It is true that college costs are staggering, after all they have increased over 5.2% per year since 1995, an inflation rate greater than both the US economy and health care.
It really is a classic case of supply and demand.
Over 70% of high school students today plan to attend college. To put this in perspective, that means over 2.3 million of the 3.3 million high school students who will graduate high school in 2016, will be planning to attend one of over 3,000 US colleges in the Fall. That is high demand and colleges have been enjoying the benefits of growing admissions, expanded and updated campuses, and great teaching careers.
The main idea shared by American families is that the penalty of not getting a higher education is too steep.
This idea is fueled by reports and statistics through the years that demonstrate the high opportunity cost of not going to college, the notion that college graduates make on average far more money over their careers than those who do not graduate college.
“The bottom line: go to college. It costs a person more to not go to college over their lifetime.”
Why Do People Make The Case For College?
- Access to jobs
When I was a high school senior in small town Nebraska there were no companies coming to the high school to recruit students to work for them. On the flip side, as a college senior we had many companies coming to campus to recruit and interview soon to be college graduates. The marked difference demonstrates one vital thing. College graduates gain access to high demand white collar jobs. If you have your college degree, you have an inside track to many great jobs. Many of my college classmates secured jobs before graduation. I recall my own experience vividly. I was fortunate enough to get past the first round of company interviews on my college’s campus and was invited to interview at the company headquarters of ConAgra, a Fortune 500 conglomerate. I spent 6 hours in this marathon interview session, where they rotated 2-4 people at a time for multiple hours, asking such questions as “Tell me what you know about arbitrage.” We did break up the day with a lunch, that was also an interview as we walked and talked to and from the lunch destination located in the Old Market district of Omaha, NE across the street from ConAgra’s downtown headquarters. I was extended the job offer to work in their merchandising and trading division and started in the management trainee program working on the Cotton Seed Meal desk. Our desk was responsible for buying, storing, and selling cotton seed meal to cattle farmers in the Midwest and southern US regions. We traded off of the Chicago Board of Trade and took positions by storing this product in many different facilities. I recall the great feeling of having secured my job prior to graduation thanks in large part to the access I was given by gaining my college degree. With no college degree, I would have had no access to this job and certainly would not have had companies coming to me.
Let’s face it. A college degree opens doors, it gives you access to interviews at the countries best companies, it gives you access to alumni who already are working in the countries best companies. A door open is one of the best things we can ask for. It is up to us to make the best of those open doors.
- Access to network
When you go to college you meet people. You meet many people. People who know people, people who are part of families who know people. You also become part of a college network, an alumni network, usually strengthened from a common bond. There is something about talking with and helping someone who has walked down the same path across campus, up the same stairs to classes, and across the same stage at graduation. An alumni network can be a powerful thing and with social platforms like Facebook and LinkedIn, connecting to alumni groups has become even easier.
My personal experience was that I benefited from access to jobs and access to a network by attending the college I did. My college was in the backyard of ConAgra’s headquarters. The company came to my college and invited me to their campus to interview. To then maximize this opportunity (door opening) I reached out to the one alum that I had heard through the rumor mill had been hired. We spoke for 30 minutes and I wrote down every word, soaking it in. I was so prepped for the interview that the 6 hour interview blitz was well handled. I had a calmer demeanor because I was aware of what the work was like, what the demands were, what I would actually be doing as explained by my alumni connection. He was more than gracious to take the time to explain, coach, and provide pointers.
- Higher pay (bigger paychecks)
David Leonhardt published an article for the NY Times in 2014 that indicated Americans with college degrees make nearly twice as much per hour than those without a college degree. That’s up from 64% more per hour in the 1980’s and 85% more per hour than the 1990’s. His article describes research by economists that define the cost of not going to college to be more than $500,000 in economic value over their lifetime, factoring the cost of college and incomes over time.
“The average hourly wage for college graduates is $32.60 and the average hourly wage for those without a college degree is $16.50.” – Lawrence Mishel, Economic Policy Institute, 2014
Using Mishel’s math, the college graduate earns about $65,000 per year while the non-college graduate earns $33,000 per year, between $2,000-3,000 less per month (over $600 per week). Projecting this wage differential over a 40-year career really drives home the point. Using constant 2014 salaries, the college graduate will have earned nearly $2.6 million over a 40-year career (not adjusting for raises or inflation) and nearly $1.3 million more wages than the average worker who did not graduate college. We are speaking to the law of averages as everyone should understand this is not the universal rule. There are non-college graduates who will have tremendous careers and make far more money than college graduates. It is fair to say this is the exception to the rule.
- You have the rest of your life to work
College is an opportunity to grow, to learn, to explore, to meet people. It is one of the many stages in life that should be appreciated and experienced.
We will work at a minimum 2,000 hours per year for over 40 years. And we know some of those early “prove yourself” years will be spent burning the midnight oil to prove our worth and climb to that next rung. That is well in excess of 80,000 hours of work. We are the most overworked country in the world. We take the fewest vacations.
“Not only are Americans working longer hours than at any time since statistics have been kept, but now they are also working longer than anyone else in the industrialized world.” – Dean Schabner, ABC News
Schabner pointed out that a trio of books, The White-Collar Sweatshop by Jill Andresky Fraser, The Overworked American by Juliet Schor, and The Working Life by Joanne B. Ciulla, have been embraced by a public that apparently feels harassed by the pressures of the workplace.
One final point Schabner made is that the Bureau of Labor statistics confirmed what Fraser had been hearing in four years of interviews with white-collar workers. In 1999, more than 25 million Americans – 20.5 percent of the total workforce – reported that they worked at least 49 hours a week, and 11 million of those said they worked more than 59 hours a week. That’s 10-12 hour work days for those keeping track!
My main point is let’s have a moment of perspective and a pound of empathy for those brave twenty somethings ready to strike out on their own. Let’s appreciate the toughest life choices of who to ask to the Spring Semi-formal, which fraternity or sorority to pledge, which teacher to take for American History, and whether living on campus or off campus sophomore year makes the most sense. Once that college graduation bell rings, it is full on rent payments, grocery shopping, shaving every day, and showing up to work on time and having to stay all day. The days of class ending at 2:30 PM and having the rest of the day to manage fun, friends, and homework have passed.
- The power of knowledge
In high school I learned about Algebra, Geometry, US History. In college I learned about Finance, Statistics, Economics, Accounting, Investing and really stretched my thinking in learning about Philosophy, Theology, Astronomy, and Meteorology. The difference between high school education and college education is the difference between night and day. The skills learned, the organizations joined such as Student Body Government and Alpha Kappa Psi business fraternity provided so much knowledge that serves as a solid life foundation. Having been a business major and attained a Finance degree, I studied fundamental and technical analysis and learned about Ben Graham, Warren Buffett, and Peter Lynch. In college I was selected to an honors course, called Portfolio Practicum. We had to be to class at 7:30 AM Monday, Wednesday, and Friday my entire senior year. Now that was painful but did teach me good habits and was actually a great talking point with employers. Employers definitely favor candidates who have practical experience working and demonstrated ability to comply with a schedule. And Corporate America loves employees who like to come to work early. Regarding this Practicum class, we had to complete an interview process and be selected from the other pool of rising seniors. Once we made it into the class we then had to manage part of Creighton’s endowment fund. Granted it was a small sliver of the schools endowment fund (the original amount granted to inaugural class of college seniors in 1989 was $100,000), the fact that it was real money made the experience all the more valuable. We read Malkiel’s A Random Walk Down Wall Street, Graham’s The Intelligent Investor, and Lynch’s One Up On Wall Street. I learned to read financial statements well and observe key traits of companies that demonstrated value and strength, as demonstrated by key fundamental measurements. We had to make buy, sell, and hold recommendations to the class and decisions were made through voting. One funny point is we actually voted to sell our Apple position. This was well before the iPod and when Apple had lost Steve Jobs and was losing market share in the PC space. If only we had known…
This is the power of knowledge and why I received a sought after internship my senior year with Mutual of Omaha. I parlayed that internship into my job offer working on a commodities trading desk at ConAgra.
One cool thing that I remember about my sophomore year of college was when interning as a legal runner at a law firm (this is when I was considering the field of law). One of my main job functions was delivering legal documents to people and businesses including ConAgra. One day when I was delivering a legal package to the executive offices of ConAgra I crossed paths with Charles Harper, the CEO of ConAgra. He asked me how was the weather outside and I informed windy. “I wouldn’t know it” he replied and rubbed his bald head and chuckled. That interaction and his awesome demeanor stuck with me and I made a mental note that this would be a great company to work for. Fast forward a couple of years and that same company was extending ME an offer of employment – was beyond cool.
Editor Update July 15, 2016: It has come to my attention in reading Creighton University’s quarterly magazine that Charles “Mike” Harper has recently passed away – on May 28, 2016. I just described our one brief encounter over twenty years ago – but I can still remember like it was yesterday. Let me ask you the reader. Have you ever been in the presence of someone that seemed to energize the room, a sort of “electric” feel? Well, Mr. Harper was one of those kind of leaders. A charisma and energy that was contagious…My hats off to you sir, for your 88 years on this planet have made this world a better place. I am sure you will be leading something upstairs and making people smile.
- The power of specialization
No better case can be made for the power of specialization than those who get professional degrees and graduate with degrees in areas of specialty. I can say this is one area that may deviate from the need for a college degree. Technical training can pay handsome dividends to those who want to go to trade school and become an auto mechanic, plumber, electrician, home inspector or appraiser, etc. The key take away is that those who have acquire specialized skills in demand can enjoy years of good earnings and solid employment. My wife graduated with a degree in Computer Science as she had a natural ability to understand programming. She took a programming class in college and aced it. I mean she flat rocked a high A and hardly had to try. She says that because of how little she liked to spend time in the computer lab on nice days she would actually write her code on paper and walk it into the lab, put it into the computer, compile it most often on the first try and then walk out of the lab with a completed assignment to her peer’s dismay. She also was able to parlay this into a co-op. This was a job with a local utility (the local gas company) that paid her to work as a programmer, about 20 hours per week, while she was attending college so that she could actually pay for her schooling while working. She realized that the money she was earning working only 2o hours per week was paying her more than the full-time employees working in the student accounts office where she worked for her first college job. Programming is a direct example of a degree that is specialized and can be applied right away to the corporate landscape. Entry level programming jobs in 1999 paid about $50,000. Entry level programming jobs today can pay as much as $75,000 if you have gained experience during college. Five years of experience and you can find yourself making six digits programming, yes, that’s $100,000 per year. If you have a target degree that allows you to get summer jobs and internships and can be applied directly to the workforce at graduation, then you have a specialized degree. If you have an affinity to any of these fields then you should strongly consider the proper steps to take to apply this natural interest. Programmers, engineers, doctors, lawyers, accountants, dentists, nurses, teachers – these are all specialized degrees and lead directly to careers in those fields. Many STEM (Science, Technology, Engineering, Math) fields and majors lead to solid careers and serve as excellent specialized choices based on the US economic outlook for the next twenty years.
The bottom line: Specialization rocks!
Why Do People Make The Case Against College?
I have covered the many reasons why people choose to attend college. Well, life is all about the ying and the yang so we have to look at the flip side and consider the numerous reasons that people do not plan to go to college.
- It’s too expensive
College is not cheap. This is true. And it keeps getting more expensive fueled by a high rate of tuition inflation. The College Board publishes average costs of college by state for in-state public tuition. In October 2015, the averages demonstrate an over $9,000 per year cost. When you add in room & board, other fees, and books then the cost averages are closer to $20,000 per year. Private schools are a much different story. Duke University in North Carolina has a published 2011-2012 tuition rate of $49,498 and total costs of over $68,000 with room & board, other fees, and books. With many students taking six years to graduate then the total cost of college is even higher.
- Believe College does not guarantee success
Many college graduates have to move back home and live with mom and dad while taking jobs that do not require college degrees. The job market fluctuates from year to year and recent years many experienced older baby boomers have been competing for entry level jobs with college graduates. The demand for skilled workers is at an all-time high and for those strategic in gaining degrees (Programming, Mathematics, Finance) and experience in the right industry are finding jobs with ease. Certain degrees such as Art, History, and Liberal Arts majors may have more difficulty securing jobs without having gained key work force experience during their college tenure. College does NOT guarantee life success by any means. A student coming out of college with over $100,000 of college debt is at risk of having financial challenges and limited options. The goal is to be smart in degree selection, prudent in college choice and completion, and come out of college with a degree and applicable experience employers want right away.
- College Debt may force me into a job I do not want
I heard a story in discussion recently about a young couple just starting out in life after graduating college. They are in their early twenties, newly married, and they are ready to take on the world. The thing is, they each have college debt. They have over $80,000 apiece totaling $170,000 in student loans. Before entering the work force they both wanted to pursue a missionary trip for 1-2 years, but were unable to do so because of their loan payment obligations. Experts say it is reasonable to expect that for every $1 borrowed in student loans the payback is $2 factoring time, fees, and interest. That payback for this young couple is ultimately $340,000. That is a payment of $1,417 per month for 20 years. They are forced to get jobs and beginning earning money to pay back their loans. The number of people relying on debt to fund college has increased to greater than 70% and the average debt per student now exceeds $30,000.
- Not the college type
Many people think that college is not for them. The idea of going to college is not appealing. 3 out of 10 people fall into this category in high schools across America. Additionally the college drop out rate is high (45-55% range), nearly half of all college students not graduating. This means nearly 7 out of 10 high school students will end up NOT earning college degrees. The United States, more than any other country in the world, rewards college graduates and that reward pays dividends over an entire lifetime. All statistics demonstrate why you would strongly consider digging in and going for the degree. Companies reward those able to stick to something and finish.
- Ready to begin making money now
Many kids want to get into the real world and start making money. The independence and freedom to go where they want, when they want, to have their own place and their own car. The appeal in making money and being a grown up is higher to many who think college just causes delays. With some smart planning, it is possible to achieve independence, get a car, get a job, and get through college – all at the same time.
- Hate school
The thought of more school sends shivers down the spine. Those students who struggled through school, scored C and D’s more commonly than A’s and B’s have the hardest time considering moving on to college.
- My Friends aren’t going
Oh yes, the peer influence lives on. “Johnny has an apartment and he says I can move in with him and pay just $400 for rent. I heard that Carl’s Auto Shop is hiring and I know so and so is working there and I can make $10 per hour working at least 30 hours per week starting out.” The idea that we can come out of high school and become completely independent, without the need for college. This is 30% of all high school graduates, and is fine so long as you understand this path and are 100% okay with it. Parents can’t make their kids do anything. Kids can’t totally understand the lifelong impact of the decisions they make. This is actually one of the greatest benefits to living in one of the greatest countries of the world. You can and will be okay if you are willing and able to work and you CAN find employment regardless of your income.
- Bill Gates and Steve Jobs didn’t graduate from college
Really? You want to go there average American? I understand. I was once a high school senior who thought I would become CEO of something and take over the world some day. But in reality, this is not easy. It is rare. It is about as rare as movie stars and professional athletes. How many Mike Trout’s and Peyton Manning’s are there? That’s right. Just one of each. Just like there is just one founder of Microsoft and one founder of Apple. (well, majority founder anyway) That said, it does not mean that you cannot do something as spectacular and extraordinary as these individuals. It just means that they are the exception to the rule and are not a part of the majority of people who do not graduate college. Do your thing, knock your socks off, and make a mark on this world. Just understand that is takes exceptional talent, timing, and opportunities – to become a billionaire.
The Case for College
The proof seems clear, gaining a college degree is advantageous economically.
Getting in and getting through with the least amount of personal debt possible.
If you can have a degree that supports your career path and if you can obtain related work experience while in college, then you have a competitive advantage and high likelihood of securing a job when you graduate college.
Understanding that technical training is a viable alternative is important and understanding that life without a degree requires a different mentality and approach.
It is 100% possible to not go to college and do amazing things, to become a manager, to make over $100,000 per year, to own your own company.
Just understand who you are and what you will need to do to achieve what you want to do.
That is the main point here.
College provides a well defined set of advantages.
But understanding that we are all individuals who can chart our own paths is why this country absolutely rocks.