Should U Send Your Kids to College?
Real Estate Investor · Portland, OR · Member since 2009 · 660 posts · 244 votes
What if your son or daughter isn't sure what they want to do? Can you afford to spend $100k+ to educate them .... is it worth saddling them (or you) with so much debt that it will take years to pay back? Has college outpriced itself for those who aren't sure what they want to do for a living? Are some better off averting college and using the $$$ to invest in real estate? Maybe get a degree at Bigger Pockets?! :mrgreen:
Growing up, college wasn't an option. Education just wasn't complete until you graduated from college, period. Even then, that was a minimum. With 4 kids, the bank of mom and dad wasn't really open, except in rare emergencies. Parents and Grandparents did what they could to help with the tuition, but we were on our own as far as books and supplies, and supporting ourselves. Junior or Community Colleges for the first two years, living at home, summers working at a local mill, school terms working for minimum wage in bars, restaurants and gas stations to get by.
Parents putting their kids through college isn't a gift. Making them truely work and struggle for the first time in their lives is the real life challenge. Top Ramen instead of Mom's home cooking. No more of Dad ranting to turn off the lights, they stay off when you get the bill. A time to prove yourself and test your mettle for the first time. It also humbles the know it all kid.
I used to think that "having it made" meant I could afford a full tank of gas.
Perhaps a little more of a "tough love" approach, but a lesson I learned, and think I'm better for it.
IMHO, college teaches you a the language of your chosen profession, that's all. It opens doors that would not otherwise be open to you, but success depends more upon you than your formal education. Character, drive, dependability and a host of other personal characteristics have a lot more to do with success in life.
I went to a community college and lived at home for the first 2 years. That was about $4500 per year, minus books.
Overall when I look at how much it would have cost me to attend the local university, the $4500 for the entire year was about half the amoun of 1 semester at the university.
I am saddled with 100K in debt and the payments stink but I also realize I had some of the best years of my life, I grew tremendously, and I even learned a few things. I think the experience is well worth it, well at least until i write my next check to citi for my student loans at the end of this month
My answer is a short no. I did that with 1 of my 6 kids. Most degrees are no longer cost efficient imo. Make them pay for it and they'll do a better job of deciding to study...Rich
Spending $100K on a university education is a waste of money, IMHO. Even with residential costs, a state college will be closer to $50K. Unless they're going to a top name school, I don't think there's any difference between a degree from one institution or another.
Cain has the right idea. If you can live at home and at least get the basic courses out of the way, you can do it cheaper still.
As to whether or not a degree is useful, I'm torn. Certainly, I couldn't be where I am without my degrees. OTOH, my son's finance just graduated with an English degree and she's working at the mall. My daughters only a year out of high school with a cosmetologists license and I'm sure she's making more than my son's fiance. Go figure.
Because of my education and my degree, I'll be able to afford my children's education...for that reason alone, I'm happy to pay for them to go to whatever school they want to go to...
College may not provide them all the answers, but as long as my kids are serious about getting an education, I'd hate for them not to have the opportunity.
As for using the $$$ for real estate instead, the most successful real estate investors I know got college degrees (and MBAs), so if my kids want to go into real estate, I think college is a perfect opportunity to hone those skills.
And before anyone jumps on me about not needing to go to college to learn everything you can learn in an MBA program (or any program for that matter), I agree with that statement. But, 99% of the people who tell me that they can learn all that stuff on their own never bother to do so.
Actually, I think the main thing a degree shows a potential employer is that you're willing to keep your nose to the grindstone long enough to earn the degree. That gives some assurance you won't flake out on the job.
You also learn a bunch of basics in a relatively regimented way. So, and employeer has a reasonable expectation that you know the fundamentals of your field, and they will have to teach you just the specifics. Certainly, it would be more expedient for you to just learn everything you specifically need to know to do that job. But few employeers are willing to make that investment.
Many years ago, when I first hired on with Shell Oil, with a degree, one of the first things they did was to send us to a nine week, full time course on exploration geophysics. Not many employeers make that kind of investment these days.
Let me give you my perspective from renting to college kids for over two decades.
The ones who have some skin in the game, as in _having_ to work to pay for some or all of their education get 'centered' real quick -- either realizing that college is not for them or buckling down and working their asses off to reach their goals.
Unfortunately, the majority of students I've come into contact with are getting a degree in 'party' and are simply squandering their time and their parents' money.
Years later I've seen some of my ex college tenants working at car lots, selling yellow page ads or, most recently, moving back home to work in daddy's Cold Stone Creamery.
Easy question. A college education is worth every penny and then some and my kids will certainly have that opportunity. I never would have gotten as far as I have without my degrees. You can always find your exceptions but if you look at the data, college-educated people, *on average*, are far more successful and make far more money than non-college-educated inviduals. Some students take some time to find their way and their priority but there is no way I would deprive my children of that opportunity.
As a father of 6 and grand father of a few more, I'll still stick to my previous post. A little more info.
J Scott- I have no degree and have been quite successful. I also know TONS of grads that aren't successful or didn't use their degree to their benefit, and ended up in an unrelated field that in many cases did't even require a degree. For those, the money spent , might have been better spent on buying or starting a business.
Jon H- what about all the other grads that get a degree, go to work for a company(like Shell), take their 9 week boot camp and discover they hate it? Then what do they do with that degree?
NCMark- I've rented to those same types and I agree. There are many books written on the fallacy of providing too much for your kids. Edelman, one of my faves even covers it with stats in a book.
Tom K-your post has many arguable points-beginning with your first line "a college education is worth every penney". Baloney!! We all know grads where their education turned out to NOT be worth every penney. You can't make an absolute statement like that. Here are a few that don't qualify under your absolute.
1. Person starts his education anticipating a certain field, and by the time his 10 years of education is done, the field is no longer ripe to enter.
2. The professionals (lawyers, dentists etc) that determine they just don't like what they're doing, and change to a non-professional field and love it. Their 100's of thousands in costs and loans for the degree weren't worth it.
3. The medical person that is just coming into field and finds new regs turning it upside down and changing what it was when they started their education.. (I have a daughter finding
that at present.)
Your comment that college educated people are more successful and make more money is also dubious.
First, if you're saying that the money is apt to be more, maybe so. Those #'s aren't as clear cut as decades before when that was written. Do you know what an auto worker makes compared to a school teacher? Take out the expenses of college for 8 years and give the auto worker the 8 year head start and see where the teacher catches up, if ever, in money earned.
"Being successful" also differs depending on your definition, imo. A teacher would have to love the job to compensate for low pay. They are underpaid, imo. Yet, they might be considered VERY successful.
I've always felt that college does a good job of teaching someone to go to work for someone else. Only a few years ago, during my lifetime, USC was one of the few schools that EVEN taught an Entrepreneurship degree. Now, many have them. Before, it might have been very beneficial to not have gone to college and not to have spent 4-8 yrs, in college if you wanted to go into business for yourself.
I have a Trust set up for my grand kids to draw from for their choice of things. IT will help them get a start, but they'll have to have skin in the game. Upon certain conditions, they may use it for any of the following up to a certain amount.
1. Start college
2. Enuff to help them buy a house
3. Enuff to start a business
4. Funds to go on a mission for their church.
In none of these, do they get enuff $$ to do it all without having their own $ invested. I want to know they want it bad enuff to pay part.
The social part and intermingling may be beneficial in College, but the costs are outlandish , just to make friends. You can be successful with or without college. I know lots of both. You can also be a failure with or without college. I know lots of both.
Success may be defined in many ways, but an all encompassing comment like "college is worth every penney" is just plain incorrect. Look around, talk to others and you'll find that out, imo. Good luck to all the Students and better luck to all the Entrepreneurs. Rich in FL.
Growing up, college wasn't an option. Education just wasn't complete until you graduated from college, period. Even then, that was a minimum. With 4 kids, the bank of mom and dad wasn't really open, except in rare emergencies. Parents and Grandparents did what they could to help with the tuition, but we were on our own as far as books and supplies, and supporting ourselves. Junior or Community Colleges for the first two years, living at home, summers working at a local mill, school terms working for minimum wage in bars, restaurants and gas stations to get by.
Parents putting their kids through college isn't a gift. Making them truely work and struggle for the first time in their lives is the real life challenge. Top Ramen instead of Mom's home cooking. No more of Dad ranting to turn off the lights, they stay off when you get the bill. A time to prove yourself and test your mettle for the first time. It also humbles the know it all kid.
I used to think that "having it made" meant I could afford a full tank of gas.
Perhaps a little more of a "tough love" approach, but a lesson I learned, and think I'm better for it.
IMHO, college teaches you a the language of your chosen profession, that's all. It opens doors that would not otherwise be open to you, but success depends more upon you than your formal education. Character, drive, dependability and a host of other personal characteristics have a lot more to do with success in life.
If I could do it all over again, I wouldn't go to college this time 'round. Right now I'm feeling like I'm 20 years late to an education in basic business and entrepreneurial skills and trying to catch up fast.
If my kid was in high school, a dedicated student, and they had a dream to pursue a certain course of study in college, then I'd cough up the dough as long as they maintained their GPA.
For most, I think it's a waste of $ to go right from high school to college. There are other ways to socialize and get some life experience.
I think I'd be light years ahead of where I am today, financially, if I'd had a good mentor years ago instead of a college education.
If you have the drive to learn this stuff on your own, you certainly don't need to get your MBA. But, as I said above, 99% of people who argue you don't have to go to college to learn this stuff, never bother to learn it on their own.
And then they spend their lives wondering why they can't get to the next level.
If making a million dollars is your goal, you'll strive to make a million dollars and maybe you'll get there. If making ten million dollars is your goal, you'll strive to make ten million dollars and maybe you'll get there. If making a billion dollars is your goal, you'll strive to make a billion dollars and maybe you'll get there.
That's the difference between someone who makes a million dollars and someone who makes a billion dollars. Both the belief that it's possible and the knowledge of how to do it.
In my experience, spending time with MBA professors and students makes you realize that earning billions of dollars isn't unrealistic, whereas most people joke about making a billion dollars, but don't truly believe they can do it. And it gives you the tools you need to actually do it.
Btw, go take a look at list of richest real estate investors on the Forbes billionaire list, and see how many of them have college/MBA degrees...you might be surprised...
First of all, they should learn how to pay for it. You can help them but I will never just send my kids to college.
As to the value of college, on face value I actually made more money before I went to college than after.
However, I do credit my degree in English heavily for my success in real estate as my dad credits his Music degree. I can research what I need to know fast. By reading/researching historical information I've figured out a lot about the nature of people and how to make money from their nature. I can write killer marketing for renting and selling property (my dad still has me write his). I'm sure there's other things too I haven't thought of.
There's value to all of it as an accessory to your core nature of being a dedicated investor. You will not be successful BECAUSE of a college degree. I don't care who you are.
Rich - you're taking specific examples which I pointed out anyone can do. My comment stated that *on average*, college grads are far more successful so you comparing an auto-worker to a teacher isn't respecting the *averages*. You could have just as easily compared a worker at the local Coffee Shop to an Attorney. Look it up - all of the recent studies indicate that *on average*, college grads make ~$20k more per year then non-college-educated individuals. So yes, it is true that there is a period of years where the college grad is trying to "catch up" to the non-grad since the non-grad presumably started making money at age 18 but over a lifetime, the studies show college to be worth several hundred thousand dollars in real dollars. And while the cost for advanced degrees is naturally higher, so is the delta in *average* earning power.
In the words of Shakespeare's Hamlet, "Aye, there's the rub."
The other thing to consider is what your kid(s) will be studying in college...
The OP said that they didn't know what they wanted to do, so it's unlikely they would be getting an education in a field where college can be tremendously beneficial (law, medicine, engineering), etc.
A liberal arts degree (for example) will have much less impact on future earning potential than will a degree in either a technical field or a field that would require educational requirements for certification.
So, if the kid doesn't know what s/he wants to do, college is probably a lot less instrumental (at that point, at least) than if they do know what they want to do, and college would specifically help that pursuit...
The mention of this "future earning potential" again comes up and I have to say something. Do any of you buy a cash flowing property based on the proforma or it's performance? Do you buy on the potential or the reality? Do you really want to teach your kids the principle to invest based upon the hope of "future earning potential" or the reality that W-2 income DOES NOT keep pace with inflation or commodities pricing, is the hardest earned, highest taxed income available to a person and beholds you to 1 supplier of income?
Aside from that - Does anyone go to college for what they love and have a passion about anymore?
For a real comparison, I'd like to see a comparison between college graduates actually using their degree for income generation and non college graduates who are NOT living on government assistance but are making their own money. Wishful thinking probably....
But Tim, you're projecting *your* motivation and ability to find what *you* love with the overall population. Just because someone doesn't go to college, that doesn't exclude them from being a W-2 employee. In fact, I suspect you would find more entrepreneurs that have degrees than don't - yourself included. Sure, you can argue that my annual rise in W-2 income doesn't keep up with inflation but neither does that of the Coffee Shop Worker.
There are entrepreneurs and investors both with and without college educations but your implication is that only the non-college folks can outstrip inflation and someone like myself for some reason can't. I choose to work for "the man" because I really do love my job. Even though my discussion has focused on earning power, loving what I do is more important than anything. Pay me a million dollars a year and I'm still not going to want to flip burgers.
Ralph Scott - well said!!!
Speaking as someone who went to a private college back when a full year's expenses (including room, board, tuition, books and a little spending money) was about $3,800, I am appalled at the prices families have to spend on a college education. Even community colleges are getting out of hand. If you finance the whole thing, then your debt burden is so heavy for the first several years out of college that it is hard to form capital for investments of any kind (generally speaking).
I have no children, but if I did I think I would encourage them to work and go to school at the same time or alternate semesters or even co-op in their chosen field. I have a cousin who did this and he is doing very well in his career. I went full-time on grant money and loans from the bank and my parents. Although I cherish my college years and wouldn't trade them for anything, I wish I had worked more in the real world at the time. It would have given me a better perspective on what I was doing in school and what I wanted to do with the rest of my life - at least career-wise.
I'm one of those who never used their major in the business world. I never even took business courses until much later at a community college. BTW, online is great! If you can be disciplined enough to make time for the assignments the freedom of not going to a regular classroom can help you to get education that you might never have been able to get.
I guess the point I'm getting at is that in this day and time young people and their parents really need to look to see if the traditional college experience will actually be beneficial in their lives or if more creative ways of educating oneself will fit their lives and plans much better.
After all, whatever type of education you get, the point is that it is helpful and not harmful to you down the road. Just ask my college roommate. His major was Telecommunications - never got a job in that field - went back to school - became a Professor of Accounting and loves every minute of it. I think he may have chosen a different major in retrospect.
Thanks for reading!
I'd be willing to bet that of the college graduates who received either a technical degree or a degree in a field where education is required for certification (law, medicine, etc), the percentage of graduates actually using their degree to generate income is probably close to 100%.
And for those who have an engineering, law school, or medical school degree who AREN'T using their degree to earn income in those fields, it's probably safe to say that whatever they're doing, they probably benefited from college.
As for all the other fields outside that category, you're right that most graduates probably aren't using any specific education they received to earn income...
To cut to the chase, IMO, what separates the succesful from the unsuccesful is not a college degree (notice I did not say 'education'), but --
A PASSION FOR WHAT THEY DO.
Most of the succesful posters here eat, sleep and breathe real estate. You cannot teach that passion. You can only be so lucky as to find that passion.
I am suppose to head off to college next fall. (Actually, I should be working on my college apps instead of posting this...)
Coming from a teenager's point of view, I feel that the financial numbers of putting money into college and hoping for a good return just doesn't add up. My father already told me if I wanted to go, I'd have to make the money myself.
Thusly, I became my own entrepreneur. And because of that, I realized the bad fiscal investment college is. However, I still believe there is a discipline and maturity to be gained in college. I am probably going to be taking some business courses and law courses to better help me get a grasp of my real estate business. But I also hope it will help build my social skills, communication abilities, and overall, get myself known. There's a lot of friends to be made and well, quite frankly, I prefer to hang out with people my own age and if I can find someone with the same passion as me - well that's even better.
But as it stands now, I need to come up with some cash in the next year to even finance my tuition. I will be doing that via real estate.
Oh and not only that, I hear that renting homes out near colleges is an excellent investment. I'm looking into multi-units in Gainesville and perhaps Orlando.
I guess the answer in the end is to diversify your investments and realize that college is only one end of that. I can't deny that my college degree helped me with my real estate investing but so did leaving the full time job that my degree led me to. Knowing what I know now, I could have put that money to better use....however without the college degree chances are I probably wouldn't know what I know now. It's a personal journey. Thinking back, I did recommend one programmer who left a 70k career to become a bird dog (and made nothing for a year at it) that she immediately get back into programming and buy rentals on the side until she had 70k in rental income coming in.
In the end, back to the core question - no. The kids want the degree, they should learn how to pay for most of it themselves. I think my dad gave me 2k for college and the rest I earned myself.
I think that college is very much worth it. As it gets more expensive, perhaps that will limit the number of grads and make the degree even more valuable.
On the flip side, it's a huge waste of money to send a child who isn't motivated-- and we sure see a lot of them around here: they go to college so Daddy will support them for a couple of years while they snowboard.
I can't see much reason to finance college. You have a child, surely you know you've got one and bigger than anything, college will be coming around in 18 years. It's not like it should be catching you by surprise.
A nice house or duplex purchased for the child should be just about enough to pay for that college education in 18 years time. Isn't OPM what we are all about? Let OPM pre-pay for your kid's education.