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Is College Really Your Best Option?

Updated on October 18, 2010

For several years now, the prevailing wisdom has been that if you really want to succeed in this world, you need to have a college degree. This idea is so deeply ingrained that in 2007, according to the U.S. Department of Education, over 18,248,000 students were enrolled in degree seeking programs in the U.S. That's roughly 6% of the population that were actively enrolled in school. How many actually completed their degree programs? Only about 3 million, based on historical averages, and that doesn't take into account recent economic activity that has led to greater drop out rates.What's even worse, according to some studies, one third of those who graduate won't work in their field of study!

Another aspect of the question came to my attention on Wednesday. President Obama is asking Congress to extend the tax break for students that passed as part of the stimulus package in 2009. If you are unfamiliar with this incentive, it provides a $2,500 tax credit per student to offset tuition payments as well as books and supplies that are not normally tax deductible. The Treasury Department estimates that 12.5 million students took advantage of the credit last year, saving $1,736 on their tax bill. That comes to $21.7 BILLION that was trimmed from the national budget. Factor in the default rate on student loans, and the fact is that the federal government is losing a huge amount of money to ensure people can get a college degree.

My Alma Mater

And as a student, or the person paying for a student, what is the best choice financially? One way to decide is determine the return on investment (ROI) for college versus other investment options. Luckily, a recent study by PayScale, an online salary database company, did this comparison for you.Their study examined the salary of a college graduate 30 years after graduating compared to that of a high school graduate and then compared that result to average dividend earnings for the S&P 500 for the same time period, which produced an 11% ROI.Their findings? Unless you went to a nationally recognized engineering-oriented private school, say MIT, then you would have earned more investing your tuition money in the stock market for 30 years.

Even if we look at the short term, say the four years after high school. According to the CollegeBoard, the average cost for a public four year college is $7,020 per year. Of course that doesn't include the $1,122 the average student pays for books and supplies. Over the course of your four years in college, assuming you finish in four years which most people will not, you can expect to spend about $32,568 on your education. Let's pretend you had that money saved in advanced. You started your college career with $32,568 and at the end of year 4 you had nothing more than earning potential. If you had invested wisely instead you'd be sitting on $44,541. That's a pretty good chunk of money to have laying around.

Now, I'm not saying that you can't make more money with a college degree. Based on the U.S. Census Bureau's 2008 report, the median earnings for full-time workers, who were at least 25 years old, are: high school diploma, $33,801; associate degree, $42,046; bachelor's degree, $55,656; master's degree, $67,337; and professional degrees, over $100,000. So for those choosing between a bachelor degree or no degree, you could make almost $22,000 more per year over a high school student. But there are other factors at play. Let's say that as a high school graduate you decide to go into hotel management. With a bit of practical experience while in high school, you can start out at about $29,000. According to, a hotel manager with a hospitality degree can expect to make about $29,000. Wait, that can't be right! Actually, a lot of employers really look for the experience. All the book knowledge in the world doesn't make up for showing practical skills.

What about a degree like accounting? To be a CPA, you are required to not just have a college degree, but to have at lease 150 credit hours, 30 credits beyond the bachelor level, in most states. But is it the degree that matters or is it the professional certification. Turns out, it may be the certification. As a bookkeeper, your income potential is the same with or without a degree. So what's the advantage?

Largely, I feel it's psychological. Employers like to see that students have committed to a degree program and finished it. They believe that you'll bring that same dedication to work with you. Another bonus: networking. You can't discount the value of the people you meet while in college, many of whom can be a huge benefit to you in your professional life. And as you move on through your career and take on greater leadership roles, a college degree , and more specifically a graduate degree, is the expectation. But in every case, it's all about the follow through. If you're going to go, it's important to stay with it. Leave halfway through and you've just thrown money and time out the window, money you could have spent having fun. So set your priority and run with it. Good luck.


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    • Dark knight rides profile image

      Dark knight rides 7 years ago from Denver

      Thank you for your comment, nicomp. I agree that the value of a degree comes later in your career, in expanding your options rather than in the immediate income.

    • nicomp profile image

      nicomp really 7 years ago from Ohio, USA

      A hotel manager with a hospitality degree is *much* more upwardly mobile than a high school grad with some hospitality experience. They may be making roughly equivalent salaries early in their careers, but the college grad will see many more opportunities to move about in the company.

      Thanks for making a lot of good points about college. It's not for everyone,nor should anyone feel guilty about not going.