The ROI of Higher Education
If you've read any of my previous blog posts, you already know my opinion of academia and their attempt to brainwash today's college students and convert them into liberal drones who can echo themes of multiculturalism and socialism, but have little to no understanding or appreciation for the real-world- the capitalist world, that makes things work outside of academia. And most certainly do not have an appreciation for the hard-fought freedoms we enjoy as Americans thanks to our Constitution and the sacrifices of generations of American soldiers. But I digress....
The topic of this post is to address the value of a college degree, strictly on the basis of return-on-investment (ROI). I read an article a few years ago that provided mounds of economic data to backup their claim that, essentially for 50% of people going to college, it's a waste of money- from a purely economic standpoint, over the course of their life. Unfortunately I can't find the article, but I will attempt to recreate the gist of it here.
According to the Census Bureau, the 'average' high-school graduate earns $25,900 per year, while the 'average' college graduate earns $45,400 per year. So, if you take that average of $25,900 per year for a high school graduate and multiply by 45 years (average number of years a high school graduate works), that is $1,165,500 in income over the course of a lifetime, minus an average of 15% in taxes for the equivalent tax bracket, equating to $990,675. Now, for a 4 year college graduate, let's figure their average income times 40 years (it takes an average of 5 years to obtain a "4-year degree"), that's $1,816,000, minus 25% in taxes (higher tax bracket) which leaves roughly $1,362,000- but wait... don't forget the cost of the actual degree. In the United States, the average cost of a 4 year degree is about $80,000 (public costs less, and private costs more obviously- but this is the average). So that takes our lifetime earnings down to $1,282,000. The average student amasses $20,000 in student loans, so let's not forget the roughly $8000 in interest over the cost of the 10 years on average it takes to pay that back. That puts us at $1,274,000 estimated lifetime income for the college graduate. Now, let's also take into consideration inflation, and the fact that the value of the money earned earlier on in your career (during the 5 years while the college student wasn't earning money while their high school counterpart was) is worth more than money earned later in life. By the time you figure an average annual inflation of 3% into the mix- also in relation to the average college debt one incurrs, that adds roughly another $150,000 added to the 'average' for the high school student.
That puts the difference at roughly $133,000- not a huge amount over the course of a lifetime- and certainly not the 'million dollar difference' you might hear academia throwing around. Not only that, but remember that these are averages we're talking about, you'll have those with high school educations far exceeding the average income of those with a college degree, and you'll have a number of college educated individuals driving school buses and delivering mail (15% of postal workers hold a bachelors degree)- not to impune either profession, only to say that those professions do not require a degree, and for those individuals, the expense of a degree was a waste of time and money.
My point is that nearly half of those going to college today- shouldn't be there. I disagree completely with the notion that 'everyone needs to go to college.' That's an economic fallacy- if everyone went to college, you would have overeducated people working in low income positions- which, frankly is the case today because- as I said, nearly half of the people going to college today shouldn't be there. Not to mention the fact that they are crippled by student loans that they have to start dealing with when they leave college and enter the workforce, only to find that they aren't enough jobs to go around in their chosen field, and they will likely be forced to take a low paying job and work their way up, trying to compete with those who did not go to college, but have 5 years of relevant hands-on experience in their field. Who will most employers promote? Those with the experience and proven ability to get the job done. When the rubber meets the road, a piece of paper doesn't hold a candle to real world experience, as more and more college graduates are discovering.
I do not mean to dissuade everyone from going to college, only to say that you need to put some serious thought and planning into your decision to seek higher education or not. There are often opportunities for vocational training, on the job training, or even internships that will lead to more income and a more relevant education than many colleges can provide. If you decide to go to college, but aren't sure what you want to do- consider a community college, or if you do know what you want to do- a vocational school. The training is much more relevant, and has a much higher ROI than a bachelor's degree, which is often filled with multicultural fluff that will not help you succeed in the real world.
If you know what you want to do- for example, if you want to be an auto mechanic, start working for a mechanic as soon as you can- in high school during summer break if possible, for entry level wages or even for free if you have to- the experience you learn will be invaluable. This approach is repeatable for a myrad of professions, including my chosen career path of Information Technology. I started working for a computer company during the summer in high school for minimum wage, and today I earn more than the average bachelor's degree holder, even though I went to college for only a year, and became frustrated with the political brainwashing experience and the lack knowledge that I was receiving for my money. I instead decided to quit college and start a business, and that experience was far more rewarding, educational, and useful in life and even to employers.
There are ultimately only a few career fields that require an advanced degree- such as a doctor, lawyer, or other professional degree. If you don't intend to pursue one of those career paths, many people are better off entering the work force sooner, with an eagerness to learn and ambition to succeed. That is the path most successful people in life take, and is much more conducive to the entrepreneurial spirit our country is based on. Just a few people who didn't get a bachelor's degree include Bill Gates (founder of Microsoft), Steve Jobs (founder of Apple), Frank Lloyd Wright (renowned architect), James Cameron (movie producer), Mark Zuckerberg (founder of Facebook), Tom Hanks (actor), Harrison Ford (actor), and many many more.
There are many economists out there who agree with what I am saying, and I can say from experience that I have interviewed, hired, and fired many people over the course of my career, and I will take someone with 4 years of relevant, hands-on experience over someone with a 4 year degree any day, and I can guarantee the experienced individual will run circles around the one with a degree and without the relevant real-world experience. I've seen it happen over and over again.
My ultimate point is to not take college for granted. Review your options carefully and make sure that what you decide to do is right for you, and ultimately not a waste of time or money. It's your life, and you owe it to yourself to be successful- and holding a degree while working a low paying job is not the definition of success.