Table of Contents
Whether your college education is likely to provide a significant return on your investment depends on the following factors:
- The cost of tuition, and your diligence in applying for scholarships and grants to reduce the cost.
- The average ROI of the college you choose.
- To some extent, whether you can make it into an exclusive school—this is more important for minorities and disadvantaged students.
- The average employment and median pay rates for graduates with the degree you choose to pursue.
- Your determination to see your education through to the end.
- How hard you work to get good grades.
- Whether you can hold a job while studying full time.
You’ll notice that several of those depend not on your college, but on you. Therefore, the first question you should ask is . . .
Is College Right for Me?
That depends: are you going to finish the job?
The difference in annual earnings between a partial college education and a bachelor’s degree or better is $15,500 on average. An incomplete college education also gets you just $2,000 more per year than a high school diploma. So ask yourself: is the five-figure debt that you’re going to rack up worth it if you’ll just drop out?
For many, dropping out of college results in an unquestionable loss. Think about it: You rack up a $27,000 debt over three years of commuting to a public school. Add that to the $84,000 you might have earned in those three years if you had been working instead. It would then take 55.5 years for those $2,000 extra to make up for the combined debt and opportunity cost.
Those numbers aren’t perfect, as they are based on median income for ages 25 to 32 only. You would probably earn less than $84,000 in three years if you went straight into the workforce at 18. The income benefit of a partial college education might also improve later in life. But all the same, you’re looking at maybe breaking even around the time you retire.
John Palladino has attended four different schools and dropped out three times. The first time was during his freshman year in 2008. At the time he dropped out, he was attending a public school as an in-state student. He is still paying off the debt for that one year and living with his parents to get by.
His biggest regret is attending online courses with a for-profit university. “I only went [there] for a month and a half,” he said. “I owe them $8,000. . . . I went to a class and a half and I owe them $8,000. . . . [It] ****ed me over.”
With tuition rates higher than ever and more than 4 out of 10 college students failing to graduate, rushing into college without considering the possibility of failure is hubris. Those who lack academic discipline, a modicum of self-sufficiency, or sufficient drive can easily end up giving up or failing out. Others just have bad luck.
John wound up leaving his first college when depression made it impossible for him to focus on his studies. He transferred out of his second (a community college) when he discovered partway through that it did not offer enough courses for him to get a degree, and quit his third because it was too demanding for him to balance with working to pay his existing debts. He says he dropped out of the last college (the online one) because “I didn’t really feel like I was learning anything.”
He summed up his experience by saying, “I have no degree, I don’t even have a two-year degree, and I’ve taken so many classes.”
Don’t just assume that college will work for you. Ask yourself: Do I actually want to learn? Am I willing to work for my degree and stick it through even when it seems impossible or even stupid? Do I care enough about my future earnings, or about getting the job of my dreams, to make the enormous sacrifices in time and money that college represents?
If you answered yes to all three of those questions, then you might be right for college. Now you have to decide which college is right for you.
Find out more if college still matters - here!
How Do I Choose the Right College?
We’ve spent a lot of time discussing exclusive private schools versus public schools. Minorities, disadvantaged students (when they can acquire enough financial aid), and those looking to get into extremely competitive fields should attend an exclusive college if they get accepted. However, it seems that others may be just as successful if they spend their pre-college years working hard to get into a Stanford or an MIT, then simply go to a more affordable public school.
Whether you choose prestige or affordability, you then have to decide which colleges to apply to.
I’ve mentioned the PayScale College ROI Report before. You can find it at payscale.com/college-roi/, and it is an excellent place to start. It gives you a quick overview of how likely each college is to pay off, and by how much. It’s particularly useful because it also factors in graduation rates. I highly recommend checking any college there before applying.
One promising new college ranking system is outstandingcolleges.com. Since individual ranking systems often have major flaws, they’ve decided to compare and combine them all so that the strengths of some will cancel the weaknesses of others. It’s possible that they will soon provide the most accurate ranking system available.
Those resources will get you off to a good start. But you also need to consider what you will study.
If you have dreams and passions to pursue, then your major may seem obvious to you. But consider the odds of getting the job you want. The Georgetown University Center on Education and the Workforce frequently publishes reports on how graduates fare in the workforce, including plenty of info on employment rates by major. You can find their website at cew.georgetown.edu.
Since employment rates and earnings for specific degrees can change quickly, I won’t go into any more detail than I already have. Research the current information and find out if you have decent odds of getting a job with your desired degree. If it has anything like the 16% employment rate that Bruni gave for social psychology, pick a different major. Don’t follow up the 44% chance of not graduating with an 84% chance of being unemployed!
If you have decent chances of landing the job that you want, the next question is how much money you can earn with the degree it requires.
The financial return may not matter to you. If you look at the numbers for a degree like anthropology and decide that making no more than a high school grad is acceptable, that’s your call. Just be careful to pick a college that is relatively inexpensive to minimize your debt. If possible, make sure it also has an above-average ROI so you have some chance of recouping your investment.
For those of you lucky enough to want to enter a high-paying field like science, engineering, or business, the basic principles of finding a good college are simple. Apply to schools with high ROIs and take the best one that accepts you. For business majors, exclusive private schools are often a wise choice. But the other guys generally get the best deal: state STEM (science, technology, engineering, and mathematics) colleges frequently offer the perfect combination of a low-price education and high returns.
What Not to Do
Don’t go into college without a game plan. If you don’t have a passion for a particular field, choose a major that will make you a lot of money. Then devote yourself to studying it. Going in undecided will make it hard for you to choose a good college—and to graduate within four years.
I asked John Boucher to provide some advice on avoiding the kind of long-term unemployment (two years) he faced after college. He said, “Freshman year, try to get a good grasp of how things look in terms of career choices, and make sure you see a path from A to B [from college to a paying job] rather than just hoping you can get something at the end. That was my approach and it was not a great approach.”
Don’t select a school just because it has a fancy name. If you can’t afford it, or if you’re intimidated by the drop-out rate, then you might be better off going somewhere else.
Finally, whatever you do, don’t get caught up in the flash of marketing. Always remember that college tours are as carefully designed as brochures. Never forget that a high price does not equal a high return on investment or a quality education. Finally, keep in mind that nice, new facilities are more often indicative of the college havinga spending problem than being a great place for you to prepare for your career.
A Last Word
From kindergarten through high school, students are continuously told that they are being prepared for college. Now the time has come. There’s no more preparing for further education. College must prepare its students for the real world.
Choosing whether to go to college, which college to go to, and what to study . . . you must consider these the first choices of your adult life. Unfairly, they’re also some of the most important. They will rule your finances for years—perhaps for your entire life—in terms of both debt and income potential.
There are too many variables in the dreams and capabilities of each of us for me to lay out a precise, step-by-step plan that will work for everybody. Education doesn’t work that way. Ultimately, you must research your own career path, investigate your education options, and plot your own course through your future. I’ve given you the facts and resources that will help you make your decision. The rest is up to you.
Research. Think hard. Make your choice carefully. And once you decide, throw yourself into your commitment with everything you have.
Conclusion: Does College Really Make Cents?
For almost anyone gifted with ambition and willing to work, the answer is clear:
Getting a college degree is still the best possible investment you can make in your future. The price may be higher than ever before, but so is the reward. The amount of debt you take on will most likely seem like a pittance compared to the higher level of income you acquire. Remember, the difference in median earnings for a young adult with a high school diploma and one with a college degree is $17,500 per year—more than the average annual tuition of public colleges in any state.
Your degree will probably pay for itself by the time you’re in your early thirties. From then on, it’s all profit.
Does college still make cents? Yes. Do your research, make good choices, study hard, and build your payment strategy intelligently, and you should never doubt that you made the right choice.
I know I haven’t.