

hear that your kid got accepted at [XYZ] University. That’s

How many parents reply along these lines?

not going to contribute one dime to send my child into
that moral
cesspool. That place is a recruiting ground for
atheists, feminists, Marxists, and envy-driven anti-capitalists.
I refuse to put my child under their authority. That place
is a meat-grinder.”

The number of these parents is not legion. They constitute a

If you,
as a parent, do not see this coming at least a decade before
the day of
reckoning arrives, then you have been living
in fantasyland. You may be suffering from SAD: “Selective Alzheimer’s

If you know this day will come sometime in the next two years,
you had better develop a plan of action to delay it or even avoid
it altogether.

There are a lot of things you can do. The problem is, most
parents don’t perceive the existence of these highly practical
options, and among the few parents who do, most do not have the
strength to persuade their college-bound children to implement
any of them. The peer pressure is just too great. I don’t mean
peer pressure on the students. I mean the peer pressure on the

you’re a grandparent, you have watched your children go through
this rite of passage. Your children haven’t overseen
it. They deserve to be reminded. Remind them. Forward this

A $140,000 CRAP-SHOOT

Let’s talk about the risk-reward ratio of an investment in
your child’s college education. The risk is high. You have no
assurance that your child will graduate. Half of those who begin
college don’t finish.

Not-quite-a-bachelor’s degree is worth approximately zero.
A student’s time would far better have been spent as an apprentice
to a plumber, or as a heating-cooling system technician. Failing
to finish college is an economic risk.

Let’s go
through the numbers. Here is the worst-case scenario from a
point of view. You probably won’t have to go
through these particular numbers. Let’s call these numbers “Ivy
League numbers.” Tuition: $25,000 this year, which will probably
rise 5% to 7% per year. Room and board: another $8,000 a year
and rising. Books: $1,500 a year. Transportation? Your guess.
New clothes for your daughter: your guess. You will be on the
hook for at least $35,000 a year, except that costs will rise
at least 5% every year. Count on it.

You can easily spend $140,000 after taxes in tuition, room,
board, and books (TRBB). Your child can give up four years of
his life to earn a degree at an Ivy League university, assuming
that his college board scores are high enough and his high school
grades were all A’s, and he speaks Mandarin Chinese. You may
think I’m joking. I’m not. Straight A’s and a 1600 score on the
SAT’s won’t necessarily get a student into Harvard. He or she
also needs extracurricular activities or the correct genetic
background (which includes being the white son of a Harvard multimillionaire

Let’s say
that the total bill is $140,000. I come along and say, “I can get you almost the same product for about $7,000,
but not from an Ivy League school.” You turn me down. Your Jenny
Sue has just been accepted at Princeton, and you’re going to
pay the tab. I ask, “Will Jenny Sue earn 20 times more money
just because she is a Princeton graduate?” “This isn’t about
money!” you insist.

The day
a parent says, “This isn’t about money,” the family’s
net worth is about to suffer a substantial decline.

leads me to North’s law of collegiate financing: “A proud
parent and his money are soon parted.”

why, when I speak of “your child,” this applies equally
well to your grandchild. Every dime that your children spend
on their children’s college educations is a drain on your family’s
inter-generational capital.


and students go on a college scholarship search. They think that
out there somewhere is a free college grant or a college government
grant. It’s true; there are a few. But to get a college education
grant from any source other than the college the student applies
to is very difficult.

recruiters know this. They know that parents and students are
out there on Google, frantically
for “free college grant” and “college government grant” and other search phrases.
For decades, they have taken advantage of this universal desire to get a college
education grant. They have adopted a clever policy of deception. The targets
are the parents, who will be writing the checks.

think, “Maybe there will
be a scholarship.” No, there won’t be. There
are few scholarships, except for super-brilliant students and gifted athletes.
The collegiate marketing tools that are called “scholarships” are in fact a
legal form of what economists call price discrimination. The “scholarship” committee
estimates how much money the school can probably get you to fork over, given
your level of income, and then it lowers the fee schedule to whatever level
that the committee thinks you will be willing to pay. If you’re rich, you will
100%. Sucker!

This form of discriminatory pricing is a highly
sophisticated competition among Ivy League schools to recruit
very bright students who will
become either
famous (the production of prestigious alumni, which is a marketing strategy)
or rich (the market for future donations). It’s an investment in the future:
the college’s future, not yours.


An acquaintance of mine is a direct-mail marketing genius.
I know maybe six people who may be as good as he is in selling
things through direct mail. One of them is his wife.

was at a Jay Abraham conference a few years ago. I was sitting
alone with Mr. X, and off the top of his head, he gave me one
of the most profound insights into marketing strategies that
I have ever heard. I’ll share it with you.

are two ways to sell things. The first is well known. “At this rock-bottom price, supplies are running low!
Act now!” But there is a less well-known approach. It’s the Ivy
League’s strategy. “We really don’t want you. We really don’t
need you. But, under certain limited circumstances, we might
just let your child attend here. But don’t count on it.” Parents
can’t get their checkbooks out fast enough. They beg to have
the opportunity to write large checks.

The Ivy League universities’ approach rests on the public’s
perception of high walls to match their ivy-covered halls. They
are selling exclusivity. Their marketing strategy has been perfected
ever since Harvard opened in 1636. They have fine-tuned it. Their
freshman classes are oversubscribed by ten to one, yet most high
school seniors don’t even bother to apply. They know they can’t
get in.

Most colleges
cannot pull off marketing strategy #2. They don’t have the
aura of
exclusivity. They will enroll any student with
a warm body and a blank check. But they also can’t use the “Act
now!” strategy. This is because of the oligopolistic system known
as academic accreditation. Later in this report, I will be more
specific about how this system works, but trust me: accreditation
is the key to high costs, the restricted entry of new competitors,
and low value for parents’ money.

you play the collegiate game by the official rules, you and
your money will soon be parted.

The good news is this: there are unofficial rules. If you know
what they are, and if you can persuade your child to follow them,
your child’s college education won’t cost you an arm and a leg.
It will cost you only a rib or two.


Here is the dirty little secret of the academic degree-awarding
industry known as higher education:

A college degree is way overpriced. Students (parents)
pay way too much money. Students spend way too much time in class
— time that is far better spent in reading and writing. Then
they pay room and board on top of it.

Paying for a child’s college education is the largest single
expense that parents face, other than buying a house. But buying
a house is done over decades. A college education must be paid
for in four or five years. Loans are available, but they must
be paid off even if the student quits or flunks out, unlike buying
a house. Also, a house may appreciate in value. It rarely falls
in value. In contrast, there is no re-sale market for receipts
for college expenses.

What I’m going to discuss here, very few people know about.
If I had not spent so much time inside academia, I probably would
not have found out, either.

I know how the American academic system works. I was trained
as a scholar. In 1972, I was awarded a doctoral degree by one
of America’s better universities. I have written 43 books. I
have taught at the college level.

I’m outside the academic system, and I have been for most of
my post-doctoral career. I know enough about how the system works
not to be overly impressed with it. I also know how to beat the
system. The system is rigged against upper-middle-class parents.


The average college bill per year at a tax-funded university
is about $11,000 a year. This is where most students attend.

About 15 million Americans are attending college today. About
half pay their own way. The other half are supported by their
parents. Fewer than half of all students who enroll in college
graduate with a bachelor’s degree.

So, it’s a very big gamble to invest time and money in trying
to earn a degree. The odds are against you. Your goal ought to
be to reduce these odds. You can do this by taking advantage
of loopholes.

Every system has loopholes. Loopholes are official exceptions
that are mandatory for any system to be consistent with its official
standards, but which would threaten its economic survival if
more than a small minority of users took advantage of these loopholes.
Higher education is no exception.

Here is my view: there is no good reason for people not to
use them when they’re available. They are made to be used. You
might as well be the person who uses them.

Paying retail is not necessary. If a person knows where to
look, he can earn a fully accredited bachelor’s degree that is
not overpriced: not in money charged, not in time invested (if
he can meet certain life-experience requirements), and not in
distance travelled. He can earn it at his desk for under $7,000.
In under three years.

Because of the World Wide Web, a student never has to leave
his desk to earn a B.A., except to take monitored exams at the
local library.

The Web has changed just about everything. But it’s only one
option. There are others. There are many ways to skin the academic


You can send a child to a distant campus, either tax-funded
($44,000 TRBB) or private ($80,000 TRBB). Or you can let him
live at home, work part-time to fund his own education, and spend
as little as $7,000 over 2.7 years.

I know of a case of a home-schooled student who earned a college
degree in six months for $5,000. This was not some phony diploma
issued by an unaccredited diploma mill. It was a degree from
a state university. He never left home to attend. He did not
even live in the same state.

How was
this possible? Because there are a few accredited colleges
that grant people
academic credit for their education-related
work experience, and even life experience, meaning unsalaried
work. I call these “merit badge courses.” If a student can show
that he has the knowledge equivalent to a college class, he doesn’t
have to take the class. He just has to pay for it — sometimes
at a big discount. Some students can knock a full year off of
their course requirements this way.

This option makes sense educationally. What we learn on the
job sticks with us. Our work teaches us in the broadest sense.
Why shouldn’t adults receive formal educational credit for knowledge
they have mastered — not just learned in a classroom, but truly
mastered — on the job?

Only a few accredited colleges grant academic credit for work
experience and life experience. Some that offer this don’t publicize
it. They can’t afford to. Advertising is expensive. So, the story
doesn’t get out. That’s why so few Americans know of this opportunity.

A degree from Harvard, Yale, or Princeton will have a lot more
prestige than one from any of these colleges. But will that Ivy
League degree get its holder a job that pays 20 times more (after
taxes) than a degree from a college that costs 20 times less?
Not likely.

College expenses for most students are high because colleges
are inherently inefficient. That’s because the original model
was invented eight centuries ago, when there were only six or
seven colleges in Europe, and the printing press had not been
invented. A library of a thousand hand-copied manuscripts was
worth a fortune. Young men had to journey long distances to earn
a college degree, back when travel was expensive. Not many people
could afford to do this.

Colleges adopted the lecture method because students back then
could not afford to buy books. Lectures are highly inefficient
ways to teach. Consider how you learn anything that’s important.
You don’t do it sitting in a lecture hall, except maybe for a
brief introduction, and even that could be put on videotape.
You probably don’t read a textbook. You learn from a manual.
Then you learn on the job, preferably under the immediate guidance
of someone who does the job already.

Why would anyone choose to sit in a classroom for 50 minutes,
three times a week per course, five courses per semester, for
16 weeks per semester? No business teaches its employees this
way. Yet colleges teach mainly this way. It doesn’t make sense
. . . from the student’s point of view. It makes a lot of sense
from the teachers’ point of view — teachers who may lecture
only 6 times a week, and rarely more than 12.

Today, there are local public libraries (which became widespread
less than a century ago), academic paperback books (introduced
about 50 years ago), videotapes (introduced widely only in 1978),
CD-ROM’s (1991), and the Internet (which really got rolling in
1995). But, despite all this technology, traditions die hard
in academia. It costs college students (or their parents) a lot
of money to keep these traditions alive.

A student can read a book at home or at a local city library.
He can write a term paper at home or in the library. He can take
an exam at the city library, with a librarian as a proctor to
make sure he doesn’t cheat. He doesn’t need to attend college.
But most colleges require students to attend classes on campus.
Why? Not for the students’ sake.


The vast
majority of colleges require students to attend classes on
campus. This
requirement has nothing to do with the way that
most students learn new academic material. It has everything
to do with paying off mortgages on the college’s expensive buildings.
It has everything to do with shelving $100 million worth of books
in a $50 million library building, with a full-time staff, so
that faculty members can write term papers for each other that
almost nobody will ever actually read. This is called “publish
or perish.”

Unless a student wants to major in physics, chemistry, or engineering,
any college should be able to teach him whatever he needs to
know through the Internet. This education should not cost more
than $2,000 per year for four years. And that is with no government

Even today, with very little competition among the colleges,
it need not cost more than $1,750 a year if you know where to
look. But you have to look very carefully.

So, why does it usually cost so much more? Because the colleges
want it this way.

Only a handful of colleges have adopted 100% Internet-based
B.A. degree programs. The instructors employed by a 100% Internet-based
college would have to work a lot harder than they do now. They
would have to grade a lot more papers for a lot more students.
They would not be paid $50,000 a year mainly to deliver nine
hours of lectures a week, 32 weeks a year — lectures that they
wrote 20 years ago. The only thing that keeps Internet-based
education from replacing 90% of the colleges in America is this:
the people who run the colleges have got themselves what economists
call a cartel. They don’t want to lose it.


What is a cartel? You have heard of OPEC, the cartel that controls
the supply of oil. Its full name is the Organization of Petroleum
Exporting Countries. OPEC representatives get together and agree
to reduce their production of oil. This keeps oil prices high:
high demand, low supply.

exactly what colleges do. They have set up an academic cartel.
They keep
out new colleges — colleges that are willing
to meet consumer demand by selling educational services at a
lower price. The higher education system doesn’t allow them to
do this. There is a legal barrier to entry for new colleges.
It’s called “accreditation.”

Existing colleges have joined regional accrediting associations
that Ph.D.-holding bureaucrats operate. The representatives of
these colleges set the standards for accreditation. It’s kind
of like a club. I mean the kind of club that you hit people over
the head with.

organizations are not run by the government, but they depend
on state governments
to make non-accredited colleges
illegal. The legal use of the words “college” and “university” is
controlled by the states.

State governments define what constitutes a college or university
inside their own borders. Most states define a college in terms
of one criterion: it is accredited by one of the regional accrediting
associations. This pretty much freezes the number of colleges
that are legally allowed to issue accredited degrees.

Accreditation reduces the supply of degrees actually awarded.
This reduced supply of education is not based on a lack of supply
of students who are smart enough and who are willing to work
hard enough to qualify for a college degree. It’s a question
of an artificially limited supply of degree-granting institutions.

The colleges have those huge buildings, lawns to mow, employees
to pay, and all of those professors, assistant professors, and
teaching assistants with no Ph.D.’s (who do most of the work
grading papers and leading discussion sections for freshmen and
sophomore classes). This is a huge investment. If there were
true competition, 100% Internet-based colleges would bankrupt
hundreds of these schools. Most of the others would have to learn
how to compete.

As a general rule, accrediting associations only accredit schools
that invest millions of dollars in buildings. But in today’s
digital world, liberal arts instruction doesn’t require real
estate. It only requires dedicated teachers and dedicated students
who are self-motivated.

If the degree-granting system were really honest — if it were
not run by a cartel — then accredited college degrees would
be offered to any person who could pass the same exams that the
tuition-paying students also have to pass. If the student could
learn the material on his own, but pass the standardized exams,
then he would get the degree.

Accrediting associations don’t allow this. Why not? Because
it would bankrupt hundreds of colleges that are protected from
true competition by the accrediting associations. It would wipe
out the colleges’ tuition system, real estate system, and low
teaching load system.

every system, there are loopholes. Accreditation has left intact
at least seven of them. Hardly anyone knows about all
seven. One of them is off-campus learning.


A distance
learning program, i.e., an accredited program that offers an
internet college degree online, is a huge threat to the economics
of today’s campus-based system of higher education. But here
and there, you can find an accredited distance learning college
program or a distance learning university program. The accrediting
agencies dare not ban every distance learning degree program,
for that would be undemocratic. But they monitor every distance
learning degree program very carefully to make sure that the
programs don’t get too price-competitive. Nevertheless, I know
of at least four well-respected universities that offer an accredited
distance learning degree with very low tuition costs (under $100
per credit).

Only about 10% of 4-year colleges and universities
offer their students as many as half a dozen accredited distance
learning degree programs, even when they offer a hundred majors
to on-campus students. Most of these public universities charge
the same tuition to in-state distance learning degree students
that they charge to on-campus students, even though distance
learning degree program students don’t use the colleges’ real
estate. Most of the tax-funded universities charge three to
four times as much tuition to out-of-state distance learning
students. Nevertheless, some real bargains have slipped through
the cracks. But you have to know about their existence and
then go looking for them. Here is a good introductory


Most college administrators assume
that a distance learning program is substandard — second-best education. Even
if it’s an accredited distance learning college degree program, it’s supposed
to be substandard. But is distance learning really substandard? The evidence
says otherwise. The most recent evidence suggests that distance learning is superior
to traditional classroom education, from high
school through college.

Maybe you think I’m exaggerating. Maybe you think there is
some tremendous educational benefit that students receive by
attending classes on a college campus, compared to the education
gained by students who learn at home. Let me prove to you that
you’re wrong.

Well, actually, I won’t prove this to you. Thomas L. Russell
will. He has been studying this question for a long time. He
has gone back and looked at the published evidence of the comparative
performance of students who have taken their courses on-campus
vs. those who have taken their courses off-campus. These academic
studies go back to 1928.

Russell’s amazing discovery is this: there is no significant
difference in student performance. This is what study after study
has shown, decade after decade.

Go to his remarkable Web site. Read for yourself the findings
of educational professionals.

Click on any year to see a summary of that year’s report. The
years are on the left-hand side of the screen.

Here are just a few samples from the era before TV was widely
used as an alternative to actual attendance in a classroom:

1928: “…no
differences in test scores of college classroom and correspondence
study students enrolled in the same

1936: “[Results
of this study were very similar to Crump 1928 and showed]…no
differences in test scores of college
classroom and correspondence
study students enrolled in the same subjects…”

1940: “In
all but two comparisons, correspondence study students
performed as well as or better than their classroom counterparts
and in the two
cases which were the exception the differences were not significant.”

1943: “…
showed no significant differences between the groups in
terms of
motivation to use supplementary reading

1949: “[Results
of this study were very similar to Hanna 1940 and Meierhenry
1946 and showed…] in all but two comparisons,
study students performed as well as or better than their classroom
counterparts and in the two cases which were the exception
the differences were not

gets even more amazing. Recent studies have revealed that students
who have been educated in an off-campus learning setting
produce higher performance rates than conventional classroom-based
education does.

I ask you: Why are you determined to have your child at age
17 or 18 go through the ritual of the dorm key? Why not keep
the child closer to home for an extra two years, and then send
the child off to college?

Even better, why not let the child stay at home for all four
years, work part-time, earn enough to make a down payment on
a home, and get the B.A. by mail?

Best of all (this is not hypothetical), why not pay $5,000
and have the child get an accredited degree in less than one
year? Even I, as a man from inside academia, didn’t know that
this is possible. I found out less than a year ago.


No college can afford to give information away. Yet there is
almost nothing that is taught in a college that a student could
not get in a local public library or on the Web.

If you
have ever seen the movie, “Good
Will Hunting
,” you probably
remember the scene in the Cambridge, Massachusetts restaurant
where Will, a high school graduate who is a genius, blows away
a hot-shot Harvard student. Will knows far more than he does.
That’s because Will has spent time in the public library, and
he remembers everything he has read. He tells the Harvard student
that he is spending a fortune to learn what Will has learned
at the public library.

There is a mid-way position between the Harvard student’s parents’
enormous expenses and Will Hunting’s lack of formal education.
You child or grandchild can earn an accredited degree at a fraction
of the cost. I hope I have motivated you to pursue other paths
to this needlessly expensive, high-risk, government-regulated

19, 2003

North is the author of Mises
on Money
. Visit
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