Why a College Degree is Overrated & Unnecessary for Many Americans


Having read Sterling White’s critical look at college, “Is a College Education Financially Worth It — Or Is It a Giant Scam? I felt the sudden urge to piggyback on the discussion. As Sterling notes:

“Education is important, no question about that. However, considering our ever-changing world and new technology, there are many learning options. There are options that won’t leave you with a big lump of debt for the rest of your life.”

I think this is a key observation. Personally, I went to college and learned a few things, but I have applied very little of that to my own career in real estate. I had a lot of fun in college and met some good friends, but financially, it’s hard to justify the expense.

Of course, there are reasons to go to college. If you want to go into particular fields, such as medicine or engineering, it’s all but required. So yes, college is good for some people, for sure, but it’s not good for most — and there are other good options available.


College is Often a Bad Financial Idea

The idea that college is financially overrated really hit home for me when I read a thought experiment by financial columnist Jack Hough, which I will quote at length:

“Consider two childhood friends, Ernie and Bill. Hard workers with helpful families, each saves exactly $16,594 for college. Ernie doesn’t get accepted to a school he likes. Instead, he starts work at 18 and invests his college savings in a mutual fund that tracks the broad stock market.

“Throughout his life, he makes average yearly pay for a high school graduate with no college, starting at $15,901 after taxes and peaking at $32,538. Each month, he adds to his stock fund 5% of his after-tax income, close to the nation’s current savings rate. It returns 8% a year, typical for stock investors.

“Bill has a typical college experience. He gets into a public college and after two years transfers to a private one. He spends $49,286 on tuition and required fees, the average for such a track. I’m not counting room and board, since Bill must pay for his keep whether he goes to college or not. Bill gets average-size grants, adjusted for average probabilities of receiving them, and so pays $34,044 for college.

Related: How I Used Real Estate to Pay for My Newborn Daughter’s College Education

“He leaves school with an average-size student loan and a good interest rate: $17,450 at 5%. The $16,594 he has saved for college, you see, is precisely enough to pay what his loans don’t cover.

“Bill will have higher pay than Ernie his whole life, starting at $23,505 after taxes and peaking at $56,808. Like Ernie, he sets aside 5%. At that rate, it will take him 12 years to pay off his loan. Debt-free at 34, he starts adding to the same index fund as Ernie, making bigger monthly contributions with his higher pay. But when the two reunite at 65 for a retirement party, Ernie will have grown his savings to nearly $1.3 million. Bill will have less than a third of that.”

Compound interest, as they say, is the eighth wonder of the world!


The “College Graduates Make a Million More” Fallacy

This highlights the fallacy behind the whole “college graduates make a million dollars more than non-graduates” claim. The problem is that you are comparing apples to oranges. The United States has gotten obsessed with credentialism, so a disproportionate share of the smartest and hardest working people are going to college.

But in the end, you’re not just comparing, say, an accountant who went to college to a plumber who didn’t. You are also comparing college graduates who enter the workforce to the most impoverished, underprivileged and sometimes incarcerated people in the country, making such a comparison all but meaningless.

And there’s a major difference between degrees, too. CBS News ran an article about the 20 worst-paying college degrees. Coming in dead last was Child and Family Studies, with a starting average salary of $29,500 and a mid-career average of $38,400. Art History was 20th, with a starting average salary of $39,400 and a mid-career average of $57,100.

On the other had, the average plumber made $53,860 a year, and the average electrician made $53,080 in 2015.

And, of course, this doesn’t account for the pile of student debt many college students incur. Currently, in the United States, there is a total of $1.4 trillion dollars in outstanding student debt!

And it’s going to get worse before it gets better. As Steve Odland notes for Forbes,

“College costs have been rising roughly at a rate of 7% per year for decades. Since 1985, the overall consumer price index has risen 115% while the college education inflation rate has risen nearly 500%.”



Related: Teaching Kids to Be Entrepreneurs is Key to Addressing the Wealth Gap: Here’s Why

What Does College Get You?

But colleges do provide a great education, right? Well, not always. Here’s how the New York Sun described the results of a test administered by the Intercollegiate Studies Institute:

“Students at many of the country’s most prestigious colleges and universities are graduating with less knowledge of American history, government, and economics than they had as incoming freshmen, with Harvard University seniors scoring a ‘D+’ average on a 60-question multiple-choice exam about civic literacy.

“According to a report released yesterday by the Intercollegiate Studies Institute, the average college senior at the 50 colleges and universities polled did not earn a passing grade.”

And that’s for those who graduate. Graduation rates overall, are not particularly impressive. According to US News:

“Studies have shown that nonselective colleges graduate, on average, 35 percent of their students, while the most competitive schools graduate 88 percent. Harvard’s 97 percent four-year graduation rate might not be that surprising … [but then]Texas Southern University’s rate was 12 percent.”

And despite our obsession with credentialism, as more and more people get credentials, that just leads to “credentials inflation.” Thus, it shouldn’t be shocking that in 2012, 53 percent of recent college graduates were either unemployed or underemployed. It also shouldn’t be surprising that defaults on student loans have started to increase. According to The Chronicle,

“One in every five government loans that entered repayment in 1995 has gone into default. The default rate is higher for loans made to students from two-year colleges, and higher still, reaching 40 percent, for those who attended for-profit institutions …

“The government’s official “cohort-default rate,” which measures the percentage of borrowers who default in the first two years of repayment and is used to penalize colleges with high rates, downplays the long-term cost of defaults, capturing only a sliver of the loans that eventually lapse …”


Alternatives to College

As shown above, professions such as plumbers and electricians can do quite well without a college degree, as well as many other professions. Yes, you’ll have to start lower on the ladder, but you have four more years (or five or six or seven more years) to move up — and a lot less debt to boot.

And then, of course, there’s entrepreneurship. Unfortunately, American entrepreneurship is in a steep decline. In 1975, almost 15 percent of total businesses were less than a year old. In 2010, it was less than half that. Much of this, I believe, has to do with our obsession with college and credentialism.


Despite the just-a-little-bit negative tone of this article, I again need to stress that college is definitely a good idea for some people. (This is especially true since we have a good number of student rentals in our portfolio.) But college is not just “what you do after high school.” Today, in my opinion, too many people are going to college, and many of them are not served and are actually hurt by it.

There are many alternatives to college that people should consider. And entrepreneurship (including our favorite kind, real estate investment) is high on that list.

Weigh in! Do you believe kids should be thinking twice before enrolling in college? Why or why not?

Leave a comment below.

About Author

Andrew Syrios

Andrew Syrios is a real estate investor in Kansas City and a partner in Stewardship Properties along with his brother and father. Their company owns just over 500 units in four states.


  1. Patrick Desjardins

    All of these discussions about college are pretty silly. All statistics show that an average college graduate, in basically any field, will fare better in life than a guy who dropped out in high school. Obviously it might not apply to a frat boy missing half his classes, but college in general bring a level of sophistication and critical thinking that you just don’t find in lower grades. The step up is even bigger when you start hanging out with grad students.

    Most of your arguments are based on $$$, which speaks a lot more about the ridiculous cost of education in the US than the intrinsic value of a college education.

    No one is “hurt” by going to college. If you want to be a plumber, nothing stops you from going to college and then learn how to be a plumber.

    • Chad McClain

      The statistics that show that college graduates “fare better” than others are true but do not take into consideration the individual. Individuals that go to college and graduate are typically more driven and plan for the future more than those that do not.

      People that reference these statistics use them as a simple “If you go to college, you will make more money”. While impossible to truly test, I bet that if the individual that would otherwise go to college does not (all other variables aside), they would be more successful than others that do not and arguably better off than most that do go to college (as shown by Andrew with effect of compounding interest) in the long run.

      • Patrick Desjardins

        “I bet that if the individual that would otherwise go to college does not (all other variables aside), they would be more successful than others that do not and arguably better off”

        Better off how? You’re only considering $, which is a pretty narrow and simplistic way of looking at the value of college.

    • Darin Anderson

      Average wages of college grads vs non-grads is a fairly common justification given for college. It is a compelling argument on the surface, but if we dig a little deeper it starts to look less compelling for many students for a number of reasons:

      1. Colleges select for people who are more capable and “better” colleges select for people who are even more capable? Why do Harvard graduates do better than University of graduates? Is it because Harvard educates them better? That is what one would think but the data doesn’t really show that. The real secret is that Harvard is very selective and only takes the brightest and most academically and extra-curricularly accomplished students. Malcom Gladwell has already explored this in his book David and Goliath and shows that students who were accepted to places like Harvard but chose to go somewhere else such as University of performed just as well and in many cases even better later in life and in their careers when they were in a place where they could shine rather than being an also ran at Harvard. So when you start with a statement like people who graduate from college you already have selection bias in your group. They are more capable and driven people to begin with. So whether they would have graduated from college or not they are more likely to make something of themselves because they have the ability and the drive to do so. There are always exceptions but for the most part the college graduate group is simply a group of people that were always going to do better with or without a degree.

      2. Averages include everyone. This means for college graduates it include doctors, biz executives, engineers, etc. For non graduates it includes drop-outs, criminals, and people who are simply far less capable. And since more and more people are going to college all the time, the group that is left is on average, less capable and less driven so the gap gets larger as a result of a self fulfilling cycle. If you encourage more of the most capable to go to college, those that are left will increasingly appear to do worse as a group compared to the college group.

      3.Finally this analysis ignores the margin. What is the result for the person who only did OK in high school, isn’t sure what they want to study, and chooses a major based on something they think they like without much thought into future prospects. They will often settle on a degree in something that is not very concrete or necessarily marketable for its specific skills other than it showed you could get through 4 years of school (although it probably took 6) and then graduate and hope for the best. These are the students on the margin. How big is this group. I am not certain but it is a lot bigger than it used to be and is now a very significant portion of college students because we keep telling everyone that you have to go to college or your future prospects will be bleak. This is one reason why college enrollment keeps rising. Everyone has been convinced that you must do it. The average wage argument is very powerful and often is is casually offered without any caveats like it is a golden ticket. And here is the worst part. They believe it. They believe that by simply going to college they are going to get that extra 1 million dollars in earnings. But this group is not going to get that extra money. Many of them are simply going to give up 4-6 potential earning years and replace it with debt that will often be disproportionate to the wages they will eventually receive.

      College is very good for some, pretty good for others, and unfortunately nearly useless for far too many. We are doing a disservice to those students by extolling the virtues of college in a way that lets far too many believe that the only thing that matters is that diploma at the end. It doesn’t matter what is written on the diploma, how well you performed in getting that diploma, or how much it cost to get it at whatever college you choose. We let them believe all of that is minor compared to the golden ticket that comes with that diploma. Unfortunately when they try to cash that golden ticket those promises ring hollow when it doesn’t work. Meanwhile those making the promises continue to lead more students down the same path.

      • Patrick Desjardins

        You know the expression “Rising tides raise all ships”?

        Once again, you are only analyzing it based on economic factors. Let me tell you something, the person who goes to college to study arts or history or whatever knows that they’re not going to make as much as a plumber. Yet they see value in it.

        The whole debate is stupid and based on the false premise that education doesn’t have instrinsic value and all that matters is how much $ the degree will bring you. You can have a college degree and become a plumber or a baker if you want to, they aren’t mutually exclusive.

        • Tim Puffer

          Education does have value. But, at what cost to acquire? Schools are doing exactly what the mortgage industry did back in the housing crash – if you have a pulse you can go to school and we will give you tens of thousands of dollars. Most people are getting degrees in fields that have little to no growth. Most colleges offer little training on how to actually find a job. We must remember that they are for profit and want to get as many people through as they can.

          What point would it make to pay $50K to get a college degree only to turn around and likely have to pay for an apprenticeship program to be a plumber? Or to work at a bakery and not be able to afford your $800 per month student loan payment. Not logical.

          Education in something is a must, but it isn’t at a college right now in its current state.

        • Darin Anderson


          You are correct that there are non tangible benefits to a college education. For those who have that as their goal that is great. For those that have a good paying job as their goal I only wish they were given a more balanced story about whom it pays off for financially, and for whom it likely does not.

        • Laura Agadoni

          Your argument is good for people who can afford college. But to go into debt to indulge a hankering to study art is foolish. A better plan for people who wish to expand their intellectual horizons would be to go to college once they can afford to.

    • Andrew Syrios

      As I noted in the article, you can’t just compare those who went to college to those who didn’t. Indeed, I suspect those who went to college had much better grades and SAT scores than those who didn’t. So why not just say, those who have better grades in high school will make more money? You need to compare like to like.

      As far as the non-financial side, of course there are advantages there which I didn’t deny. But this is a financial blog and so I was focusing on the financial aspect. And there are certainly other ways to educate yourself. I think spending a year to travel is a great way to do it that I wish I had taken advantage of.

      And by the way, there are certainly some who are “hurt” by going to college. See here for example: http://www.nytimes.com/2016/06/19/business/dealbook/an-expensive-law-degree-and-no-place-to-use-it.html

    • I agree. In my mind college is about education not about a career. Of course as mentioned in the article there are certain careers that do need a higher education like doctors and such , but I think our society would be better served going back to either a mentor / or Apprentice programs. They give Hands-On practical education vs. Book education. Hands-On education is preferable to a book education when it comes to actually getting into the workforce. How many of you college students have graduated from college and tried to get a job in your career field and been told to come back when you have work experience?

      • That’s exactly it. I have one child with $50k+ debt (his choice, not my advice) who graduated with honors and tons of outside achievements. He is working at a gas station because nobody would hire him without job experience. A year later and he is about to finally start a new job — as an apprentice outside of his field of study. Young graduates are competing with so many others that unless they have something ELSE that makes them stand out, a BA degree is not necessarily an advantage.

  2. Assaf Furman

    I agree totally with your views Andrew, even though I hold a professional degree and work at my field. There’s sort of a “life pattern” to which people feel obliged to adhere where college is the immediate next step after high school, not even considering other options nor the financial ramifications. Speaking of the latter, to us it seems obvious to take your savings and invest them but at college age you’re likely to not even entertain such an option because no one has told you about passive gains.

  3. Gianni Laverde

    Great article Andrew. IMO, if a corporate career or specialized careers (doctors, engineers, etc) is what someone seek, then College is necessary to get that ‘credential’ which most times those jobs require. Otherwise, nowadays, there is plenty of educational material online on any trade and subject which than people can apply to what they want to do in life and still be as successful as a College graduate.

  4. Jonathan Godes

    “And then, of course, there’s entrepreneurship. Unfortunately, American entrepreneurship is in a steep decline. In 1975, almost 15 percent of total businesses were less than a year old. In 2010, it was less than half that. Much of this, I believe, has to do with our obsession with college and credentialism.”

    – I am sure most of this statistic is a result that 2010 the U.S. was at the absolute bottom of the worse recession in several generations. Not too many people were starting new businesses in ’09-’11. This is where cherry picking stats can get a bit dangerous (and I am speaking to the 538 article, not you Andrew). In 1983 it was at 12% and in 2007 it was at 11%. It was at 11% in ’92 as well.

    The 538 article goes on to say “Americans started 27 percent fewer businesses in 2011 than they did five years earlier, according to data from the Census Bureau.” Yeah, because our economy was in a debt fueled hyper-growth bubble in 2006 when no one could lose. Look at the percentage of employment, SP 500, GDP or any other statistic you want and I will nearly guarantee you that between 2006 and 2011 there was more than a 27% decline.


    This is also an older article that only goes to 2011. The current (2015) BLS stats show a consistent increase of an average of 24k businesses a year that are a year or less old (560k to 680k). That is a nearly 5% increase every year for the last 5 years. Funny, because from March ’05 to March ’10, the number went from 680k to 560k. I think that these numbers and statistics show more a function of our economic cycles than they do a worrying trend.

  5. Kevin Harrison

    I think many people are wasting their time in college, those who are not going into specialized fields would most likely be better served by gaining some real world experience in whatever their chose profession is. Also there is a huge lake of people entering the trades (IE plumber electrition Etc), These are careers that will make good money and with so few people joining right now the pay is rising. Which is fine by me since that is where I work. The trades also pay you to learn so you are earning while you get your “education” so to speak.

  6. Joel Owens

    Life is a constant process of learning. If people with degrees think the have (made it) they need to think again. Some degrees are useful but going to college to rack up debt people cannot get rid of even in bankruptcy makes zero sense.

    There are people with 80,000 of debt that can’t get a job in there field so they are flipping burger for 8 bucks an hour. Car, family, house, and student loan costs will keep them in the poor house until the grave.

    A degree doesn’t always make you smarter than anyone else. College has it’s place but most students if you analyzed debt and then opportunity in their chosen field and worked the numbers it wouldn’t pencil out. 1 million in 25 years when these students retire will be nothing with inflation.

  7. Arianne L.

    Good points in the article. I think today’s youth would do well reading it since they read 1,000s of articles about how you need to go to college to get a good paying job but that doesn’t always happen. I am not here to argue, just provide a case study – of myself. Parents, friends, and myself expected me to go to college and so I did. 4 years of undergrad, 2 years of grad school, and 40k in debt later (I worked while in college. Most graduate with more than that), I had a Masters degree and landed a reasonably well-paying W-2 job above US median household income right out of school. One year into the job I absolutely hated it. Learned about real estate investing, and 8 months after finally starting, our REI business is projected to earn about three times my W-2. I wish I had been exposed to REI 8 years ago before I embarked on my 6 year degree. I’d probably have met my current mid term goals already.

  8. Scott Malkin

    I agree that college and advanced degrees may be a poor financial decision….

    Who makes more money- a UPS driver or a physician?….

    see the article below for more details…

    In summary,
    – It takes about 18 years for a doctor to approximately equal the earnings of a UPS driver working full-time
    – It takes about 27 years for a doctor to catch up and equal the earnings of a UPS driver (if UPS driver worked as many hours as the doctor did)

  9. Bart H.

    College education is okay IF you can afford it without incurring debt. I look at it as a return on investment. Like in real estate, the numbers must work. I gained a college degree in engineering, but know someone who took a class or two in CAD who are working as engineers! My college education was free thanks to Pell grants, but if I had to do it over again and use student loans, I would forgo college. I feel the same way concerning funerals. Why buy a plot of land for burial and place a financial burden on the family to pay for those remaining expenses when you could be cremated and leave behind no debt? Get a burial if your heirs can afford it debt free.

    If you can afford college without debt, go for it. If not, then don’t sweat it. A degree is never a deciding factor for success. It only prepares you to work for someone else anyhow. The goal should be financial independence, regardless of your educational background, and that doesn’t require a degree.

  10. Scott Trench

    I think that unless you plan to immediately become an entrepreneur or have family money, a college degree from at least a standard university is pretty necessary to enter the business world. We don’t even look at applications from folks without college degrees for most positions here at BiggerPockets, for example.

    That said, I think that graduate school is a REALLY bad investment, unless you know exactly what you want to do and how that degree will help you get there. The four year undergrad degree is necessary to get you in the door at most well paying non-trade jobs, but not a graduate degree.

    The graduate degree specializes you (making it hard to justify certain types of potentially rewarding work like joining a pre-revenue startup or a completely commissioned sales job) and pigeon-holes you into very specific work – an MBA prepares you for only one option – working a high paying corporate job. A law degree prepares you for long hours doing legal work.

    You basically remove options that don’t tie with your degree if you get a law degree or MBA – I bet that most MBAs from top schools are unwilling to buy cheap rental properties in the up-and-coming part of town and fix them up on the weekends even if that builds more wealth for them than their job! You basically HAVE to work in a related field, even if the long-term upside at another option might be better.

    So, my opinion – get a degree from a cheap but good state school or try to find some scholarship money or financial aid and graduate without debt. Then go crush it in the real world, making money, saving money, and accumulating assets as fast as possible.

    Of course, I got my degree from an expensive four-year university, with substantial help from my parents so I want to make that statement as a disclaimer – I don’t know exactly how I would have chosen if I wasn’t lucky enough to have them help me through. I certainly wouldn’t have gone to the school I chose, however.

    • Jonathan Godes

      First – love the transparency and honesty of the last paragraph Scott. Kudos!

      Second – I would disagree with you about the MBA. I got my MBA a couple of years out of my undergraduate because my wife worked for a college and it was free for me. I have been an Executive Director of a local nonprofit at the age of 26 because of combination of factors, but the MBA was something that the folks on the hiring committee raved about. “What an up-and-comer, super motivated, ambitious, thoughtful” were all comments that I probably received because of the piece of paper. Throughout my career, I was nearly always the youngest applicant and always seemed to get the job.

      I am not saying that an MBA is the golden ticket, but I do believe that it accelerated my career by a decade. I still work running nonprofit organizations, so I am not in a high-paying corporate job. That is what led me to BP and RE. I know many people with MBA’s that are in administration with government, nonprofit and the private sector that have incredibly rewarding jobs that are not at all corporate.

      Whether we are talking about an undergrad or graduate degree, it is hard to get money and funding without a degree or family money as you mention. As a lender, with all things being equal, do I lend money to that 25 year-old car salesman with no formal education or do I lend it to a finance major and MBA graduate?

    • Andrew Syrios

      To a certain extent I agree with you Scott, although I think it has a lot to do with the credentialism obsession that everyone (including even me when looking at resumes) seems to have to one degree or another. It’s something I think we need to, as a society (as much as I hate that phrase) move past.

      But I don’t think it’s that simple. College is 4+ years of opportunity costs plus a lot of debt for many people. Yes, it may be harder to get your foot in the door, or you may start back a bit, but the best way to move up is to add value. For example we had an employee rise from a simple admin to our CFO just by being indispensable.

      It all depends on what you want to go into. People wanting tech jobs (like what I assume BiggerPockets is mostly hiring for) are some of those that I think generally should get college degree. (For the most part, those who really should get college degrees, IMO, are those who want to either going to academia or specialized or technical fields.) But even still, if they can learn another way and build an impressive portfolio of work, I would think many would look past the lack of college degree. And that would land them that job without the lost time and student debt.

  11. David Goossens

    I went and got my business degree but was disappointed at the options available during my job search. I’m an electrician now. In 2 years I’ll have a 6 figure income that I can plow into more rentals. The construction experience was also extremely helpful for managing my first flip. Knowing what I know now, I’d probobly skip college and go straight into construction and/or work for a mentor to get started earlier in REI. The reality is that you can learn topics relevant to your business By reading books, searching online, and by talking to other professionals. No need for massive student loans…

  12. Larry Tanner

    I totally agree on all points. What people have to realize is that college is, for the most part, a scam in the USA. Its all smoke and mirrors, which sums up the whole education system at all levels in the USA.

    The only people who should go to college are those that have a clear career path chosen already and have the conviction to pursue that career path once they obtain the degree. Most fresh high school grads do not fall in this category. They go to college to either party, to “find themselves” or simply because it is the fashionable thing to do these days (meaning they have been duped into thinking college is necessary at all costs). College does not help most people choose a career path despite what the government and the educational community will tell you. I know, I fell for it hook, line and sinker myself.

    College is a huge expense with no guarantee of a decent ROI after the degree is obtained. Therefore, college is rarely a good choice for most kids straight out of high school. They best thing one can do is to look for jobs, work, and through that process figure out what it is they would like to pursue long term. It is that process that leads to maturity and the ability to see the job market with open eyes and make better career path decisions.

    Parents have to stop trying to help fund their children’s college education and educate them on when college is a good idea and that they must finance their own college education if and when they figure out a career path that requires a degree.

    But this will never happen. Post-secondary higher education in America is a fabricated industry. If people were to open their eyes, a lot of colleges and universities would have to shut down and there would be a lot of professors and staff out of work. Gotta feed the machine…keep them kids comin’ in because god forbid we would have to enter the private sector!!!!

  13. It depends upon what the degree is in. If it’s a BS in a field where a student actually learns something (computer science, biology, engineering), it can be well worth it. If it’s a BA that concentrates on pontificating theories to further arm pompous Millenials, it might not be quite so. It all depends on the field you’re entering. One thing that these studies don’t take into consideration is the connections you can make in the “right” schools. More valuable than the propaganda many schools are spewing. I agree with you that most people don’t belong in college and would be better served learning a trade. For those that do, it doesn’t have to be cost-outrageous. I just read a study that proved the type of degree was now much more important than the school it was obtained from. BSCS from a state school better than a BA in Philosophy from Harvard. The ripoff is expensive schools with degrees that do not prepare someone with specific skills.

  14. carlos lastra

    I think one important difference between those who go to college and those who don’t is the type of work you do. If you don’t go to college you have to work on something that requires you to do a lot of physical work, like carrying heavy stuff, walking and driving a lot and that sort of things. On the other hand if you go to college your work requires that you use your knowledge not so much your physical power, so most likely you will work un an office environment and have your hands clean most of the time. That’s also valuable. I think the big difference between the two is that one of them started saving that 5% at a much earlier time than the other so I think the lesson is that if you go to college you still have to save some money to benefit from the compounding interest, may not be that much but at the end is going to make a big difference.

  15. Laura Agadoni

    Great post Andrew!

    What’s going on with student loans is an outrage. I wrote about this before. You might be interested. Here’s an excerpt:

    “You normally think of payday lenders and car title lenders as being predatory lenders, not student loan lenders. But start thinking that way, because they are. If you are paying tens of thousands of dollars for a product (education) that doesn’t get you what you pay for, there’s a problem.” http://thoughtcatalog.com/laura-agadoni/2015/01/5-reasons-you-should-avoid-student-loans/

  16. Jerry W.

    I normally like your posts. This one is absurd. If you quit school in 8th grade and became a plumber you would make way more money, right? Why don’t we encourage folks not to get educated? Sure it is stupid to go a $100K in debt to get a degree in art, just like it is stupid to invest all of your money in the stock market on your own with no training. There are folks who make a lot of money and become extremely rich without a college education. Show me one of those folks who didn’t want their children to get a college education! I went to a small junior college with no student aid and worked multiple jobs to get an education. I went on to a state university then to law school. I only went to school one semester a year for several years as that is all I could afford. I finally took out student loans to go to law school because they would not let you go one semester a year. Most of the folks I hear say you don’t need a college education come from families who have wealth, like you. Guys who grow up with dads who have an 8th grade graduation learn how important an education is. College is not for everyone, but neither is a job that requires saying do you want fries with that. Lack of a college education gives you choices you would not get otherwise. Some of the classes are useless and stupid some are golden. The basic core classes, reading, writing, math, even science helps make sure they are educated enough to understand the world around them and how it works. If you have children do you tell them college is bad do not go just read a few books and try to apprentice with an electrician or plumber? I bet not. How many of the computer programs you use to run your business were made by guys with just a high school diploma? How many of your workers who mow your lawns clean your apartments when folks move out do not have college diplomas? How many 18 year olds who are apprentices to plumbers invest their money in the stock market instead of beer? How many even know how to invest wisely? How many would lose everything if they tried investing without any education? How many stock brokers have no college education? When you look for guys to clean carpets you don’t ask about their degrees do you? When you want to hire someone to do marketing or manage your office or business do you ask for a resume and their education? It is dam easy to look down on education or anything else when your family has money. You wouldn’t talk that way if you saw your father struggling to read, or taking classes to get educated. College opens doors that would never get opened to an entire class of people. Most of those doors are already open to rich families. The likelihood of my getting a loan without a college education considering the state of my finances were pretty slim when I bought my first house. All of my children got college degrees, and I had to get in the face of more than one moron who tried to tell them you don’t need a degree. One of my favorite was just join the military. Serving in the military is an honorable thing. Many of my family have served. Even my dad with no diploma got to go to Korea, he even became a corporal. Now how many commissioned officers have you met who had no college education? None I bet. Would you rather your child be a private or a general? You can be a private with a college degree, you cannot be a general without one. There are many plumbers who make more money than I do. Some have college educations, some do not. I do not go around knocking them learning about plumbing and say going to apprentice to be a plumber is dumb. I know of many successful tradesmen who made a lot of money and ran a business that lost a lot of money because they were good plumbers but not good at running a business. The ones who made it had help from folks with college degrees, like business majors, accountants, etc. How many of the folks saying “if I had invested in real estate sooner I would have been richer than if I went to college” got money from their family to get started or saved money from their nice paying job? Banks don’t lend money to McDonalds workers who have no savings to buy houses. It is easy to denigrate the key to pulling yourself out of poverty for millions when you are born with wealth. Please don’t make posts to deter others who truly need it to make a better life.
    Please note that I am not criticizing you for having a family who worked hard to get ahead, you just never had to face what the first of your family without an education had to face. There rant over.

    • Andrew Syrios

      I must say that equating that saying too many people go to college and college is, for many (but by no means all) not a good idea to “Why don’t we encourage people not to get educated?” is, as you would put it, absurd. As is the idea that anyone doesn’t have a college degree ends up working in fast food. Furthermore, the idea that only way to get educated is simply wrong. As far as your 8th grade example, that’s really a red herring as for one, high school is paid for by the state, so there’s cost to go and two, I highly doubt that earnings of high school drop outs (really middle school drop outs) would be more than the high school graduates if Jack Hough plugged them into to his same formula. Finally, why not flip your thought experiment around? Why stop after college? Why not get a master’s then a PHD then another master’s in a different subject, etc? If earnings don’t matter and the only way to get an education is college, then why not.

      A large part of the problem is the idea of credentialism that has employers and the like judge candidates based primarily on credentials such as degrees. It’s one of the reason everyone wants their kids to get a college diploma. (Well, not including Peter Thiel, of course.) A college degree comes off as a some sort of litmus test to having made it. But that’s the exact concept I’m criticizing. And with the costs of college skyrocketing and degrees being less valuable than they once were, financial analysis’ showing that college is often not the best choice and there being a myriad of other ways to get educated, my case is not that no one should go to college or that those who do are stupid, it’s just that too many are and for many, it’s not the best choice.

  17. Adrian Stamer

    I could be wrong as its late, but it seemed you did your calculations by just saying the high school only person puts his savings + 5% away and then the college graduate just pays his debt down by just 5% a year taking 12 years to pay down. The college grad on average will make significantly more then the high school grad (without scrolling up I believe it’s about double starting off) which means the college grad can pay down their debt and save significantly more then the high school grad.

    If the high school grad is only living off $15k a year and saving the 5%, then the college grad also can live off $15k a year, use the leftover $15k a yr to pay down debt and then save their 5% too and absolutely run the high school grad into the ground.

  18. Jerry W.

    I thought your article said “college is good for some people, for sure, but it’s not good for most” and “College is Often a Bad Financial Idea”, hmm you did. Then you tried to compare two of the highest earning trades, plumbers and electricians to the worst paying college degrees, like family studies. You did not compare Dr.s to fast food workers. You also may not know that in order to be a full electrician you often need college level courses. Try figuring out resistance factors without higher math. College also helps you learn to learn. I got a low voltage electricians license. I was one of only 3 or 4 in the company who did, so I made more money than the rest. Of the 3 or 4 who got the license all of us had college training. Most of the folks who failed the test did not have college training. We all got the book and studied for less than a week before taking the test. College helps you read and understand and apply knowledge. It did not require a degree to get the license, anyone could take the test. With only a 10% pass ratio from the company installing the cable, it is interesting only those with college passed. College will help you learn about things like investing. Do you really think someone with only a high school diploma will do as well investing as someone who understands mico economic and macro economic principles? Speaking of investing, who do you think had the more expensive house house and higher 401K and higher pension of the two guys? I have not seen pension funds in plumbing companies. I am sure some have them, but I have never seen one. How many accountant companies have pensions? Actually quite a few. Anyone can make a few generalizations and conclude what they want. I agree college is not for everyone, but for most it will provide a better chance to a higher salary and better retirement that not getting one. Yes there are other ways to get educated than college, but college helps you learn how to get educated. Comparing useless degrees to plumber wages but ignoring fast food workers and accountants, and Dr.s, wages are equally misleading. I truly hope you did not discourage someone living in poverty from going to get a college degree. there are not enough plumbing ap0prentice openings for all of the folks who need to improve their lot in life and live in poverty. There are a lot of government programs to help folks get an education who truly need it. Don’t forget you can spend over a decade doing an apprenticeship to become a plumber or electrician, and you have to take and pass a lot of tests before you can move up the various ranks. Being educated on taking tests can help. I know of several electricians who have college degrees, and some who do not. The ones with college degrees tend to own the companies. It has been my experience that it is usually the rich folks with college degrees that denigrate the value of a college degree the most, not the folks with historically low incomes in areas with low job opportunity. There are other avenues to education without college but many of those avenues are only open to those with a rich family.

    • Andrew Syrios

      You know, I specifically mentioned that those were some of the lowest paying college degrees and it’s of course obvious that plumbers and electricians are some of the higher paid trades. That point would have some merit if that section wasn’t preceded by Jack Hough’s research on the net worth of those who go to college (and make more, but start their careers later and often have debt to pay off) vs those who don’t if they make the average salary and save 5% of their income. It was just noting that not even though most college grads have a higher income, even that doesn’t hold up consistently for all those “useless majors.” I don’t know what you define a “useless major” but there are a lot of them that fall into this category.

      Furthermore, once again, the idea that college is the only (or one of few ways) to learn, say higher math, is ridiculous. The Internet is awash with cheap (often free) resources. The problem is that college is the only way to credentials, which many employers often require. Indeed, college’s worth (as overrated as it is for many but by no means all people) is artificially inflated by this obsession we have with credentialism.

      College is without question, good for, and quite frankly necessary for some people. You said I “did not compare Dr.s to fast food workers.” Well first, those who want to become doctors obviously fall in the category of people I think should go to college. And secondly I did take on that concept when discuss the “college grads make one million dollars more than non grads” myth, saying,

      “But in the end, you’re not just comparing, say, an accountant who went to college to a plumber who didn’t. You are also comparing college graduates who enter the workforce to the most impoverished, underprivileged and sometimes incarcerated people in the country, making such a comparison all but meaningless.”

      Right now the smartest and hardest working people tend to go to college. Often, as noted above, this is necessary (say if they want to be a doctor). But there’s a pretty blatant self-selection bias going on here. You may know plumbers with college degrees (I sure don’t, despite knowing quite a few plumbers), but on the other hand I know bar tenders with college degrees they got a long time ago. My argument was not all or nothing. It’s simply that college is by no means a guarantee of economic success and that right now, too many people are going to college, most specifically for those so-called “useless majors.”

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