• Harry N. Stout

177- Weighing the Cost of Higher Education


Is the cost of getting a college degree, professional designation or learning a trade worth it? Should you pursue your passion in life or what gets you a job? The cold, economic truth is an education is only of value if you can translate learning into skills that allow you to earn a cash income you can live on. If you chose to pursue higher education, you will find that it takes time, money and dedication to be successful.


For most of us, we are not born into families that have the financial resources to fully fund our educations. To our advantage, we are beneficiaries of free, publicly-funded elementary and secondary education, but if we decide to gain the knowledge to pursue a trade or profession, we will need to find the money to pay for that education. In the United States today, higher education is expensive.


In a post updated on January 27, 2021, StudentLoanHero.com presented updated information on student loan debt. It reported that for the Class of 2019, 69% of college students took out student loans, and they graduated with an average debt of $29,900. Meanwhile, 14% of their parents took out an average of $37,200 in federal parent PLUS loans. It also highlighted that Americans owe over $1.71 trillion in student loan debt, spread out among about 44.7 million borrowers.


As a society, we have not given enough thought and disseminated sufficient information about the value of higher education. For the most part, we have directed most everyone down a path to obtaining a college education that would assure them of a high-paying job and a great start to their earning years. Unfortunately, to find that high paying job one must choose a field of learning very carefully.


According to the College Board’s publication, Trends in College Pricing 2019, the four-year undergraduate costs of post-secondary learning range from over $40,000 for an in-state institution to over $140,000 for a private school. The costs at all types of institutions are high and need to be carefully planned. Choose a trade or profession that is not in demand, and you have wasted time, money and work that will not pay off for you. As an added impact for many students without the jobs they dreamed about, they will have the pleasure of repaying student loans for a good portion of their adult lives.


To be able to gain the skills needed to be attractively employed individuals need to obtain a careful mix of formal and practical learning. This mix will be different from the post-World War II model of education most Americans have experienced. The cost benefit tradeoffs of obtaining this education need to be carefully weighed and openly discussed within the family. I believe discussing the costs and benefits of higher education should start when children reach around 12 years of age.


There is not only doom and gloom when considering paying for the right education. There are benefits to a properly focused education that include:

  • You will earn more money during your lifetime. It is estimated that a college graduate with a bachelor’s degree in an employable field of learning will earn five times as much as someone with only a secondary or high school education.

  • Better jobs provide better health, disability, retirement or other benefits that will enable you to address and mitigate some of life’s key financial risks.

  • You will likely have increased lifelong opportunities to obtain even better, higher-earning jobs.

Summary

To make the decision on what education to pursue and at what institution, you will need to balance what I call the Education Equilibrium Scale of the desire to learn a subject and its potential to provide future income for you. The best education is the one that balances your interest in pursuing an area with the probability of the future income it provides.


For example, becoming a medical doctor will likely provide significant future income. However, if you cannot stand the sight of blood, you will not enjoy the profession. Ultimately, the trade-off for all of us is to choose an area of knowledge (e.g., technology, science, computing, marketing, management) that we enjoy and have a passion for that is in demand by employers and can produce a reasonable level of future income that will provide for our future needs. Good luck on making the choice!

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