Look past the surface: A college degree and student loans are one of the best investments you can make

From the Surface

When you look at the current statistics surrounding college and higher education in the United States, the picture looks pretty bleak. In 2017, there were more than 44 million borrowers holding student loan balances of more $1.3 trillion in the U.S. The average student graduates with $37,172 in loans. Not a great way to start your financial journey as an independent adult.

These costs aren’t surprising either when you look at the costs of high-level education across the U.S. The numbers are pretty steep since the cost of tuition and fees is $34,740 at private colleges, $9,970 for state residents at public colleges, and $25,620 for out-of-state residents attending public universities. That $9,970 number is way low if you compare it to the cost of my in-state tuition at the University of Illinois Urbana-Champaign. The state of Illinois is broke as can be, so the state universities have to drive up costs to make up for no state funding. In many states across the country, government funding for universities is dropping, which is driving the cost of education and student debt up even further. But this is a whole other political and economic discussion that I won’t even bother going into now…. (though I would love to).

So yes, higher education is stupid expensive, and the number of loans and amount of interest being paid just to get a quality education is completely ridiculous. However, it takes strength to look past the ugly surface and see that the value of an education is more valuable than you can imagine. You might just think that you’re shelling out six figures for a piece of paper that entitles you to a higher-paying job and a stable career trajectory, but it’s just that type of thinking that is driving this whacked out education system.

Higher education is about bettering yourself, learning new things and making yourself into a more valuable member of society. The purpose of a degree is not to earn more money but to learn more about the world and make yourself into something more.

 

My graduation day from UIUC in 2012 at my favorite watering hole

 

What is an “Investment” in Your Education?

Let’s start off with what an investment is. An investment is when you part with time or money in hopes of getting a return or profit. In the example of higher education, you are paying for tuition, fees and living expenses with the hopes of getting enough out of it that you will be prepared to make more money and establish a better life for yourself after you graduate with the new skills you acquired. Note, it’s not just shelling out $100k+ to get a higher paying job. The college experience is about more than that.

Let’s look at some of the things you can hope to receive as part of your return on an education:

1. Expected earnings increase. I’ll put this as point #1 because yes, no one goes to school thinking it won’t help their chances of earning more in life, but don’t get that confused with just getting a higher paying job. Many times, it’s the skills you learn in school that enable you to make more money for yourself by starting a business, negotiating a higher salary or working harder than your peers.
2. Job skills. Depending on your degree, you learn a variety of different skills throughout your college experience. While getting my degree in civil engineering, I learned not only about design and constructing buildings, but also about cost analysis, business writing, public speaking, negotiation and also how to work really damn hard because my classes were very difficult sometimes. (My C- in Quantum Physics will never be forgotten….)
3. Building a professional and personal network. I made a lot of great friends during college who are now accountants, engineers, business owners, lawyers, doctors, etc, and we still keep in touch. If I need professional or personal advice, potential business partners or investors, I have a lot of great people I could turn to outside of my close friends and family.
4. Life skills. When you pursue a college degree, you’re basically on your own. There is no boss or parents telling you what to do or not to do. You learn quickly about time management, good study habits, personal responsibility and more. It’s pretty much a sink or swim environment.
5. Work ethic. It takes hard work and responsibility in order to get through 4 years of school. What you learn will stick with you for the rest of your life.
6. A hell of a good time. I don’t know about you, but living away from home at age 18 with a bunch of my best friends was a great way to spend 4 years.

There’s more to a degree than a higher-paying job. You just have to dig a bit deeper to understand what you are really returning from your initial investment.

 

The True Value of an Education

Graduating from college is not easy. It requires hard work, long hours of studying, attending class, learning complex subjects, time management and earning money from jobs during the school year and/or summer breaks.

If you compare the cost of a college education to other investments, such as a house or stocks/bonds which yield between 2-10% per year at best, the return almost isn’t even comparable. What is the return on a college education? It could be priceless.

Your freshman year roommate could become your future business partner where you generate $1 million in revenue your first year together. Your time management and speaking skills help you crush it at your first sales job where you receive a $10k bonus. Your first entrepreneurial experience tutoring fellow classmates paves the way for your launching your first company at age 30. You never know where those 4 years could lead you.

If you just want to make more money and have a stable job, there are plenty of professions that offer this opportunity without shelling out $100k+ for a degree. Plenty of companies have opportunities in sales for those without a degree. Construction trades are way undervalued as a valuable occupation. All of my customers in my current job run their own construction businesses and generate millions per year in revenue. Not one of them when to college.

When trying to decide if investing in a college education is right for you, ask yourself “What is the reason I want this degree?” Because if you want to learn about complex topics, develop life skills and work hard for something worthwhile, then a college education could be one of the best investments you ever make.

What are your thoughts on the cost of a college education and it’s value? Do you think it’s worth it? Leave a comment or send me an email!

NYPFGuy