In the process of advising my two cousins who are in college now and third who is preparing to get into one, I have learned a lot. The one thing that has shocked me is the cost of getting the degree (Avg of $40,000/year, it costs $160,000). For those, whose parents can foot the bill, it may not seem like a big deal but for an average American, it is a lot. Assuming that you are able to earn $50 – $60k after graduation and you are able to pay $10,000/year, it will take 16 years to repay the principle (incl. the interest, it will be a life-long ordeal or worst-case need to file a Chapter 7 to get out of it).
For the minority, who end up in decent careers (which may not even be closely related to what you studied in college), the ROI may justify the degree in some way. But for a majority, especially those who are in unrelated careers that hardly pay anything, a college degree perhaps is not a good investment at all –
Here are some statistics for 17 Million Americans with a college degree (from the article in the Chronicle)
- Obviously, 17 Million are in a job that does not require a college degree
(if you include people in careers not related to their college degree, this number will be higher)
- 5,057 janitors in the U.S. with Ph.D.’s, other doctorates, or professional degrees
- 317,759 Waiters and Waitresses (over 8,000 of them have doctoral or professional degrees)
- 80, 542 Bartenders
- 49,452 Postal service Mail carriers
More occupations are listed below:
This is something that administration and policy makers who emphasize on education as the solution to Jobs should ponder about. Moreover, since many employers seek experience over a degree (unless you are from an ivy league school or in the tech industry) should the emphasis be more on vocational training and practical experience instead of theory in a random subject.
4 comments
October 29, 2010 at 8:13 pm
Yero
Your $40K/year tuition average assumes someone is attending a private, non-profit school ($35K/year). But public schools are under $20K/year (http://politics.usnews.com/opinion/articles/2010/08/24/the-average-cost-of-a-us-college-education.html, yes, I agree the data is 3 years old), which will pull the average cost down.
These statistics don’t indicate if this is the final career for these individuals. This may not be what they want to do; only a stop-gap as they look for a job in their field. Are they doing this full time? It’s reasonable for a college grad to tend bar while going to grad school. 2nd jobs? Retirement income? I know these special cases won’t cover the majority of the 17 million, but it will eat into the numbers.
Additionally, the original thesis does state that a college degree increases earnings on average. So we should consider the other tens of millions of people who would not
I agree that college is not for everyone. But the difficulty is in deciding if that college is not for you without limiting your future career options.
October 29, 2010 at 8:59 pm
Tushneem Dharmagadda
My $40k estimate was an Avg of public and private schools. BU costs $58k/year. The cheapest might be $10k/year or less with aid etc.
As far as the numbers go, I think Chronicle picked it up from Bureau of Labor Statistics (http://www.bls.gov). Am not sure how BLS estimates these. I agree they can be skewed. But I do see a lot of people who do english, history, arts, philosophy, science and some random majors which are totally unrelated to their jobs.
Yes I agree that deciding to go to college or not is a chicken and egg problem.
November 3, 2010 at 9:58 am
J Singh
Tushneem, those are sobering statistics.
An ROI calculation is a factor but it shouldn’t be the only factor in deciding whether to go to college and which college to go to.
Young folks have aspirations, as indeed we did when we were that age. If we dig behind the statistics of those 17 Million Americans, we would find 17 Million stories of why and how they ended up in jobs they are in. How many feel it was a waste of money? I don’t know this, but I would bet a majority of them would describe the college experience as a positive one even though they were not able to capitalize on it.
In a similar vein, as an entrepreneur I know that 90% of new businesses fail. Entrepreneurship is a waste of money, to say nothing of the creative energies and of time. Why, then, do I persist in trying to be an entrepreneur?
Because the journey is worth it.
November 3, 2010 at 10:10 am
Tushneem Dharmagadda
One of the things I forget to mention and emphasize in the blog is about Government’s role in all this. Spending personal money and calculating the ROI is an individual decision. As you rightly said, emotional and intellectual gratification is also an ROI and in many cases we discount that. However, as the Chronicle article also points out, most public schools are subsidized by the Govt. This helps bring down the cost of education. So the larger question is where should the Govt invest tax payer’s money? And as I say in my last para, is it wise to invest in degrees or vocational training?