Decreasing Incentive to Attend Universities
Real Estate Investor · Santa Cruz, CA · Member since 2009 · 267 posts · 73 votes
I have been noticing a trend. And the trend goes like this: the return on investment for those attending 4-year universities is decreasing substantially. For the amount you pay to attend college, it is in many cases not worth the tuition investment. With tuition prices increasing every semester at many schools, I cannot see the light at the end of the tunnel.
Am I alone in noticing this trend? Is university education becoming obsolete, especially regarding increased income opportunities following graduation?
Just curious to hear what the BP community has to say...
Don't get a degree in advanced women's liberative chicken yodeling with a minor in theatrical basket weaving and expect a whole world of high-paying jobs which garner huge respect to open up to you.
On the other hand, some educations are very extremely worth it. Accounting, finance, prelaw, or any of the hard sciences (Assuming you intend to make a career out of it) are all excellent ways to spend tuition money.
On a personal level, I know far too many art majors who work retail jobs in order to starve with their 4 room-mates who also got useless, no-return degrees and work jobs that they could have gotten straight out of high school.
I have "influence"over to kids, one 17 the other 18 (knowing their mother!) We have been talking about this. They both have good grades.
One wants to be an attorney, he has to go to college, the 17 yr old, she really has no idea what she wants.
There are technical degrees that should provide a goodliving, especially in health care/ everyone does not need a college degree.
Depends on what school you go to and for what. Their mother really can't send both to college. I suggested the Air Force for the boy, they will take care of the education and he can attend while he serves and could have enough to pick up part of law school. I figured the AF would be the safest, especially if he could be a legal clerk.
Where there is a will, there is a way! Good luck
Just throwing it out there, but my guess is that any empirical data you've collected isn't statically significant when trying to determine an overall trend. In other words, the observations you've made on a small scale may not hold true on a national level (they may, but that would just be coincidence).
Do you have any data to support your belief in this trend? I'm fairly certain that if you phrase the question in a way that allows for a more quantifiable answer, you should easily be able to find the data you need to determine if the trend actually exists.
Sorry to be so analytical about this, but I have a major pet peeve with people thinking their daily observations necessarily correlate to what's going on at a much bigger level. If that's not what you were doing, I apologize.
I agree with Bill, not just in the "Where there's a will," part, but also that college isn't for everybody. But Joey, you might be a little short sighted in your thinking. College isn't about the cost or measuring a return on tuition based on your feelings about after graduation financials.
If it's for you, you'd want it and do everything you could to get it, instead of testing an ROI argument in support of dropping out. It doesn't work for me, and I doubt it'll work on Mom or Dad.
There is no way, at your age, I could have pictured my last 30 years. I graduated two years before the personal computer, from another CA State Univ (Humboldt), in '81.
Don't know what I'd be doing if I hadn't done it, but I wouldn't be doing what I am, that's for damn sure. I've never regretted achieving it, or the doors that I didn't even know existed, that later opened because of it.
Before attending college, how many of you ever think of what you expect to learn from college, what kind of life you will have in college, and what career you will pursue after graduate? I dont, and don't even know what I am interested in. Just everybody goes to college, and so do I. But I did develop my interest that I can take as a career when I was in college. Just curious how many are like me. Maybe I am a outlier.
Here is some data on education level vs. unemployment. As the chart shows, education pays....
Joey, I find that university education will not become obsolete because of the relationships that can be created and the networks that can be created.
If you go to a university focus on building relationships with people who take action.
I graduated from Purdue University and the relationships that I created in the 90's have helped me immensely.
Don't get a degree in advanced women's liberative chicken yodeling with a minor in theatrical basket weaving and expect a whole world of high-paying jobs which garner huge respect to open up to you.
On the other hand, some educations are very extremely worth it. Accounting, finance, prelaw, or any of the hard sciences (Assuming you intend to make a career out of it) are all excellent ways to spend tuition money.
On a personal level, I know far too many art majors who work retail jobs in order to starve with their 4 room-mates who also got useless, no-return degrees and work jobs that they could have gotten straight out of high school.
There is something to be said about the value of the overall experience of a college education. When I say college education, I am referring to a 4-year university, not 3 years at a community college, then some part-time or online college.
Obviously certain majors have better statistics with respect to salary & employment data, but part of going to college is learning about yourself & pursuing a degree in a field one finds interesting. In addition, the general education requirement at most universities (hopefully) expose one to subjects as well as people, that one might not otherwise have been exposed to.
There are other pursuits in life besides money. The college experience happens to allow one to experience it all.
SolidReturns -
I respectfully must disagree with you. If your goal is to learn about yourself and have beautiful self-actualizing experiences you can accomplish that goal without spending a lot of money.
To wit - I may love hiking, but I'll be darned if I'd want to spend thousands (or tens of thousands) of dollars getting a degree in it in order to better know myself and learn about a field I find interesting. (Advanced shoe fitting 101, anyone?)
In my opinion, college is simply too expensive and too time-consuming to pursue frivolously in order to 'know thyself'... it is an investment of the self with a rather large fiscal component, and like all investments of that nature must be evaluated based upon the expected return.
Aaron,
You're allowed to disagree!
That being said, I can't imagine a better place for 18 year old to spend the first 4 years of their post-high school lives, though I can imagine the military as possibly being a good experience.
I would argue against the "too expensive" & "too time consuming" points. As to too expensive, there are plenty of good public colleges that aren't terribly expensive.
As to "too time-consuming" what else are you going to do from 18-24? Sure you could go into sales or a trade and make some OK money in your early 20s, but over time that 4-years in college is time well spent. I'm sure that, as a group, the college graduates' quality of life, if charted, would quickly surpass the non-graduates pretty quickly. After that everything is gravy.
The "investment of the self with a large fiscal component" is certainly worthwhile, IMO, if in addition to the extra one earns over their lifetime with a degree, they come out as a better, more well-rounded individual.
Within my various sample populations/circles of friends/colleagues/acquaintances, all of the ones that went to college are doing a lot better in life than those that didn't, and it's not even close. That's enough proof for me.
From a strictly financial standpoint investing in hard sciences or traditionally higher-paying professions is likely to be worth the cost and then some. As others have stated investing in majors that don't have a nice market is a waste.
I do think we are graduating too many folks right now. A graduate degree is quickly becoming the equivalent of an undergraduate in my occupation. So you need MORE education just to compete and those without degrees won't find work in Austin very easily.
A college education is in no way, shape, or form obsolete.
Anyone who thinks he has it all figured out when he's 18 -- and this comes from someone who had it all figured out when he was 18 -- is a fool.
Even if you think you're going to be an entrepreneur who will never apply for a job in his life (and good luck with that), you will still need a resume to impress lenders, investors, partners, etc. And that resume has to show that you didn't stop your formal education after the 12th grade.
I think if I had it to do over again, I would have pursued a liberal arts undergraduate degree, using those years to learn more about history, the arts, literature, language, etc. I'd take a few business courses, for sure, but in my view the "good stuff" doesn't really come until graduate school.
And then, I'd send myself to the absolute best school I could borrow my way into, damn the cost.
I once looked into going to Wharton for an MBA as an adult (the regular program, though, for two years full-time), and I came to learn that, at least at the time, PNC Bank would loan you 100% of the tuition cost, and they qualified you for the loan solely based on the fact that you got into Wharton. Paraphrasing the PNC brochure, "When you leave Wharton, you won't have any problem paying back our loan."
I think there's something to be said for that.
Plus, as has been stated, the networking opportunities that going to college creates can be priceless, especially if you go to a school that is known to generate business leaders. I have a couple friends who went to Top 5 Ivy League schools, and there's no doubt that the "clubby" nature of these institutions is a gift for those who know how to use it.
So, in my opinion, college is an absolute must. If not for the education, then at least for the girls and the beer.
Well of course Wharton is a ticket to success Paul. The best business school in the world should be!
Those schools can charge more simply for the networking and exclusivity. If you get a MBA from one of the top 5 or so business schools you are set up for life.
The question is whether or not the "other" schools/degrees are worth the cost of admission. Many aren't IMO....many still are, but it isn't as clear-cut as the value of a Wharton MBA.
Fair point. However, I think any college degree is better than none.
Having said that, if someone can't more than offset the cost of a basic four-year college education over 40 years of working, then perhaps that person shouldn't go to college after all.
I too would like some references to actual statistics to back up your claim Joey. It may be true, but "noticing a trend" doesn't mean very much.
I've heard those BLS statistics described as "If you're a college grad, the economy is slow. If you're a high school grad, we're in a recession. If you don't have a high school diploma, we're in the great depression."
Perhaps more important than the earnings, which are strongly tied to career choice, is the fact many jobs are cut off without a degree. A high school diploma is sufficient and usually not even required to work in retail. But a college grad can get that job, too. Much tougher for that non-college grad to move up into middle management in that retail chain than the college grad.
this is always a toss up for me...on one hand, i don't use my degree, and hopefully will never have to...the money spent on a degree (that some said above will take 40 years to pay off) could be better invested into a business or real estate if you're sole goal is income....
on the other hand, i'm a better person because i went to college...i think the point of the whole liberal arts course catalog is to make students take classes outside of their discipline...literature that we were forced to read in college teaches us ethics, human responsiblity, empathy, etc. my college made me take a Great Books class, 2 philosophy classes, a theology class, ethics, logic, etc. None of these were for my major but were still required. I'm a more knowledgable person and can see other sides of the story better bc of these classes. Will I ever use the info for business? Not direclty. I dont plan on quoting Plato anytime soon. However, it's easy to see how some of the material can enhance your life, and your business relationships.
A college degree in the wrong hands is worthless. I've hired and fired a lot of 'educated idiots' because they lacked the ability to do the job they were hired for. They had the paper, they had the experience, but they couldn't produce.
I have no college degree and do quite well in IT management. Two of my closest friends have no college degrees and one does very well with a specialty position in a hospital's bio-med dept, the other is the VP of Global Procurement & Manufacturing for a major fire control manufacturer.
Not bad for three guys without degrees.
College will open doors no doubt, but that piece of paper will not keep you in.
It's really all about who you know and how you perform given the slightest opportunity. Bright stars will shine, with or without a degree.
If you have motivation, common sense (yes, common sense is a big one, and you can't get that in any university) and the ability to learn, you can be successful.
If you have the cash to pay for your education - go for it. If you're going to graduate with a 6 figure debt to go with that piece of paper - best of luck.
Here is a real easy way to see if a College Degree is "worth it." Go through any Help Wanted section for professional jobs and see how many say "Degree Required." My last job as a Finance Director was "Degree Required."
Now tell me if you think a degree is "worth it!"
Here is one example for VP of Finance:
QUALIFICATIONS GUIDELINES:
Education:
Bachelor's Degree in Accounting, finance or related discipline required, MBA preferred.
Certified Public Accountant (CPA) required.
http://jobview.ocregister.monster.com/VP-Finance-Job-Huntington-Beach-CA-US-97787801.aspx
I do think college is overrated, and that it's overrated. The problem lies in that there is so much talk/pressure in going to college that no one thinks about what's next until they graduate. Kids are so encouraged to go to college that they just do it without a plan. Yes, there are some careers that you definitely need a degree, but others you don't really. Maybe it's harder to be competitive, but if they spend those four years as a ____clerk at a company and work their way up, they'll save the student loan debt and already have the job experience that is so very important. In life, it's often more about who you know than what you know.
Someone told me the story about how he was about to graduate with a degree in journalism and a professional came in to give a career talk to his class. Their advice? "You should have skipped college, got a job making coffee at the paper, and worked your way up." I know way to many people who have a degree and aren't using it. I have an accounting job that I enjoy and do not have an accounting degree. I had "some college" and "45WPM" on my resume but no office experience, but they took me in and I learned on the job.
LOL - Over the years I've applied for and landed a number of jobs where a degree was required - didn't have one, still got the jobs.
I worked in bio-medical engineering for a number of years, position stated that a degree was required, I didn't have one, and for all the years I held that job I made more than most of my peers - peers that all had degrees mind you.
Degrees are a piece of paper that says you're capable of passing a slew of tests - doesn't mean you'll have a high paying career, or that you can even hold a job for that matter.
There are plenty of very wealthy people without degrees - it is not a requirement to have a degree in order to be wealthy.
One of my current team members happened to have a business degree when he was hired - he was hired for help desk.... Today he's a talented developer. He excelled at help desk and showed an interest in programming - my lead developer took him under his wing and brought him up to where he is today. Want to get ahead - that's the way it's done - get a job and excel at it. Start at the bottom, it's OK, the cream rises to the top. A friend helped get him the help desk position, his drive, ambition, ability to learn and work ethics got him where he is today - not his business degree.
kevin, i don't think your situation is similar to a young guy straight out of college...while i commend you and your career, no degree and a wealth of experience is sufficient sometimes...no degree and no experience=no job
I was once a young guy right out of high school - well a high school with a technical program - and I did fine, as did most of my friends.
My son has a number of friends that have been out of college a few years now and the best some of them have found are pretty close to MLM sales jobs.
Straight out of college, with a shiny degree - you'll fall to the bottom if I'm looking for help. What I want is someone with proven experience, the degree is not nearly as important. In my industry, there are plenty of very successful self-taught individuals.
Yes, there are fields where you'll absolutely need a degree to succeed - but schools today are graduating a whole lot of students with pretty much worthless degrees and 6 figures of student debt. Any way you cut it, that my friend, is not a good start.
A degree is not a guaranteed ticket to success - but the debt many students rack up these days will certainly be a ball and chain around their neck for years and years.
I'm not going to argue that point with you-- i agree. Some people shouldn't go to college. However, the ones that are intelligent and capable should not skip college because they have romantic illusions of becoming an entrepenur or real estate mogul either. I wasn't around when you were fresh out of college, but I know what the job market is like these days. I have tons of friends with and without degrees out of work. However, when the headhunter or human resources is going through a stack of 100 applications to bring in 3 for an interview, and one to give the job to, they're going to go for college degrees as a priority, I'd bet. You may not because you have a different slant due to your history, but if I was a betting man, I'd bet these people have so many kids applying that they use the requirement of a degree to weed out many applicants.
With all that said, I think a degree is more of a status symbol these days. Unfortunately, unless you're working for yourself, you have to dress the part on the interviews to get the job, and that includes having a degree on your resume.
This can be explained by a basic job-market signalling model. Even though a degree can not improve any of your skills, it can be used as a signal of your ability. Here is a quote from wiki:
"In the job market, potential employees seek to sell their services to employers for some wage, or price. Generally, employers are willing to pay higher wages to employ better workers. While the individual may know his or her own level of ability, the hiring firm is not (usually) able to observe such an intangible trait - thus there is an asymmetry of information between the two parties. Education credentials can be used as a signal to the firm, indicating a certain level of ability that the individual may possess; thereby narrowing the informational gap. This is beneficial to both parties as long as the signal indicates a desirable attribute - a signal such as a criminal record may not be so desirable."
No, actually they are more popular than ever. I have a daughter going away to college next year, depending on the choice, I am looking at 45-52k per year!
Your exactly right on ROI, it is gonna be tough to recapture that. However not everyone is cut out to be an entrepreneur. Without college or being a real hustler in business/sales, your really pretty limited on options. :roll:
With all of that said, I think college is not for everyone, and it is most certainly not the golden ticket they portray it to be.