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Is College Worth it Today? An Alternative Idea

is college worth it 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….

Only 50-65% of INITIAL COLLEGE ENROLLEES GRADUATE IN 6 YEARS!

In Summary:

  • 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……

What if…..

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.

 What if…..

 

Archived blog posts:

Do the Math – Big Ten Schools

4 Expectations from President Obama’s Second Term

 

4 thoughts on “Is College Worth it Today? An Alternative Idea”

  1. Edith says:

    Ok, financially, it may not be worth it. But here is my take on College. Getting a college education has other advantages: easing into the real world with not much too lose, showing that you have the stamina to really see something through, and having a chance to mature while pursuing some of the activities you may have missed in high school. Generally growing up and becoming more educated in the process.
    I am an education freak. And no college isn’t necessary to a good education, but I like it.

  2. Ron says:

    Couldn’t agree more. It’s sad that the cost of college has us even thinking about alternatives but it’s an awful lot of money. A friend of mine had another crazy idea which I love. Upon high school graduation, give your child $75K and have him/her come up with a business plan and start a business with the seed capital. If it fails, take a month or two off and give them another $75K to start a second business. In the end, you are net neutral cost-wise EVEN IF BOTH BUSINESSES FAIL, but your child has most definitely learned and gained more real life experience and knowledge than they would from sitting in a college classroom and being lectured to. Grant it, there are other benefits of going away to college, but at this point, I don’t think this is nearly as crazy an idea as I did when I first thought about it.

    1. Brad Rosley says:

      Great idea Ron, maybe seed capital for a franchise..

    2. Edith says:

      I, repeat, it is not all about the money.

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