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College ROI: Is College Worth the Investment?
Is College Worth the Investment?
Are you a high school student or the parent of a high school student and starting to think about what's next? College is the choice of many and has been held up as mandatory in order to have a high paying and rewarding career or simply to grow as a person and broaden horizons. When I went to college (I won't mention the year!) tuition, room and board at an expensive private school was $12,000 to $15,000 per year. I was easily able to attend with financial aid and by working. I paid for it completely by myself and feel proud of that. Now, tuition, room and board is about $50,000+ per year and many are wondering whether college is worth the investment. I don't think it's possible for a student to pay their own way anymore, especially if their family falls into the middle class and doesn't qualify for much financial aid. What are students and parents to do? The answer, I think, is to carefully consider if a college degree is even necessary, and if it is, choose wisely how much you invest based upon the expected return on your college tuition investment.
Return on Investment for Various Career Choices
Skilled Blue Collar (e.g. Plumber)
Social Services (e.g. Social Worker)
Professional (e.g. Doctor)
Number of years of school/training
3-5 yrs of Apprenticeship
4 yrs of College
4 yrs of College
11-13 years College & Residency
Median Starting Salary
$32,000 - $55,000
Median Mid-Career Salary
$42,000 - $70,000
$153,000 and up
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College is Worth the Investment for Some Careers
It's clear from the table above that some college degrees pay off and some may not. Professional degrees, like MD's, have the highest salaries but also require the longest length of schooling. It's important to account for the 11-13 years of school when the student really isn't earning anything at all. These years of lost wages can impact the return on investment of professional degree programs quite a bit and if you finish medical or law school with a couple hundred thousands dollars worth of debt, the higher salary is cut down a notch while student loans are paid off. Engineering and science type degrees seem to pay off very well, if you can keep your college expenses reasonable via scholarships or attending a State School. Then there are the degrees in areas that may or may not lead to a highly paid career. These are such things as sociology, psychology, history, social work, etc. Given that you could make more money in a skilled trade, without the expense of college, if a career in one of these fields is what you're after, it's imperative to keep your college costs low. Start at a Community College and then transfer to a State School. You'll save thousands of dollars and won't regret it.
Finally, it's important to note that the skilled trades are paid pretty well, especially for those with experience. There is no required schooling, only an apprenticeship and a test. These jobs may not seem glamorous but the pay and union benefits are high given the schooling required. In addition, for those enterprising individuals who have an entrepreneurial bent, starting a business as a plumber, electrician, or carpenter can be very lucrative. And these trades people are in high demand since their jobs cannot be shipped overseas.
Successful People Who Don't Have a College Degree
- Michael Dell: Founder of Dell Computers
- Simon Cowell: Of American Idol Fame
- Mary Kay Ash: Founder of Mary Kay, Inc.
- Richard Branson: Founder of Virgin Atlantic Airways
- Debbie Fields: Founder of Mrs. Fields Cookies
- Bill Gates: Microsoft founder
- Rachel Ray: Cooking Show guru
- Peter Jennings: News Anchor
- Tommy Lasorda: Baseball Manager
- Karl Rove: Presidential Advisor
Spend Less on College and More Time Proving Yourself on the Job
If you feel you must attend college, keep this in mind...where you go to school may be less important than finishing your degree and working hard and smart when you get your first job. It's estimated that only 56% (source: higheredinfo.org) of those who start an undergraduate degree actually finish. So you have people spending thousands of dollars on a year or two of college without reaping the benefits of the actual degree. This is obviously a recipe for poor return on investment. Finally, while a prestigious college degree can help you get your foot in the door for some entry level jobs, it doesn't help all that much after the first few years of your career. What's more important is how well you do your job and how well you get along with other people. I've worked with people who have degrees from places like Harvard and Yale and I've seen first hand that if they can't fit in and get along with others, their jobs are more likely to be eliminated when a company downsizes. On the other hand, people with degrees from less well-known schools who do their jobs well and interact well with co-workers are likely to be promoted.
College is Worth the Cost, Sometimes
The bottom line is that college can be worth the investment if you take the time to match your choice of major and career to your expenditure. Lower paying careers like those in social work should be approached with Community College and State Schools rather than via expensive private colleges. Those with aspirations for higher paying fields like engineering can spend more. But I would argue that no matter what your degree or career, spending as little as possible on education is the best route. That means maximizing scholarships and financial aid and choosing the school that provides the best package.
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