Like most things in life, a rule of thumb, when deciding what to do about your education, should be, don’t spend money you don’t have on something you cannot afford. A college education is no exception.
I had this thought when watching the State of the Union Address in January. President Obama honored a young man in the crowd who had recently been accepted into college and was the first person in his family to pursue a college education. That truly is a great achievement and something that should be honored.
However, in the next sentence, the President went on to talk about how he wants to work with Congress to help college students out of debt caused by taking on too many student loans. A noble idea, but let’s look at the root of this problem. People are taking out enormous amounts of loans to pay for an expensive college education(s) in order to set themselves up for a career that does not pay well enough to afford your loan payments once out of school.
We have generations of graduating high school students thinking that in order to get a job and make something of themselves they have to go to college for four years and get a degree in…anything; communications, education, marketing, puppetry, etc…. It used to be a no-brainer. Any college degree meant when you graduated you would be given a job that paid well and you would be able to pay back any loans you took out to get through school. The fact is that the market value of many college degrees has plummeted in the last 15-20 years and the matter of whether or not college will pay off in the future is now a question mark.
Let’s play this out in a real-life example of someone I knew while I was bar tending my way through my undergraduate years. A girl I knew went to a very expensive, prestigious, private school and got her degree in Sociology, took out an enormous amount of student loans. Then followed it up with an even more expensive Master in Social Work from the same school and took out even MORE loans. By the time she graduated she had a BA, an MSW, and over $100,000 in student loans to pay back in a field that is not known for lucrative salaries. She was buried in student loans and had no real way of paying them back. The interest will be with her for 50+ years.
What are we talking about here? Is social work bad? Are jobs that do not pay a lot of money not worthwhile careers? OF COURSE NOT! It all comes down to making GOOD DECISIONS!
Let’s go back to Obama’s friend at the State of the Union address. Let’s assume his parents never opened a 529 account and he will be paying for college himself. There are a couple decisions he could make that will make his life a LOT better. Decisions like working through school, being able to pay for some of his education up front will save him an enormous amount of money in the future. Choosing to go to a cheaper community college or state school rather than the expensive private liberal arts college will also make college much more affordable. If none of those decisions would make his decision to go to college affordable, then he could also look at the option of going to a vocation school and learning a trade. The main idea is that there are many choices to a graduating senior in high school other than getting an absurdly expensive four-year college degree and subsidizing most of it with loans.
For example, in our industry of heavy machinery there are always job opportunities for good diesel mechanics. As more and more companies consider buying used forklifts, companies like National Warehouse Equipment are in need of more good experienced technicians. Vocational schools where you learn and get certified in these trades are FAR less expensive than a four year degree and a person can make a very comfortable living fixing and building machines. The same goes for electricians, contractors, and many other skilled workers.
My point is that your education is an investment. You are taking a risk that the money you put into your education will yield good enough returns to cover the money you are spending and more. If your investment doesn’t pan out and you lose, it is your responsibility to cover your losses because that is the nature of a risk. It is the same idea as the stock market. You invest money and you are taking the risk that your money will be able to return. If you fail in the stock market, you should not expect someone to swoop in and save the day…the same goes for secondary education.
Going to college is a great experience, but it should be more than that. It should be part of a calculated, intelligent decision that takes into account the risks and rewards of choosing that path. And it is not the best path for everyone.
For another example of a BOOMING industry that needs skilled workers and does NOT require a traditional four year degree, check out Andy’s article on the trucking industry. Good commercial drivers are always in need and the pay/benefits are constantly increasing. Check it out and click here!