More than half of older millennials with student debt say their loans weren’t worth it. Crushing debt combined with a brutal job market due to the pandemic have them questioning the entire concept of going to college. And you know what? I agree.
The American Dream used to work like this: get good grades in high school, go to college and earn a degree, get a good-paying job, get married and have 2.3 kids, buy a big home in the suburbs, retire at 65. Instead, here is where we are today: get good grades in high school, take on thousands of dollars in student loans to go to college, settle for a job with a salary that barely covers student loan payments, take on more debt to go back to graduate school and defer student loan payments, graduate and take a job that still barely covers student loan payments, spend the next twenty years paying down student loans instead of building wealth, never be able to retire and continue working for the rest of your life.
We need to rethink the entire educational system, but before we do that, it is imperative we teach high school kids how to conduct a simple cost/benefit analysis. If you have to take on $50,000 in student loans to go to college and the starting salary in your field upon graduation is $30,000, then you are better off not going to college because you will struggle to make the monthly student loan payments provided you find a job upon graduation. Conversely, if you have to take on $50,000 in student loans to go to college and the starting salary in your field upon graduation is $80,000, then you are better off going to college because you will be able to cover your student loan payments. This simple exercise can save you financial heartache for the rest of your life.
Universities — especially the Ivy League leagues — are also at fault. It currently costs $200k to attend Harvard for four years — and that’s just the tuition! I get it — Harvard has a great alumni network, looks great on your resume, and can open doors — but come on, is it really worth $200k plus room and board for a piece of paper and bragging rights?
The top universities have become more selective with admissions, making it harder to get in, which then creates a feedback loop — the lower the acceptance rate, the more prestigious it is for those that are accepted, which leads to more applications and a lower acceptance rate.
What are universities doing with all this tuition money? They are spending it on attracting professors, which they then tout so they can appear even more prestigious. Never mind most of these professors have spent virtually no time in the real working world and teach theories which are practically useless upon graduation.
Think about your own experience with college — how much of the knowledge imparted to you by professors have you used since you started working? I bet your answer is little to none! It’s like that old cliche in the movies when it’s the new employee’s first day and the boss tells him, “Forget what you learned in college.” In this case, the cliche is true.
Here are some guidelines for college in general:
*If you are independently wealthy or someone else has offered to pay for your education, then by all means go to college.
*If you need to take on student loans to go to college, you need to find out two numbers: 1) the realistic starting salary of someone in your chosen career field, including the after-tax amount you will be paid monthly; and 2) your monthly student loan payment upon graduation. If your monthly student loan payment is more than 25% of your monthly after-tax paycheck, don’t go to college — or at least consider another major that will make these numbers work.
*Most MBA programs cost too much money and are worthless — especially if you are already working in the business world. You would be better off reading The Personal MBA and getting a variety of on-the-job learning experiences. An MBA might open a door for you — but hard work, perseverance, and networking will take you much farther.
*Before choosing a college major, try and get an internship or some volunteer experience actually doing the job you think you will like. The truth is you won’t know for sure until you actually do the job whether you will like it. I know so many people who graduated from college and are working in completely different fields after their first job didn’t work out. A finance major who became a realtor after not liking finance. An education major who hated teaching and became a wedding planner. A doctor who detested working with insurance companies and switched career fields to information technology. A college dropout who started his own restaurant business. These are actual examples of people I know.
*If you hate college, go to trade school and learn a skill. Some of the wealthiest Americans are small business owners — like plumbers and electricians — who learned a skill and eventually started or acquired their own business.
*Don’t go to college just because that’s what everyone is supposed to do after graduating high school.
College is not going away, but if tuition rates (and room/board) continue to increase, more and more high school graduates will pursue other means of work because obtaining student loans just isn’t financially viable. College is a financial cost/benefit decision — and it should be treated like one.