Is College Still A Good Investment?

There was never a doubt in my mind that I would go to college. My mom drilled it into my head so much that I was a little flabbergasted by friends who decided to forego the undergraduate experience. Why would anyone decide to skip college? I thought a university education was the only way to get ahead.

Now, older (and wiser? — that’s still up for debate), I see that many of the friends who decided not to attend college don't seem to have paid much of a price for their decision. Their life looks awfully similar to mine, and they don’t earn a lick less than I do.

So, did I waste my college years? Is college still a good investment? Let’s take a look at both sides.

My Mom's Take: You NEED a College Degree

The latest released US Census information for job pay (2006) shows that college graduates earn, on average, almost twice as much as non-college-grads. Those with advanced degrees earn almost three times as much as those who only have a high school diploma, on average.

Additionally positive, college graduates get to experience university life. Learning from classes, being exposed to people from many walks of life, and entering discussions with and relating to those interested in similar things can be invaluable experiences in college. Even the non-traditional college experience can be eye-opening and well worth the investment.

Earning twice as much sounds pretty good right? So what's the downside?

What Mom Never Told Me

Of course, there is no getting around the looming college debts or the lost years of potential job experience. Both can be severely negative aspects of attending college.

In my case, for example, my college debt still flits about my head. It is a pesky annoyance, and right now, while I earn the same as my high school graduate friends, they are leaps ahead of me in net worth. Many other college graduates also find the debt counterproductive in the early years of their careers.

Also, the fact that high school graduates can immediately start full-time jobs while their counterparts study for four years may put them ahead of the pack. The job experience can lead to earlier promotions for the high school grads, placing them in better career positions in their twenties.

However, when the college student graduates, he can usually find entry-level positions unavailable to non-college-grads, immediately raking in close to the same income as the high school graduate. From there, his income is expected to eventually double over the non-college-grad. Something to keep in mind... .

Investment or Waste?

So is college a good investment? Obviously, there are many factors to consider, including the field of study and the length of time on the new job.

General fields of study often don’t garner large incomes, but specific jobs in technical and medical fields do. Investing in an education in these fields often brings greater returns than liberal arts fields do. Of course, this is all dependent on the student’s passion: A doctor who hates his work will not attract new patients, while a fiction writer who loves her job has a better chance of selling books.

The other factor to consider, the projected length of time in the new job, is also a contender. An 80-year old woman obtaining her medical degree, for example, will not earn back the tuition she pays. In the same light, it would take a middle-aged man a while to see returns on his education investment, if he sees returns at all.

While the numbers still look pretty good for a student getting a computer science degree, for example, there is also the troubling trends in earnings vs. cost. A report by the National Center for Public Policy shows that from 1982 to 2007, college costs rose 439 percent while the median income only rose 147 percent. Clearly college costs are rising faster than the benefit they confer is.

Obviously this trend has been one of the reasons that students must be more discriminating in what types of degrees they get and which colleges they attend. As prices skyrocket, most students will need to do a cost-benefit analysis to see if their education has a chance to pay for itself. Obviously there are many variables to this, but at a minimum, my mom's belief that college is always the best choice is becoming more and more suspect.

Tips To Get The Best of Both Worlds

If you or your child is wrestling with this question right now, here are a few ways to get the best of both situations:

  • Half and Half: Attend school part-time while holding down an internship, temp job, or part-time job in the field you'd like to explore once you graduate. This provides work experience and networking opportunities while your working toward your degree.
  • Network from School: Many higher education institutions have career centers and alumni connection programs that can help you start networking with potential employers and colleagues while you're still in school. Figure out the best way to make use of those resources as soon as possible.
  • Harness the Power of the Internet: With social media, there's no reason why you can't start getting involved in your chosen field from your dorm room. Follow the right people on twitter and join in the conversation, join facebook and linkedin groups that focus on your passion, and follow blogs and websites that keep you in touch with the changing face of your field. Interacting with people who are already doing your dream job is one of the best ways to jump in yourself.

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Anonymous's picture

MoneyCone wrote:

Mon, 02/21/2011 - 16:28 Comment #: 1

With spiraling costs of a college education, I sometimes do wonder!

Christa Palm's picture

Christa Palm wrote:

Mon, 02/21/2011 - 17:15 Comment #: 2

Very true, MoneyCone!

Anonymous's picture

The Dividend Pig wrote:

Tue, 02/22/2011 - 17:46 Comment #: 3

I've asked myself this question many times, and the answer really does depend on numerous factors. With that said, I've found a strong work ethic and persistence will take you farther than any college degree, no matter the prestige, or price tag.

Anonymous's picture

jeff @ sustainable Life blog wrote:

Tue, 02/22/2011 - 23:19 Comment #: 4

I constantly wonder this - Even though I take a kind of black-cloud view of college, there's no doubt in my mind that it has helped gotten me where I am today (career wize). Even though I was delusional enough to think I was going to be making 50k+ per year out of school, I didnt, and now I'm confronted by the other side of the equation: student loans and paying them back.
It sucks from this end, but once those are gone, it will probably be nothing but a good thing for me, long term.
Also, I made some great friends, and you cant price that out.

Anonymous's picture

Invest It Wisely wrote:

Fri, 02/25/2011 - 04:22 Comment #: 5

I think it definitely still is a good investment, but I also think the educational system is suffering from some bloat in that many people are going into college when they would honestly be happier and probably make more money elsewhere, and some people use college just as a way to pass four years of time. This push to force everyone through higher education is actually increasing its costs, lowering its quality, and making it less accessible to those who can truly benefit from it and benefit others as well.

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Weekend Reading: Yearning for Spring Edition | Invest It Wis wrote:

Fri, 02/25/2011 - 13:11 Comment #: 6

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Christa Palm's picture

Christa Palm wrote:

Sat, 02/26/2011 - 21:32 Comment #: 7

Dividend Pig, very true! I know I will get farther in life working hard than I would in taking any additional college courses.

Jeff, I think college takes a little while to really show profits, but once it does it's well worth it financially. As for personal growth (and fun friends!), I wouldn't give up my college expereince.

Good point Invest It Wisely! My sister is in college right now, and she says the quality of her education is very much lacking from when I discussed my class load (many moons ago...) with her.

Anonymous's picture

cpascal wrote:

Sun, 03/20/2011 - 13:21 Comment #: 8

I think that college is a good investment if you don't have to go into debt in order to do it. There are numerous ways to make college debt-free, such as going to a community college for the first couple of years, and getting college credit through credit-by-exam programs like the CLEPs.

Christa Palm's picture

Christa Palm wrote:

Tue, 03/22/2011 - 18:18 Comment #: 9

Great point, cpascal! I loved my community college and state college experiences (with much lower debt!).

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Personal Investment Articles and Financial Planning | Person wrote:

Fri, 04/08/2011 - 00:25 Comment #: 10

[...] presents Is College Still A Good Investment? posted at MomVesting, saying, “Obviously there are many variables to this, but at a minimum, [...]