Is College Worth it Today? An Alternative Idea
When I went to college ( U. Of Iowa) the out-of-state cost was around $5,000. Four years and $20,000 or so later I and was done (thanks again mom and dad for paying). My first salaried job paid me $19,500, or almost the equivalent of what my four-year Big Ten school education cost. For the purpose of this argument I will call it a 1 to 1 deal – 1 year’s starting salary equaled the cost of 1 college diploma.
Fast forward to today; U. of Iowa costs $35,000 for one year!! IF you child graduates AND can find a job, they might make $35,000 in their first year. So now it takes 4 years of full-time work to earn what a good four-year college diploma cost. Also, factor in that more and more kids are taking more than four years to finish, adding to the total college nut.
Recent studies show that only about 40% of kids get their college degree in four years.
A rather large percentage of kids start college, but never actually graduate. What’s the return on the money you spent on your child’s college without the diploma? Ouch….
- The cost of college has sky rocketed it now takes one year of work to recoup one year of school (if/when graduate finds a job)
- A majority of college graduates have gone to school for more than 4 years
- Nearly 40% of kids that start college never get a degree – what was the point of that?
Also, more women than men are getting college diplomas these days. Many of these women choose to stay home after a stint in the work force when they have children and that makes me wonder if the return on college investment is worth it. For example, if it took them 5 years to graduate and then they spent 5 years in the work force just to break even, that doesn’t make financial sense to me. I’m just saying……
Instead a paying a college $35k per year for 4 years you invested that $140,000 ($35,000 x 4 years) into a growth portfolio for your child’s financial benefit? For example, it could sit in a trust for your child’s benefit at retirement.
If that pile of money was invested for your child instead and grew 7% per year from age 19 until they were 65, it would be worth $3 million.
While many people with a college diploma do better in the job market than people without one, that is far from guaranteed. I see smart, well-educated people all the time that are just getting by and wish they could retire with anywhere near that kind of money. This may be a little far-fetched for most of us, especially because most of my readers have a degree, but I hope to challenge you to think about this idea.
Imagine not having to worry about saving for retirement.
Archived blog posts: