Before you agree to take out that student loan, make sure to ask yourself this most important of questions, because the answer to this question will determine how you spend the next 3-5 years of your life, and it’s almost certain to determine whether or not you’ll need to dig yourself into student loan debt.
According to most studies (and especially those promoted by major media networks), the answer is yes, college degrees are still worth getting, but I’m here to tell you that for many Americans, the actual answer is absolutely not, and especially in 2014.
Is College Really Worth It?
While higher educational institutions (colleges and universities), guidance counselors, and even your parents might think of this as a simple question, the issue is far more complicated than you might initially think.
First – can the true costs and the value of a college degree even be broken down accurately enough to come up with a reliable indication of whether or not it was worth the time and money invested?
If you believe the statisticians, then yes, but to be brutally honest, it depends on what you plan to study.
How Much Is A College Degree Worth?
I’m glad you asked, because that’s the crux of this question.
It doesn’t matter how over-priced, or affordable, your college degree might end up being – what really matters is what you’ll be able to do with it.
Is it worth investing in a $100,000 college degree that will let you earn $50,000 per year for the rest of your life? Absolutely!
Is it worth investing in a $10,000 college degree that will let you earn $25,000 per year for the rest of your life? Absolutely not!
Which Degrees Are Worth Getting?
If all the horror stories about excessive student loan debt haven’t convinced you to stay away from college (and try some other more efficient path to stable employment), then it’s time to get serious about picking your degree.
Let’s face it, any old Bachelors or Undergraduate Degree is no longer guaranteed to get you a “good” job – no matter how reputable the school may be!
Remember, there are Ivy League graduates with years of post-baccalaureate “Barista”-level experience on their resumes, graduates who are buried in student loan debt, and earning as little, or even less, than their colleagues who chose to skip college entirely, and get a head-start on their careers.
If you’re considering going to college to earn one of the dreaded humanities degrees (read: anything other than Engineering, Math, or Hard Sciences), then it may be time to think again.
Sure, an Econ degree may still end up paying the bills, but will a degree in Psychology, Communications, History, Philosophy or Sociology end up paying big dividends?
Realistically, probably not. And especially not if you’re paying for a private school education, or for tuition at an expensive for-profit school.
What Have the Studies Shown?
Now that I’ve gotten all my warnings out of the way, let’s drill-down into the data.
Keep in mind, though, that these studies are typically funded by groups who promote higher education (for any number of reasons – from being funded by the colleges and universities themselves, or by the Government, who stands to make a killing on student loan debt), so they have to be viewed skeptically.
A number of massive studies have proven for years, and continue to prove that the costs associated with going to college are in fact worth the expense, since getting that degree will, on average, increase earning power by enough to make a major difference over one’s lifetime.
Remember though – this data is based on previous experience, meaning the old economy, old GDP growth rates, old inflation rates, and outdated costs associated with getting your degree.
Virtually nothing has risen in price more than the costs of a college degree, other than college textbooks, and virtually nothing has flattened out as much as the average earning power of college graduates.
Anyway, I’m just an observer with anecdotal data – here’s what the professionals have to say:
The 2014 Federal Reserve Bank of New York Study
In June 2014, two Federal Reserve Bank of New York economists (think they have a reason to pump up student loan debt?) named Jaison Abel and Richard Deitz released a study that every major media portal has latched onto, and used as evidence that it is, in fact, still worth it to go to college to get a bachelor’s degree.
Their study found that the average return on investment for a bachelor’s degree has hovered around 15% since the year 2000, “easily surpassing the threshold for a sound investment” (in their words).
But in my opinion, this study is incomplete, because of the way that they decided to calculate ROI.
To determine ROI, they simply took the average cost of an undergraduate education (I wonder how they got to that number), and compared it to the wages that college grads could expect to earn compared to the wages that those with only a high school diploma are expected to earn, and counting the difference all the way to retirement age at 65.
What’s Wrong With Their Calculation?
I thought you’d never ask!
The study doesn’t take into account the amount of money that was lost by choosing to go to college rather than choosing to enter the work force four year earlier.
Instead of college, someone who graduated high school could have started working right away, and in the modern economy, it isn’t even guaranteed that their first job out of high school would pay much less than a recent college graduate.
With so many college graduates working at unpaid internships, stringing together part time piece-meal work, or freelancing to try and get by, it’s no wonder that many students are choosing to skip college and head straight into the workforce.
Over those four years of working, we can expect that the new worker is likely to receive a raise each year as well, so their average annual income won’t be limited based on whatever they can earn the first year out of high school, it should be appreciating with each year of experience they complete on the job.
In some fields, that may not amount to much, but for many others, like the paths toward becoming an Electrician, Plumber, Contractor, Mechanic, this could amount to some significant raises, and potentially earn the high school grad even more than a new college grad is likely to get with a few years of their own experience.
The modern workforce doesn’t really require a traditional college education, as evidenced by the recent Business Insider article about Google opening their doors (and cubicles) to those without college diplomas.
How long will it be before other companies follow Google’s lead and start picking up talented young programmers who haven’t been ruined by the trappings of stifling undergraduate degree programs?
The value of a college degree continues to depreciate, and will continue to be eroded heading forward into the future, especially by the time that those now in school (or considering signing up for massive student loan debt) will be retiring at age 65.
By the way, who is still planning on retiring at 65? That number is so ridiculous for this calculation, especially considering that there’s virtually no chance any Millenial or perhaps even many Gen X’ers will be able to stop working that early.
There’s no accounting for the opportunity costs of carrying excessive student loan debt once the graduate does get their diploma and is sent out into the wider world.
What about the fact that they’ll have trouble qualifying for car loans, mortgages, business loans, or other financial opportunities simply because of the fact that they’re drowning in a pile of debt?
And finally, where is the calculation for the inflating cost of bachelor’s degree, which rises each and every year to a new astronomical height? Why wasn’t the increasing cost factored into the algorithm that these obviously intelligent Federal Reserve Bankers put together?
With college tuition, textbooks and other associated rising at a steady rate every single year, it doesn’t make sense that the inflating costs of college degree programs weren’t taken into account.
The Propaganda Problem
We’ve got a major problem in this country with propaganda – and it’s even scarier because it’s not being driven by a nefarious group of evil bond villains, but by corporate entities, boardrooms, CEOs, the deans, presidents and even professors at colleges and universities across the country.
The simple fact is that higher education, and excessive student loans, are powering a massive portion of our modern economy, funneling wealth from the taxpaying middle class and into the hands of the elite who run this whole sham.
While you get busy burying yourself in student loan debt, these guys and gals are laughing their way to the bank, playing rounds of golf at the country club, and traveling the world in their private jets.
And the worst thing about it all? You’re lead to believe that there’s only one way to open up that giant door of opportunity that will let you live like they do – by saddling yourself with extreme student loans, digging yourself into debt, and becoming a good little wage slave.
But What Do I Know?
I’m just a guy with a college degree (dual Bachelor’s actually), but I’m not that great at Math, I haven’t run any double-blind studies, and I am shooting from the hip with lots of anecdotal evidence about the downsides of going to college.
I did have a great experience in school, racked up quite a large debt load myself, but managed to find a great job and am now doing ok for myself, but I worry about the future of this country, those who aren’t going to have it as easy as myself, and especially what will happen if this whole student loan bubble bursts.
My rear-view mirror is full of images from the mortgage meltdown, and I’m just hoping that we can somehow start deflating this new student loan bubble before it explodes.
That’s the purpose of this website, and the point for this article as well. Hopefully it’s at least made you think twice about accepting blatant propaganda without doing some of your own research.
What Should You Do?
If you’re looking to get into a technical field, a hard science, or something lucrative like finance, then I wouldn’t worry too much about taking on student loan debt.
As long as you keep the debt manageable, go to a reputable school, get good grades and come out of school with some actual industry experience (make sure to sign up for as many related internships as you can!), you should be able to find a way to float on.
But for those of you considering humanities degrees, education degrees, art degrees or a degree in some other subject that modern capitalist society has deemed to be of little worth, be prepared for a long, hard road working your way back to zero.
A better option for you might be looking into alternative education opportunities, like the Khan Academy, which offers college-level courses absolutely free.