- Joined
- Jul 30, 2007
- Messages
- 599
Rep Bank
$730
$730
User Power: 9%
College....is it worth it ?
Here's the latest from KIO
Counting the Cost of College
Posted on: Tuesday, August 10, 2010
Here in Arizona, the summer is coming to a close for our local college students. If you drive by Arizona State University, you can see activity picking up. The kids are starting to come back and soon classes will resume. I thought I'd write a post to all those kids starting or resuming their college education.
When I talk to young men and women on their way to college, I often ask them why they're going. Many times the response is, "I don't know. My parents want me to get a good education so that I can get a good job." This line of reasoning made sense decades ago before Nixon changed the rules of money in 1971 and the rules of retirement changed in 1974. But, as I've said before, getting a good job made sense when the dollar was backed by gold and worth saving, and when companies took care of their employees for life through a retirement plan. Today, that path makes little sense.
Many people think that I'm anti-education. But nothing could be farther from the truth. As I wrote about in June in my blog post
""http://www.richdad.com/Richdad/RDBlog/RDBlog.aspx?TopicID=12"", I attended college and found it to be beneficial in many ways—though those benefits were more intangible like leadership skills. But I hold no illusion that it is responsible for my success today, and, as I also wrote, the skyrocketing costs of a modern college education are creating diminishing returns when it comes to the value of a college education.
The problem isn't college. It's that college is considered a sacred cow, causing many people to blindly hold onto the truism that a good education equals a good job and rush into college with no plan and no concept of the risk they are taking.
College is risky
A recent article on MSNBC.com, ""http://www.msnbc.msn.com/id/38561562/ns/business-personal_finance/"?" points out the risks associated with the high cost of education. "Private college tuition and fees have risen 70 percent over the past decade, according to the College Board. That is more than twice the rate of inflation. Public college tuition and fees have doubled in the same timeframe." While the cost of college has grown twice at the rate of inflation, real wage growth has been flat for most jobs—and negative for many. In other words, people are paying more for less.
What's worse, many students take on a huge student loan burden, which affects their quality of life after graduation and cuts significantly into any higher earnings they might have as result of their degree.
Because of facts like these, I often encourage young men and women to forgo college unless they know they have need for it. The old rule of go to school and get a good job is an obsolete one. You can no longer expect that going to college will provide you a stable financial future. You must first have financial intelligence and understand why you want to go to college in the first place.
Count the cost
To be sure, there are many jobs that require a college education. For instance, if you want to be a doctor, that will require many years of school and a very high commitment. Also, if you wish to be a schoolteacher, you need the proper certifications. As a consequence, you'll have to work many years to pay off the money you spent to receive those degrees.
For some people, the cost is worth it. Fulfilling a dream and pursuing a passion can give a person enough drive to put in the necessary years and take on the resulting costs of education. But for many people, college debt is an assumed necessary evil of life. They enter into college because of other's expectations, not knowing why they are there, they take on huge debt, and graduate with no idea of what to do except look for a good job, save money, and pay off their college loans.
Even worse, some people believe that a "good" college like the Ivy League schools will assure them a better shot at high-income career. The numbers tell a different story. As the MSNBC article points out, "Calculations done by Kotlikoff for msnbc.com suggest that attending a public college might make more financial sense than a private college. Private schools charge $26,300 a year on average, compared with $7,000 for in-state students at public, four-year schools, according to the College Board."
The higher cost of private education results in some startling facts. According to Laurence Kotlikoff, an economics professor at Boston University, the cost of attending NYU vs. UMass puts the NYU graduate at financial a disadvantage for life:
"The calculation assumed the student earned a business degree, got a job making $65,900 (the median industry salary, according to the BLS) and paid 8 percent interest on the loans. After factoring in everything from taxes to 401(k) contributions, Kotlikoff calculated the graduate paying off the debt from UMass would have $36,515 for discretionary spending. That would remain stable even after his debt was paid off. The NYU graduate would never catch up. He or she would have $22,128 for discretionary spending at age 22, rising to $35,311 at age 42, when the debt is paid off."
Make a plan
In the end, I can't tell you whether college is a good or bad decision for you. No one but you—not even your parents—can do that. While I think in most cases there are better ways to get ahead in life, such as investing in your financial education and learning to sell, many people do go to college.
So, if you're planning on going to college or are currently attending one, here's my advice.
Know why you're going and make a plan. Don't go to college expecting to discover what you want to do in life. Know what you want to do in life and organize your education accordingly. If you want to be a doctor, take pre-med classes and go to medical school—and understand the cost of that decision. If you want to be a business owner, invest in your financial education—something you often won't find in the hallowed halls.
Also, don't get caught in the trap that more expensive is better. Keep your costs as low as possible. In the real world, what school you attended becomes less and less important and your character, drive, passion, and intelligence prevail.
Finally, use your free time to supplement your education. As I've written many times, what conventional wisdom considers a "good" education is really an incomplete one. You will not learn how to prosper financially in college. You will not learn how money works. You will not learn how to invest. You will not learn even the simple definition of an asset, something that puts money in your pocket, and a liability, something that takes money out of your pocket. You must take charge of your own financial education. Only then will you have a complete education.
Best of luck.
Here's the latest from KIO
Counting the Cost of College
Posted on: Tuesday, August 10, 2010
Here in Arizona, the summer is coming to a close for our local college students. If you drive by Arizona State University, you can see activity picking up. The kids are starting to come back and soon classes will resume. I thought I'd write a post to all those kids starting or resuming their college education.
When I talk to young men and women on their way to college, I often ask them why they're going. Many times the response is, "I don't know. My parents want me to get a good education so that I can get a good job." This line of reasoning made sense decades ago before Nixon changed the rules of money in 1971 and the rules of retirement changed in 1974. But, as I've said before, getting a good job made sense when the dollar was backed by gold and worth saving, and when companies took care of their employees for life through a retirement plan. Today, that path makes little sense.
Many people think that I'm anti-education. But nothing could be farther from the truth. As I wrote about in June in my blog post
""http://www.richdad.com/Richdad/RDBlog/RDBlog.aspx?TopicID=12"", I attended college and found it to be beneficial in many ways—though those benefits were more intangible like leadership skills. But I hold no illusion that it is responsible for my success today, and, as I also wrote, the skyrocketing costs of a modern college education are creating diminishing returns when it comes to the value of a college education.
The problem isn't college. It's that college is considered a sacred cow, causing many people to blindly hold onto the truism that a good education equals a good job and rush into college with no plan and no concept of the risk they are taking.
College is risky
A recent article on MSNBC.com, ""http://www.msnbc.msn.com/id/38561562/ns/business-personal_finance/"?" points out the risks associated with the high cost of education. "Private college tuition and fees have risen 70 percent over the past decade, according to the College Board. That is more than twice the rate of inflation. Public college tuition and fees have doubled in the same timeframe." While the cost of college has grown twice at the rate of inflation, real wage growth has been flat for most jobs—and negative for many. In other words, people are paying more for less.
What's worse, many students take on a huge student loan burden, which affects their quality of life after graduation and cuts significantly into any higher earnings they might have as result of their degree.
Because of facts like these, I often encourage young men and women to forgo college unless they know they have need for it. The old rule of go to school and get a good job is an obsolete one. You can no longer expect that going to college will provide you a stable financial future. You must first have financial intelligence and understand why you want to go to college in the first place.
Count the cost
To be sure, there are many jobs that require a college education. For instance, if you want to be a doctor, that will require many years of school and a very high commitment. Also, if you wish to be a schoolteacher, you need the proper certifications. As a consequence, you'll have to work many years to pay off the money you spent to receive those degrees.
For some people, the cost is worth it. Fulfilling a dream and pursuing a passion can give a person enough drive to put in the necessary years and take on the resulting costs of education. But for many people, college debt is an assumed necessary evil of life. They enter into college because of other's expectations, not knowing why they are there, they take on huge debt, and graduate with no idea of what to do except look for a good job, save money, and pay off their college loans.
Even worse, some people believe that a "good" college like the Ivy League schools will assure them a better shot at high-income career. The numbers tell a different story. As the MSNBC article points out, "Calculations done by Kotlikoff for msnbc.com suggest that attending a public college might make more financial sense than a private college. Private schools charge $26,300 a year on average, compared with $7,000 for in-state students at public, four-year schools, according to the College Board."
The higher cost of private education results in some startling facts. According to Laurence Kotlikoff, an economics professor at Boston University, the cost of attending NYU vs. UMass puts the NYU graduate at financial a disadvantage for life:
"The calculation assumed the student earned a business degree, got a job making $65,900 (the median industry salary, according to the BLS) and paid 8 percent interest on the loans. After factoring in everything from taxes to 401(k) contributions, Kotlikoff calculated the graduate paying off the debt from UMass would have $36,515 for discretionary spending. That would remain stable even after his debt was paid off. The NYU graduate would never catch up. He or she would have $22,128 for discretionary spending at age 22, rising to $35,311 at age 42, when the debt is paid off."
Make a plan
In the end, I can't tell you whether college is a good or bad decision for you. No one but you—not even your parents—can do that. While I think in most cases there are better ways to get ahead in life, such as investing in your financial education and learning to sell, many people do go to college.
So, if you're planning on going to college or are currently attending one, here's my advice.
Know why you're going and make a plan. Don't go to college expecting to discover what you want to do in life. Know what you want to do in life and organize your education accordingly. If you want to be a doctor, take pre-med classes and go to medical school—and understand the cost of that decision. If you want to be a business owner, invest in your financial education—something you often won't find in the hallowed halls.
Also, don't get caught in the trap that more expensive is better. Keep your costs as low as possible. In the real world, what school you attended becomes less and less important and your character, drive, passion, and intelligence prevail.
Finally, use your free time to supplement your education. As I've written many times, what conventional wisdom considers a "good" education is really an incomplete one. You will not learn how to prosper financially in college. You will not learn how money works. You will not learn how to invest. You will not learn even the simple definition of an asset, something that puts money in your pocket, and a liability, something that takes money out of your pocket. You must take charge of your own financial education. Only then will you have a complete education.
Best of luck.
Dislike ads? Become a Fastlane member:
Subscribe today and surround yourself with winners and millionaire mentors, not those broke friends who only want to drink beer and play video games. :-)
Membership Required: Upgrade to Expose Nearly 1,000,000 Posts
Ready to Unleash the Millionaire Entrepreneur in You?
Become a member of the Fastlane Forum, the private community founded by best-selling author and multi-millionaire entrepreneur MJ DeMarco. Since 2007, MJ DeMarco has poured his heart and soul into the Fastlane Forum, helping entrepreneurs reclaim their time, win their financial freedom, and live their best life.
With more than 39,000 posts packed with insights, strategies, and advice, you’re not just a member—you’re stepping into MJ’s inner-circle, a place where you’ll never be left alone.
Become a member and gain immediate access to...
- Active Community: Ever join a community only to find it DEAD? Not at Fastlane! As you can see from our home page, life-changing content is posted dozens of times daily.
- Exclusive Insights: Direct access to MJ DeMarco’s daily contributions and wisdom.
- Powerful Networking Opportunities: Connect with a diverse group of successful entrepreneurs who can offer mentorship, collaboration, and opportunities.
- Proven Strategies: Learn from the best in the business, with actionable advice and strategies that can accelerate your success.
"You are the average of the five people you surround yourself with the most..."
Who are you surrounding yourself with? Surround yourself with millionaire success. Join Fastlane today!
Join Today
ehsii:
upuf:.
