Is a college education always worth it?

Is a college education always worth it?

I anticipate that the title of this article is likely to interfere with some people, but please carry with me and continue reading. Im really a strong advocate of learning and education, as Im a college graduate in chemical engineering. However, the main arguments that I would like to present are that education does not have to be formal in order to be effective, and that the main purpose of formal education is to get a better job.

Basically, college education is an investment in your future. Just as in evaluating the benefits of any investment, you need to perform a cost-benefit analysis, with the cost of tuition and fees, and the benefits are the increase in salary you can expect due to your graduation. The higher the cost, the greater the benefits must be for the investment to make sense.

Lets say you have a full riding school with all the clothes. You would be crazy not to take advantage of such an opportunity. On the other hand, what if your college education costs over a million dollars? The higher salary you could expect would have been better, much higher for such a big investment to be economically justified.

Learning versus formal education

Often the students go from college and think that their years of learning are too good, and for that they are usually grateful. This is unfortunate. In fact, I think your best year of learning usually occurs after graduating from college. Let me explain.

While we are part of the school system we are usually not inspired to learn, mainly because we have to be there. Even when it comes to college education, we are often socially obliged to be there by family, friends and society as a whole. Since we usually feel uninspired in such a stiff environment, the amount of learning we really absorb is minimal.

Once we have graduated from the university, we are now liberated from formal education, and can exert knowledge on our own terms. We can choose to study astronomy, history or basket weaving if we wish. The reason we believe we can learn more effectively after college is because for the first time in our lives we are really looking for knowledge and not a piece of paper. From this position, learning is done on our own terms and at our own pace. Now, learning has become our choice. And thanks to the internet and your local library, its usually free!

A fast and dirty look at the numbers

Lets say youre thinking of a career in medicine specializing in saying, pediatrics. Since it usually takes about 12 years to complete your school and residence, you would not be able to call yourself a pediatrician until you are 30 years old. Assuming you are required to pay $ 125,000 in student loans that will be paid out in 10 years with 5% interest, you would pay $ 15,780 in loan payments annually until you reach 40 years. This is not a big problem because pediatricians make around 135,000 dollars a year, but it will probably put your investment program in wait until the loans are paid. Lets assume when your loans are paid in full, you start investing 10% of your salary, or $ 13,500 per year. If your investments earn you 8% per annum, you have accumulated $ 1.1 million when you reach a pension at age 65.

Now lets look at someone who will be a hairdresser. Assuming you can finish your training in 2 years, you will be ready to start working for 20 years. Now you start investing 10% of your annual income of $ 30,000 or $ 3000. If your investment earns you 8% annually, your account has grown to $ 1.3 million at your 65th birthday.

As you can see, the high education investment that the pediatrician needs in combination with the hairdressers early start makes the financial decision more or less a wash. The main retrenchment from this discussion is that your decision to pursue a high paying career that requires a comprehensive education training depends on your passion for the field and not because you think it will make you rich. In addition, a big difference in annual salary between careers does not always mean a big difference in accumulated wealth.

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