Is College Worth the Investment?

By Ron | Jan 7, 2008

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Is College Worth It?

The short answer is no, not if you’re looking at it from a purely monetary investment point of view. There are better ways to generate a much higher return on investment than to spend it on four years studying for a degree that could be rarely used.

No matter what website you read, what calculations or assumptions you make, it’s very difficult for the college graduate to overcome the massive debt load they incur by going to college, even with a higher salary. Most calculations I’ve made show only a 2-4% return on that investment. Given that college costs have risen about 35% over the past five years, and considering that there seems to be no end in site, many people are questioning whether a college degree actually contributes value.

Sure, college graduates make substantially more than high school graduates, but they generally start their adult lives with $70,000 to $150,000 (or more) in debt, debt that is exempt in most cases from bankruptcy. Their starting salaries are rarely twice the average high school graduate’s in the beginning, and they generally are behind their high school peers with cool cars and fancy clothes. They start life wanting to catch up as well as deep in credit card debt from not having the instruction or maturity to recognize the long term effects of 28% interest rates on $10,000.

Would it be a better choice to select a career in a field that doesn’t require a college degree? US News & World Report seems to think so. This article got a lot of press, but upon a closer reading, there are only four careers out of 31 that do not need a college degree and this article isn’t the condemnation of college that it was made out to be. So, maybe things aren’t so bleak for college graduates after all.

The underlying question is this: why has a college education become so overpriced in relation to the value received? As Rich Karlgaard with Forbes Magazine sees it, there are three reasons:

We live in a world with much easier access to information. Anyone a computer can have the same information as a degreed college graduate from an elite university.
Coveted higher paying positions go to those with natural intelligence, the ability to grasp and understand numbers, a strong work ethic, the ability to communicate, and the ability to get along well with others.
In the past, society thought that a university would instill those qualities in its students, and that its graduates would be able to think, speak, write, debate, weigh evidence, and learn from history. Today’s colleges aren’t consistently producing a product that is worth the high price.

Is college worth it?

The flip side is yes. College teaches someone to work toward a long term goal and to chip away at it, one course at a time. What is that worth?

Certain professions demand a college degree and if you aspire to one of those professions, you really have no other choice.

The “college experience” can be very positive, given the right guidance and instruction.

My recommendation:

If you decide that college is right for you (and only YOU can make that decision), investigate all your options. Look into online degree programs. Many of these are very affordable as I mentioned in a previous post and they hold the same validity as on ground programs. The diplomas and transcripts are exactly the same. Another option is to attend junior college for a few years before going on to that “elite” university. If you’re in high school, try to take AP classes for which you get college credit. My niece started college with 15 hours of credit.

If your dreams include graduating with a college or graduate degree, I believe it is more important to work toward that goal than to worry about the return on that particular investment. Make sure that you don’t go to college at any price, but don’t let the price keep you from moving toward that goal.

This decision should be a personal one. A careful, well thought out decision made without emotion or the desire to keep up with the Joneses or because college just seems like the next logical step in life.

What do you think?

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1 Comment so far

Reduce College Costs | The Wisdom Journal June 30, 2008 8:47 am

[...] stage in your life can be expensive if you transfer schools or drop out entirely. Remember that NOT going to college is an option if you have a real opportunity to pursue something you’re [...]