Is College Worth It?

I have worked in information technology management for over 20 years, and part of my duties during that period have involved finding, vetting, and hiring IT personnel including engineers, technicians, analysts, developers, supervisors, and project managers at corporate IT departments and IT consulting firms.  So I speak from experience when I say there are a plethora of individuals on the job market that hold degrees, even advanced degrees such as masters and doctorates, but have little to no real world experience or marketable skills and have a very hard time competing in the job market.  I have hired roughly 50 people during my career thus far, interviewed hundreds, and unfortunately have had to fire several as well.  I've had several people with advanced degrees reporting to me over the years, some have been good, others not so much, but in every case, it's the individual's willingness to learn and succeed, and not the degree that has led to their success or failure.  In fact, in my personal experience, those with degrees are playing "catch up" with their peers that have more real world hands on experience.  Those with degrees are usually handicapped to one degree or another, no pun intended.  Many college graduates don't even make it into their chosen field.  In fact, a study by the Strada Institute found that 43% of college graduates are underemployed in the job they accept after college, and 5 years later two-thirds of those are still underemployed, and 10 years later, half of them are still underemployed, experiencing a 20% pay gap, on average.  There are a couple of reasons for this.  First, is supply and demand - for most fields, there are simply more degreed individuals than positions available in the field.  The suggestion, by some politicians and others, that everyone should obtain a degree and then expect to find a job commensurate with that investment, is simply an economic impossibility.  Second, in many fields, and certainly in information technology, those with degrees start out at a disadvantage to those who used their time to gain valuable skills and experience in the industry, rather than spending that time in college.  Those with hands on skills and experience are far more appealing to an employer than someone with a degree and little or no real world experience.

College degrees are becoming less, and not more valuable over time.  This is the direct result of a combination of government subsidization and society's illogical push to drive everyone to obtain a college degree, driving artificial demand up.  In 1988, the average tuition cost for a four-year degree was $18k, and in 2019 that same degree is $102k, adjusted for inflation, but that degree purchases less, not more leverage in the job market.  In an economically misguided aim to increase the number of individuals who hold degrees, the US government subsidized college education in the form of federal student loans which typically do not have to be paid back until after graduation.  Most commercial banks got out of this business decades ago because the risk was increasingly high that individuals would not be able to earn sufficient income to pay back these loans in a reasonable time period.  Government has mitigated that risk by making it illegal to discharge government student loan debt in bankruptcies.  This has resulted in millions of Americans holding over $1.4 trillion dollars in college debt that handicaps their ability to live life, often working in underemployed positions that do not require a degree because they were unable to obtain a position in their chosen field.  Colleges, of course, have been giddy with this situation because they have been able to drive tuition up dramatically - far higher than inflation, despite the fact that the value of the degree in the market has in fact, decreased.

Let's look at a four-year bachelor's degree, which takes an average of 5.1 academic years to obtain.  According to data from the Bureau of Labor Statistics, a bachelor's degree holder makes, on average, $60,996 per year, vs. someone with a high school diploma who makes, on average, $37,024.  Those with some college, and associates degrees fall in-between.  The average cost for tuition and fees to obtain that four-year degree (not including room and board) is $102,950.  That is across public (in state and out of state) and private colleges, based on 50% in state vs. out of state public, and 25% of the total comprising private students, which are the rough numbers as of 2019, compiled from the National Center for Education Statistics numbers.  Let's assume that someone gets a job out of high school and learns on the job, earning their average of $37,024 over the course of their working career which is 45 years (the average age of retirement being 63 minus 18 years old at high school graduation).  That person earns $1,666,080 over the course of their life, minus approximately $200,000 in income taxes (based on 2019 tax brackets) for a total of $1.46 million.  Now let's look at the person who obtained their bachelor's degree.  First is the cost of the degree, $102,950 on average, and the average student loan debt is $37,000 so the rest is often paid for by parents or by working, usually in unskilled positions. That debt is typically paid back over a 10 year period of time adding just over $11k in interest at 5.5% which is the 2019 average for a federal student loan, so we're at $114k for the cost of the degree.  Next, let's calculate the income of that person over their 40 year working career (since they were in college for an average of 5 years), so that's a total of $2.44 million over their life, minus $114k for the degree and $445k in income taxes (again based on 2019 tax brackets) for a resulting $1.88 million, about a 22% difference.

Some might believe that risk is worth it, and that return on investment (ROI) is there, but keep in mind that we are already seeing a paradigm shift where degrees become even less valuable to employers.  Now even large companies such as Apple, Google, Bank of America, IBM, Netflix, and many others no longer require degrees of their employees.  They have come to realize that those degrees do not mean the recipients have the ability to create or innovate.  Rote retention, taught in college, is less necessary today, with humanity's information at our fingertips thanks to the Internet and tools such as Google, Alexa, and Siri.  Technical degrees are out to date very rapidly, within a matter of two to three years typically.  Corporations and individuals involved in the industry must learn constantly in order to stay on top of the trends and platforms, and colleges, with their archaic curriculum structure simply cannot keep up with that pace.  When I attended the University of Southern Indiana in 1996, I was astounded at how behind the curve the university was- they were easily a decade behind the industry.  I worked at a computer consulting firm during the summer in high school, and learned far more from that experience than I did at USI.  Unfortunately, this is still true today at most universities as they, and the professors who aren't working in the real world, simply cannot keep up with the pace of innovation.  Many companies are developing their own internal 'universities' and vocational training systems that are based on the actual skills that are needed by their employees, and can teach what is needed in a matter of months rather than 4-5 years, all the while they are being paid and expanding their skills and marketability in the real world.

I am a huge advocate for gaining knowledge.  You should live life like a sponge, learning everything you can about everything you can.  Those who are hungry to learn have more information and resources available at their fingertips, then ever before in the history of the world.  The Internet has connected everyone and consolidated books, videos, research materials and much more, such that you can learn more about almost any topic you put your mind to, in the course of a few days of research, than you can in a semester of college.  The days of the college paradigm are coming to an end.  College for the masses was a modern invention; only since the 1950s has it made economic sense for many, but as with any product that loses it's scarcity, it's value declines.

The free market capitalist system has, more than any other economic system in history, advanced the state of the world and helped our fellow man.  More people have been lifted out of poverty under capitalist economies than all others in the history of the world.  It's not even close.  Socialism and communism which purport to care for the poor result in the most destitute societies in history.  What you earn is directly proportional to the value that you bring to society.  Your value to the marketplace, that is, your salary, is determined by the degree to which your time and skills help your fellow man.  The more you help your fellow man, by delivering goods and services that others need, the more you are rewarded.  This system has led to the innovations, goods, and services that have lifted billions of people out of poverty.  Human nature is to seek self-interest before others, and capitalism incentivizes rewarding those who provide the most benefit to their fellow man.  This is the motivation that drives people to succeed and innovate.  Thus it is important to maximize your time and skills to provide the most that you can for others with the tools God gave you.

A large number of students in college today, shouldn't be there, from an ROI perspective, according to the numbers we discussed.  If you do decide to attend college, please make sure that you are doing so with a well researched plan, that you are certain what you want to do, and that there will be a job waiting for you in your chosen field upon graduation, so that you don't end up underemployed as nearly half of college graduates do.  Do the math to make sure that the salary is sufficient in your field to justify the investment.  Most things in life come down to a cost / benefit analysis, and higher education is no exception.  Employer run universities, on the job training, apprenticeships, and vocational opportunities often make much more sense than traditional college education.  Traditional college education is fighting an uphill battle that it's not likely to win in the coming decades.  Those with the drive to succeed and an attitude to persevere will always be successful, with or without a college education.


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