Poor Dad, Poorer Son

January 12, 2010 § 5 Comments

Consider this scenario. You are a talented person who possesses the necessary academic qualifications to pursue higher education at a top-flight university. But there is one problem. Your family is on the breadline; you are unable to secure the funds to finance such an expensive education. What are you to do under such a circumstance? You are likely to opt for a college education of lower quality or will skip college altogether.

Consider another scenario. Your family is part of the middle class. Based on your parents’ income, it is possible that you can secure a loan to finance a top-notched education. The ongoing credit crunch, however, dictates that you probably only have a 50/50 chance of securing a loan. Furthermore, you also face the prospect of having to spend most of your post-college life paying off your college debt. What are you to do under this scenario? There is less than a 50% chance that you are able and would be willing to make such a risky investment.

In the final scenario, you are a person with average ability who comes from a wealthy family. You are able to secure admission to one of the top universities in the country, mostly through your parents’ connections. Since your family is rich, you don’t have to worry about how to pay for your higher education. You have access to the best educational tools, and can hire the best tutors to assist you with your schooling.

After reading the three scenarios, someone may ask this question. Is a college degree really the key to prosperity? The answer to this question depends on the quality of your college education. A degree from a top university pretty much guarantees you a good and high-paid job. A degree from a lesser university, however, does not worth as much. In the employer’s perspective, a C graduate of a top university is always better than an A+ graduate of a lesser university.

What can we conclude from the three scenarios? In economics, there is a concept called the cycle of wealth or the cycle of poverty. If your parents are affluent, it is very likely (though not absolute) that you will also be rich (as a result of the quality education you attained); your children will be well-off as well. If your parents are poor, it is highly likely (unless some really fortunate events occur) that you will end up impoverished just like your parents; your children will end up impoverished as well.

The three scenarios from earlier perfectly demonstrate the phenomena I have just mentioned. As the cost of even mediocre higher education continues to rise at a blistering pace, many American families are becoming trapped in the vicious cycle of poverty through no fault of their own. Unless swift actions are taken, the American dream is very much just a dream.

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§ 5 Responses to Poor Dad, Poorer Son

  • DarcKnyt says:

    A frightening scenario, especially for me with two young children and limited or no prospects. Very eye-opening. Vicious cycle, with no clear-cut solution.

  • I find it kind of generalized. Rich are not always inherited. India when it got it’s independence where predominantly poor and then there came a strong middle class that rose up phenomenally. Most of them are sons of poor farmers, poor labour class who dreamt big and rose to the occassion through sheer hardwork. It is true with many other middle class of Koera, Japan, Brazil etc Yes, being a son of a rich makes life easy but then when right economic conidtion prevails it gives impetus for the sons of poor to dream big and achieve big.

    • leafless says:

      You must not have known how expensive higher education is in the United States; it’s a big problem over here.

      The only way to eradicate this type of problems is through a revolution of some sorts. What happened to India when it gained independence was a revolution, socially and economically.

  • steve says:

    I gotta say…this is very cynical approach to life and its success….if you have drive and a dream then you should move forward to that dream. Your family would want you to succeed so thats what you should do. I also believe if someone does not like their lot in life then its up to them to change it…i know someone with a 6th grade education who is the most respected professional in their field…he is the most respected master plumber in the tri state area with the most successful businness in the state…least thats how i feel…college is great but definetely not the end all be all…i know some folks that went to good schools working for minimum wage…….zman sends

    • leafless says:

      Steve,

      I am not saying that this is true to all cases. But for most cases, it is true. If you look at the statistics, college-educated people earn a lot more than those who are not. Ivy League graduates make more money than the average college grads. Who do you think have a better shot at getting a high-paid job? A well-connected person or a not-so-well connected person. We don’t want to admit it, but life is not always fair.

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