With the current economy, are we entering a new era of education? Meaning, is the model of getting an undergraduate degree (or even a graduate degree), and then entering the job force going the way of the dinosaur?
In other words, is it a better investment for younger people to skip college and go the route of entrepreneurship?
That’s the argument put forth in an article I recently read on U.S. News. Essentially, proponents of this view tend to suggest that a college degree isn’t always worth the investment. Basically, the reality that these days many people take out big loans for their education, yet struggle to find suitable jobs in their field, is what makes college seem like a sketchy investment. Instead of pursuing such a traditional path, the idea is that people in business, technology, and the arts should go the route of self-employment. That’s the argument in a nutshell.
This is a position that’s been picking up steam of late. Even here on Squirrelers, there was a guest post in June 2011 that covered the topic of whether or not college is right for everyone. I thought the guest poster made some very good observations on how the idea that college is practically a “right” for middle class Americans might need to be revisited. This in light of the employment market and high level of student loan debt.
Personally, I still lean toward the more traditional route. That is, upon graduating high school, a kid goes to college and gets an undergrad degree. Personally, I obtained an MBA, which I can tell you was definitely worth the investment, as I was one of those people underemployed before business school. I realize that things are continuing to evolve in the market and economy, but it seems to me that it’s good to have a solid education.
I realize that it’s easier than ever for people to make money through entrepreneurship, particularly online. Enterprising new grads might be able to make more money right away on their own than they could through the traditional job route. However, being an entrepreneur isn’t for everyone. Sure, we can all bounce back from failures, but it helps to have a foundation on which we could build off.
Getting a college degree today, for younger people, is like a high school degree in a prior generation. It’s an entry ticket, a requirement for those in their early 20’s who want to get access to jobs. And about jobs – they aren’t obsolete. Not by a long shot. In my view, it’s imperative for a young person out of high school to go to college and at the minimum, get an undergraduate degree.
Don’t tell me about how Bill Gates, Steve Jobs, or other business superstars dropped out of college and succeeded big time. Most of us aren’t going to be multi-billionaire tycoons, and those guys are anomalies. Kids graduating high school need to think of higher education. I think that the idea of skipping college is founded on shaky ground, and not a fit with overall trends over the last 40 years.
Now, in terms of where a kid goes to college, that’s a big deal now. Realistically, there are probably a number of schools that are very expensive yet offer little appreciable advantage over schools that are much cheaper. Just because a university is private, doesn’t mean it’s going to be better than a public school. I think that the idea of people just going to the highest rated school they get into is very outdated. Rather, kids should pursue a college education – but choose a school by giving plenty of thought to the financial side of the return on investment. I say this knowing that not everything about personal growth can be numerically quantified. However, a mistake in choice of colleges and potential loans could stay with a kid for many years. Choose wisely!
Because loans create such a large financial hole for students to climb out of once they have completed their schooling, many are now choosing to work while attending university. Of course, juggling classes with work can be extremely difficult, but online certification classes eliminate much of this difficulty by allowing students to study on their own time. It is possible to obtain the certification needed for high-demand careers like psychology through these online universities, which allows students to complete their degrees on their own time and start their new careers with minimal debt.
My Questions for You:
What do you think? Are you with me, thinking that college is vital for new high school graduates, or do you subscribe to the movement that questions the need for college for business and other majors?
Do you think that people spend enough time looking at the financial return side of the equation when choosing a college?
I normally wouldn’t give this advice, but considering how expensive college education has gotten, I really wonder if the returns are worth the investment.
That’s one bubble I can see coming!
Moneycone – I think you’re on to something there. It’s been talked about, but it seems as though there’s a declining ROI involved with some of the more expensive colleges.
Bill Gates, Steve Jobs, Larry Ellison Richard Branson, Bill Gates – exceptions, not the rule. I think when we point to all of the billionaire dropouts we tend to glaze over those who dropped out and, well, aren’t billionaires. The bias of the unseen, I suppose.
And yes, you’ve got to figure out your ROI on your degree. If you are going into a Major with poor unemployment prospects and low starting salaries – either try to minimize the costs as much as possible or switch Majors.
PKamp3 – yes, I agree that those are the exceptions for sure. It’s entertaining how those names get thrown out there when people justify the position that college is unnecessary. Hate to burst anyone’s bubble, but I don’t think any of us are going to ever be remotely close to the success of Gates, Jobs, etc.
This topic is sibling rivalry in a nutshell for me. I went to university and obtained an Engineering degree. My sister started a business at 18. We both earn a healthy living, we own our own homes, we both experience ups and downs of the market, and most importantly: we both work. I don’t believe higher education is for everyone any more than I believe starting a business is for everyone. Both prospects, when they fail, are extremely expensive propositions. Both have great potential too. This discussion really does compare apples to oranges, neither one is better than the other. The most important part is watching your money and staying adaptable.
Cassie – I agree that it’s vital to watch your money and be adaptable. Those are great traits that alone can help quite a bit throughout life.
I think it depends on the individual. I went straight on to college and it was the right thing for me. My brother stayed home and went to community college a couple years until he figured out what he wanted to do.
I think overall, you can’t go wrong with a college education. My son is leaving the nest in September to go to college. He isn’t 100 percent sure what he wants to do, but we are also discussing ways to make money on the side so he too can have multiple streams of income one day.
Kris – I really like how you’re talking about multiple streams of income in this way. While my kids are much younger, if they were nearing college age I’d be having the same conversations. Good stuff!
I am so tired of the new wisdom that everyone should just become an entrepenuer. You know what, my husband and his friend tried that. Luckily all the paperwork was in the friend’s name, and it’s only now that the disaster of their business is no longer ruining his credit.
College, or a 4 year college right off the bat, may not be for everyone. And for some people, starting their own business might be the right idea. But it’s not the right idea for everyone. It’s not even the right idea for everyone for whom going to college isn’t the right idea.
I am also getting sick of the idea that if you go to college, it better be for a “practical” degree like engineering, accounting or nursing. Believe it or not, the purpose of college is not to prepare you to go into a specific job- that’s called a trade school. The purpose of college is to help people learn to think and analyze on a deeper level so that they can succeed at any job they decide to try.
And Gates, Jobs, and most of the others, they went to college. They dropped out before getting degrees, yes, but please don’t underestimate 3 years of a Harvard education, even if there was never a degree. If nothing else, the networking paid major dividends.
I probably shouldn’t rant so much in your comment thread, but I am thrilled to see somone sticking up for the “traditional” route. I don’t think we should expect 18 year olds to know what they want to do with the rest of their lives, but that’s the joy of a liberal arts education- it gives you skills that are portable.
Shanendoah – really good points. I agree that one shouldn’t understimate 3 years at Harvard, even if not equating to the degree. The idea that I think you’re pointing out is that the traditional route has merit that hasn’t vanished, and that skills are gained through the college experience that will pay off later. I do agree for that. And I agree that college is there to help you think and learn, no matter what. Sure, there are some very specific skills that people emerge from college with, but there’s also the “learning to learn” aspect. I have had a post idea for a while, about just this concept and a discussion I had with someone years ago about the true value of an undergrad education. Thanks for reminding me of that idea 🙂
I still think an education is essential. Even if a kid is a natural entrepreneur, he/she should still go to College. Bill Gates and Steve Jobs went to college. Yes, they dropped out, but they learned a few things and met a few people before they left. There are ways to lower the cost of college like going to community college for a couple of years.
retirebyforty – I agree, college is essential. Pretty much nobody, other than a few lucky people, will be able to pull of what Gates, Jobs, and the like have done.
we’re going to try and short-circuit the process by college prep classes and college credit at the local tech college. Some degrees may not certainly be worth the high tuition and room and board. Costs for a four-year liberal arts degree may be spiraling out of sight. But that certificate surely opens a few doors. Like other commenters have said, not everyone is Bill Gates.
101C – that’s a good move, getting stuff done early and for less, before kids actually go to college. That might save a little bit, if they can matriculate with credit hours already earned.
College degrees or post secondary training is a given. You cannot survive without it. There are a number of ways to reduce the cost such as community college, scholarships and grants.
krantcents – agreed completely.
This is a great post. Personally I feel that education is still important, and having a backup plan is always important.
That said, education is in a huge bubble and both the students involved and society at large would be better off if more people went into the trades, medicine, technology and other areas where labour demand will exceed labour supply for many years to come. My cousins and their family went to the trades right after high school and they earn more than me, and I spent many additional years in college and then uni. It just goes to show that there are many paths open to young people and they dobt need to become enslaved to student debt…. in fact, they should really consider the benefits, costs and alternatives.
I would love to say much more but I’m on mobile and it’s a pain to write. This one’s definitely going in the roundup. 🙂
Invest It Wisely – glad you liked the post. It’s interesting how there’s need for people in all kinds of trades, which might not need a degree. Still, I think it’s best to get the degree and figure things out later. The issue is making wise choices about what type of price tag is worth it, based on your own needs, and future interests. Really, education prices are growing by a rate that easily exceeds inflation, but the economy here in the U.S. is not keeping pace. Things are out of balance, and people need to look at the choice of colleges much more carefully and strategically today. At this point, it looks like that’s how I’ll be doing things with my kids.
I’ll disagree on “it’s best to get the degree” — I think that depends on the person. For me personally, it made sense, and when a good friend of mine only had one semester left and he didn’t feel like finishing it, I pushed him to finish because he was so close anyways, and it would only help him.
At the same time, college is just not for everyone. People like my cousins are not lazy, they work very hard, but they never enjoyed school and the path to get to college would have been many additional years that would not have made a difference. The husband of one is an entrepreneur doing pretty well, and the other is making a six figure salary as a construction foreman at a age when I was just barely out of school. 😛
Personally I will push my own kids to go for it if they are going down that path, but I disagree on the assertion that it’s always better to spend the time to get the degree than not. In fact, I believe that by the time my own kids are that age education will be somewhat different than today — I expect online learning and things like that to place increased competition on the traditional institutions, and that’s actually a good thing. I personally spent too many years because we have a two-tier system here, and I was falsely led to believe that the first tier was useful and would also lead to a good job. Didn’t work that way. 😉
What I will agree on is that high school by itself is useless. High school is not much more than a babysitter these days, unless you’re lucky enough to live in a good district or you have the money to send them to a good school.
You definitely need to get some sort of real education after that, whether it be university or learning a trade, or a technical college of some sort.
I also said I spent too many years on the first tier, but one positive thing I can say is that I met a couple friends that I still have and I did meet a girlfriend of now 7 years from there. So, that’s the positive spin on the time spent for me. 🙂
Here were my own thoughts about it from about a year ago: http://www.investitwisely.com/college-is-it-a-complete-waste-of-time/
Invest it Wisely – High school on its own, without further education, will not get most people as far as it would have a generation ago. Not even close. That’s not to say that some people can’t succeed in the trades, because they can. But college is really what that high school degree used to be in that past generation, at least in my view. As for high school as a baby sitter, sadly that’s what it can be in bad school districts. It’s very important to me for my child to be in a high performing school district, and I’ve been pleased so far.
Invest it Wisely – life experience is a great teacher of what works and what doesn’t. I tend to agree that education will be somewhat different down the road, say 15 to 20 years. I can already see with my own child that they teach “Keyboarding” in elementary school. That essentially means typing, which was only offered in high school when I was younger, and was considered a joke of a class. I took it despite the disdain of others, and found that it was actually worth the time!
Funny, I was working on a post on this topic over the weekend.
Honestly, I think it’s a false choice to offer the two as a “one or the other” life decision. I think college gets an overly bad reputation because of debt, but that doesn’t really say anything about the education itself. I mean, I wouldn’t tell someone not to buy a Honda because a Maserati is too expensive. So, to me, it doesn’t really make sense to say that an education is inherently the wrong decision because too many people borrow too much to go to school.
JT – you have a great point in noting the “one or the other” concept. I agree that it doesn’t have to be both. If someone is so inclined, is mature, and has his or her head on straight, starting on a parallel path of entrepreneurship and college can put someone ahead of the game. No question about it.
I’m a backer of going to college because it’s a life changing experience, the networking is priceless, and you get to choose what you want to study. The rising costs are ridiculous though so state schools or even community programs are the way to go IMO. -Sydney
Untemplater – there sure are a lot of great aspects to college. With those rising costs, it’s so important to pick wisely.
I don’t think college is vital, but I think it helps to get some solid education in place before starting any venture. The sad fact is that high school doesn’t prepare adults for anything, and college at least doles out some more information. I know I wouldn’t want to start a business without solid understandings of finance and such.
Robert – I agree that high school doesn’t adequately prepare people for the world today.
“Do you think that people spend enough time looking at the financial return side of the equation when choosing a college?”
ABSOLUTELY NOT! I feel like (read: have no proof lol) that people believe college is their time to explore what they want to do with their lives and just don’t realize they are spending 1100 a credit to do so lol
Evan – I agree that most people don’t look at the financial side of it! To many, college is a time to explore….at a super expensive price. There are many kids who truly know the value of a dollar, but some that truly don’t.