The College Investment

Earlier tonight, the social media peeps over @GOOD posed a question related to personal financial investment in education. They state that the number of adults who say college is a good investment is way down – just looking at the last four years. Of course this would be the case! Four years ago, a higher percentage of ready-to-graduate seniors had job offers lining up. Not only did they receive multiple offers, but those jobs were paying decent living wages. The climate for graduates since 2008 has been drastically different. It takes months, sometimes years, for a person with a degree to find employment. As yesterdays children become adults, they are quickly learning it does not pay well to be among the best and the brightest. All those awards, honors classes, and internships do not guarantee anything these days.

In a sense, adults are feeling less satisfied with the investment in a college education, because the costs have increased rapidly and the benefits have diminished. Ultimately, obtaining a college degree is not the financial value it once was. Take a quick look at this chart I put together. It plots roughly my annual expenses while attending an in-state four year university. The chart also shows my actual income compared with the earnings I could have made had I skipped college and went straight into the workforce.

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Had I started in 2006 with minimum wage employment and gradually increased my salary, I could have expected to earn around $153,000 over the last six years. I instead chose to forgo these potential earnings and invested some $76,500 toward a four year degree. I did work part-time while in school, so I maintained a small level of earnings to pay for basic living expenses. However, a major factor in adults not satisfied with the college investment is the actual versus expected income. When I was approaching graduation, I had a salary figure in mind. This number, around $40,000, was not arbitrary. It was a number professors told me my skills and experience would be worth. It was the number the university highlighted on publicity fact sheets.  The financial goal of earning a degree is to generate more income over your lifetime than you would have without attending college. Presently, the labor market does not put a high value on most degrees. I find that some employers value my skills and education at about two-thirds the rate I had expected and that is upsetting. While the current generation of graduates realize college was not a good investment in the short-term, traditional sense of earning higher salaries, it remains an investment in shaping personality, professionalism, and intellect.

We become very different people through obtaining a college education and we need to consider the value of that education beyond the immediate financials. One day things will suck less than they do currently. When that day arrives, those adults who are well educated will be in a position to not only earn more, but to also live a more fulfilling life.

Let me know what you think. Are you optimistic about your investment in education, or are you pessimistic about its future value?

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