Personal Finance

Opinion: Going to College Is Still an Important Step to Building Lifetime Wealth

Expertise: Landlording & Rental Properties, Real Estate News & Commentary, Personal Finance, Real Estate Investing Basics
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Ask 10 people in the real estate industry about the value of a college degree and you'll get 10 different answers.

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My BiggerPockets colleague Andrew Syrios makes an ardent case that college degrees are overrated. Another colleague, Sterling White, doesn’t go quite so far but points out that many college students simply follow the herd into college without any idea what they want to do with their lives. Still other real estate pundits propose an alternative path in the form of real estate educational programs.

We can all agree that not everyone should go to college. Not all jobs require a degree, and in some fields, a degree doesn’t even help differentiate your resume. If you know you want to become an electrician, you need to attend trade school, not college.

But what about people who don’t know exactly what they want to do? For them—even those who end up in the real estate industry—college degrees can still end up helping their career.

The Data: College Graduates Earn More Money

It comes as no surprise that college graduates earn more money than their less-educated counterparts.

One study by the Social Security Administration found that men with bachelor’s degrees earn $900,000 more than men without them. The study found a lower figure for women at $630,000, as many women drop out of the workforce when they have children and generally earn less for similar work.

Another study by Georgetown University found an even starker difference between college grads and non-college grads. Their data demonstrate that the lifetime earnings advantage of a college degree is $2.8 million.

Critics contend that these studies compare apples to oranges. That they compare accountants and executives to secretaries and checkout clerks. But isn’t that the point of going to college—to qualify for higher-skill, higher-pay positions?

The Logic: Sort Yourself Into a Higher Category

Instead of answering phones for the regional manager, you can work your way to become the manager yourself.

I can hear you objecting already: “But you don’t need a college degree to become a real estate agent or sell mortgage loans! And certainly not to become a real estate investor. If I want to go into real estate, why do I need a college degree?”

You don’t. But it still helps you.

5 Reasons to Invest in Near-College Real Estate

It helps you in several ways. First, having a bachelor’s degree sorts you into a higher category than the candidates without one who applied for the same job. Given the choice between two otherwise similar candidates, employers opt for the one with the degree.

Second, college degrees put you in a better position for advancement. Your career doesn’t end with your entry-level job, despite earnings misconceptions among college students. If you want to earn more money, you need to pursue promotions and climb the ladder. And at a certain (not very high) point on that ladder, workers without degrees bump their heads against a glass ceiling.

And if you want to invest in real estate, you need capital for down payments. That capital comes from your savings rate: money you earn from your job but don’t spend. Get a degree, work your way up the ladder, earn more money, and use that high salary of yours to invest in real estate and reach financial independence young.

Related: 9 Things 20-Somethings Should Do to Be Financially Free by 40

My Experiences

I didn’t know what I wanted to do when I enrolled in college. For that matter, I had no clue even after I graduated with several not-so-useful degrees in psychology and criminal justice (with a minor in anthropology, thank you very much).

In other words, I was exactly the kind of person that the skeptics argue should have skipped college.

Yet I've never regretted my college degrees. To begin with, I never would have gotten my first internship out of college working directly with the owners of a nationwide mortgage lender—an internship that evolved into a full-time job as an account executive handling hard money loans to real estate investors. That job was my first exposure to the real estate investing world, which has shaped my entire career.

I didn’t need my psychology degree to write mortgage loans. Nor did I need it later when I went to work for an e-commerce company selling legal forms for landlords. But the owner of that e-commerce company bothered reading my resume because I had a college degree.

Later, when I split off on my own to found a software company, I technically didn’t use my psychology degree either. Except that our primary marketing strategy involved writing clear, articulate articles, which I learned how to do in college.

Does Your Major Matter?

For some careers, you need a specific major. You need a premed biology degree to get into medical school, for example. Teachers generally require a teaching degree, and most law schools look for a degree in English or history.

But for most careers, you don’t need a specific major. Many critics of college education point to this fact, as they deride college degrees. “See? Most graduates never even use their degree in their eventual career!”

It doesn’t matter. In the eyes of employers, having a degree separates you from the hoi polloi, the plebeians, the unwashed masses. Hard stop.

modern library: empty reading room with tables

Graduate Degree vs. Bachelor’s Degree

The aforementioned Social Security Administration study shows that people with graduate degrees earn even more money still than those with bachelor’s degrees. Does that mean you should run out and get a graduate degree as soon as you graduate college?

Not necessarily. Unlike bachelor’s degrees, which serve mostly as a differentiator from those without them, graduate degrees serve as a specific requirement for one job type.

For example, my wife went to work as a paralegal after graduating college. She didn’t know what she wanted to do with her life. After a few years of soul searching, she found her calling as a school counselor, which requires a master’s degree. So she went back to school to meet that requirement.

Consider graduate degrees a means to a specific career end, rather than a floor qualification across multiple fields. Unless you know exactly what you want to do, rethink graduate school.

The Albatross of Student Loans

Critics of college education point to the worryingly high student loan debt in the U.S. and elsewhere. They point to young adults struggling to buy a home under the weight of student loans or how they delay young adults from investing.

Related: Should I Pay Off My Student Loan or Invest in Real Estate?

They’re not wrong to be concerned. The cost of education has skyrocketed in the last 30 years, as colleges hire more secretaries than professors in an endless cycle of administrative bloat.

Even so, no one says you have to pay average tuition prices or take out student loans. There are infinite ways to pay for college, from scholarships and grants to ROTC to working part-time to employer debt forgiveness and beyond. Some students attend community college for two years before transferring to a four-year university.

Get creative with it, and find a way to do it affordably rather than the lazy route of just borrowing the problem away.

Final Thoughts

The skeptics aren't wrong when they point out that many real estate jobs don't require a college degree. You don't need a degree to become a property manager or sell property insurance.

But having a degree opens far more doors in your career, both to score entry-level jobs and to climb your way up the ladder. I don’t use my psychology or criminal justice degrees in my day-to-day work teaching real estate investing or managing a property management software company. But at each major junction in my career, my degrees helped me secure the jobs that set me on this trajectory.

If you have no idea what you want to do with your life, consider taking a gap year to get to know yourself better. If you still don’t know, go to college, and find a way to make it affordable without heavy student loans.

It will leave infinitely more paths open to you in your career, whether you enter the real estate industry or not.

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How has a college degree helped you (or not) in your career? If you haven’t attended college yet, what will help you make the decision? 

Share in the comment section below.

G. Brian Davis is a landlord, personal finance expert, and financial independence/retire early (FIRE) enthusiast whose mission is to help everyday people create enough rental income to cover their ...
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    Mikael Winkler Rental Property Investor from Columbus, OH
    Replied about 1 month ago
    Very interesting article. Frankly, as a college graduate who isn't using my degree, I had drifted into that "college is pointless for most" catagory. However, I do see how that mindset tends to undervalue the experiences you gain and what you learn about yourself. The key, as you mention above, is to try to get creative in lessening the financial burden.
    G. Brian Davis from Baltimore, MD
    Replied 30 days ago
    Absolutely Mikael - there's a big difference between graduating with little/no student loan debt and graduating with $150K in debt!
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied about 1 month ago
    My answer would be that it very much depends both on 1) what your (non-financial) goals are and 2) what you are majoring in
    G. Brian Davis from Baltimore, MD
    Replied 30 days ago
    I hear you Andrew! Rather than put words in your mouth, I tried to leave it at linking to your published work on this topic.
    Virgil Pryor Real Estate Agent from Memphis, TN
    Replied 29 days ago
    I am currently enrolled in college and i fell personally that college motivates me more because I'm around lots of great competition.
    G. Brian Davis from Baltimore, MD
    Replied 28 days ago
    Thanks for the ground-level perspective Virgil!
    Nancy Roth Investor from Washington, Washington D.C.
    Replied 29 days ago
    Excellent, Brian. Thanks for posting. Education isn't about getting ahead materially. It's about gaining knowledge and perspective that help you function and communicate better in the world, whatever you do. Turns out I was lucky in my choice of studies: I majored in agriculture. I did very little with it in my 9-5 career years, but the studies of land resources, soil, water systems, horticulture, botany, city planning (yeah really), and earth science turned out to be very helpful to me in real estate. In my family women were not sent to college--until I was, thanks to my mom's advocacy. A great gift to me, and absolutely a net positive in every aspect of my life. Totally opened my eyes to so much in the world. Also FWIW I think someone who really wants to learn will find great teachers anywhere they go, including low-cost community college. My sister-in-law taught at a local community college for her career and she said she had amazing, motivated students, a lot of whom were the first generation in their families to go past high school. So one financial strategy might be to focus more on how you can be productive and get what you want out of the experience, and less on the brand name. Education does not have to break the bank.
    G. Brian Davis from Baltimore, MD
    Replied 28 days ago
    Great points all around Nancy! And congratulations on being the first woman in your family that graduated from college!
    Jesse Hunter New to Real Estate from Dallas, TX
    Replied 29 days ago
    I disagree with this article, but that's ok. There is a huge grey area between high school graduates and college graduates. Does this data take into consideration people who develop specialized skills on their own or through trade schools? As someone who has built a software company, are you saying that between two candidates, one with a college degree vs. one without a college degree, who has twice the skill and elegance in how they write code, you would choose the college graduate? I don't believe you would. In fact, neither would the top tech companies in the world. Apple, Google, and Netflix have all been known to hire skilled workers without college degrees. "Our company, as you know, was founded by a college drop-out, So we’ve never really thought that a college degree was the thing that you had to have to do well. We’ve always tried to expand our horizons” stated Tim Cook CEO of Apple, Inc. You could argue that, outside of the tech industry that this is "just the way things are". However, all companies will essentially become technology companies in time. As we continue to innovate and push forward, we need to challenge these outdated ways of thinking, not accept them. The price of higher education in this country is laughable and the debt that it straps onto the backs of our youth is terrifying. Just my two cents.
    G. Brian Davis from Baltimore, MD
    Replied 28 days ago
    Thanks for the dissenting opinion Jesse! Keeps the debate lively. You're right of course that a tech company will typically hire the candidate with better technical skills, but when skill levels are similar, the edge goes to the college graduate. You make a great point that the cost of higher education in the US is outrageous. It's ripe for disruption!
    John Barnes Flipper from Manassas, Virginia
    Replied 27 days ago
    Who wants a "job"? A college degree impresses only those who have one. Brandon Turner doesn't have one. Need I say more?
    G. Brian Davis from Baltimore, MD
    Replied 26 days ago
    You need your initial investing capital from somewhere. For most of us, that's a job. I'm an entrepreneur and investor, but like nearly everyone else I started with a job to gain skills and earn capital to invest.
    Earl Wright from Palmetto, Florida
    Replied 25 days ago
    Excellent article. Let me start by qualifying myself as formally uneducated. I chose to go to work in the trades immediately after high school. I have been very successful in my trade and have had my own small business for 22 years. During my time in the trades I started investing in real estate in order to fund my retirement. I am 52 years old and retired comfortably. I have gained all of my knowledge through the school of hard knocks. I have been in the camp of, "college is a waste of time and money for most people" I have made the argument of, most people not working in the field of their major. I have argued regarding the cost. More recently I have argued about colleges becoming more and more political than educational. While I still think all of these arguments are valid you have reinforced a statement made by my oldest, bachelor holding son. He said having the degree will never hurt him and it may in some cases be an advantage. He has completed his degree debt free without financial help from the old man. He too often argues that college is not for most people. This young man has his degree in history and worked as a school teacher for 5 years. He left his teaching job to pursue his real estate investing and drywall businesses full time. He was able to work as an investor part time to make enough to go full time. AS you know school teachers aren't highly compensated. I believe the biggest issue in the education system is the cost and the choices a large number of young people are making to take on enormous amounts of debt. I am shocked that I do not read more often about the fact that many of these people are borrowing their costs of living, together with the school cost all wrapped up in packages called "student loans." This is a terrible injustice to these young and uniformed people that are using these loans for all of their expenses. These are the same people calling for federal debt forgiveness. I will say I am more inclined to support a persons decision to pursue a college education now than I was prior to reading your article. I still think more people need to consider trade school or work experience but as you said it largely depends on a persons field of interest and /or weather they know what they want to do with themselves. I can surely understand an 18 year old not knowing what they want to do for the rest of their lives. Perhaps a military option and the benefits available should be promoted a little more. Especially for those that just don't know what to do next.
    G. Brian Davis from Baltimore, MD
    Replied 23 days ago
    Thanks for sharing that perspective Earl, always nice to hear these kinds of experiences on the individual level!
    Timothy Smith Investor from Buffalo, NY
    Replied 22 days ago
    I wholeheartedly agree that college is not for everyone. It is crazy that some schools even offer "exploratory majors", but hey, they're selling a product too! The norm of going to college as an extension of Grade 13-16 and beyond is on its way out, IMHO, and I only see that being expedited by the current pandemic. I've been seeing a lot of "anti-college" mentality from my real estate colleagues lately, and found your article apropos. Honestly, I wonder if a lot of this mentality is simply a form of self-validation. I fall into a very specific niche as a classical musician: college, and graduate school, was a necessity to gain the skills required in my industry. Unless you are a generational talent, undergraduate and possibly graduate studies are requisite. Rather than taking the conservatory route, I attended two liberal arts colleges that helped "round out" my education through general education courses and a traditional college campus experience. Psychology, literature, and history, in addition to my music courses, were degree requirements. In addition to studying with some of the giants in my field, I developed a network of friends and colleagues around the country -- and world -- that not only make my life more enriching through shared musical and social experiences, but also provide work opportunities. I used to joke that I had a couch to crash on in every city in the country, mainly from the connections I built in school. The value of these experiences cannot be measured in cash flow, cap rate, or ROI, but have made my life richer. Of course, I have debt, but it is a means to an end that I would choose to do all over again. My college experience taught me critical and creative thinking, in addition to problem-solving skills. Musicians spend countless hours practicing and rehearsing, while learning, honing, and analyzing their "product". We musicians also get tremendously accustomed to rejection and failure. For example, I've taken roughly 50 professional auditions in my career and have only won 3 of them! So, licking your wounds and learning from failures is something that comes with this field. Some folks give up and move on to another career, some become the superstar performers and pedagogues of our industry, and some -- like me -- use the lessons learned to develop a secondary career.
    G. Brian Davis from Baltimore, MD
    Replied 21 days ago
    Thanks for the thoughts Timothy!