We aren’t saving for our daughter’s college education. Matter of fact, we had a 529 set up and we cashed it out. (And yes, I’ll tell you what we did with it here in a minute).
Now call me crazy, but for our family, this is the best choice. It’s not that I don’t believe in the value of a good college education. I agree with my colleague G. Brian Davis that college can be an important step to building lifetime wealth.
However, to be a great investor, a college degree is not required. I will say I’ve made a lot of money (and traded less time for dollars) flipping properties and my banker has never once asked me if I have a college degree.
Simply, I just don’t believe that going to college is the key to being wealthy.
College Isn’t for Everyone
For starters, not everyone is ready for college when they graduate high school. Maybe they don’t know what major they want to pursue or maybe they are wholly unprepared for the classroom experience. I was a straight-A student in high school yet racked up my first C in freshman chemistry. I didn’t adjust well going from a class of 25 to 500!
According to the National Association of Scholars, there are many other reasons why a college education may not be right for many:
Not everyone can afford to go to college to begin with. College tuition prices have soared in the past 20 years. Although there are so many ways to pay for a college education, most students will have to take out debt to cover their tuition bills in an amount that may be a crushing blow to their ability to generate wealth later in life. Case in point: I have one previous colleague who has racked up $182,000 in debt (they are not a doctor or vet) yet makes $55,000 annually. That debt alone is crushing their ability to get ahead.
Even if you do go, if you don’t finish, it will be a waste of time. In 2006, 50% of students did not finish in six years. And if you took on debt, this is like paying a mortgage on a home that you don’t have a title to.
Even if you don’t incur a lot of debt to attend school, experts argue that you may be paying too much for too little of an education. There are many open-source and online programs that are cheaper, or even free, that rival many four-year programs. My friend’s husband is a serial entrepreneur, and he made his first million by having a great idea, not a great degree.
By going to college, a student delays their opportunity to earn an income, creating an opportunity cost. For some degree-holders, this is worth it (doctors, lawyers, engineers, etc.). However, many employers aren’t requiring a four-year degree anymore, instead of looking for aptitude and entering their teams in specific training and certificate programs. My brother-in-law (and several of his friends) are well on their way to financial independence by getting a certificate in a hospital software program. And there are many other companies that no longer require a college degree.
College culture can produce toxic habits in young adults that can impact their earning potential. This is especially true if they can’t kick the bad habits. With the advent of social media, a “bad night in college” documented on social media can ruin a student’s earning potential for years to come. Such behavior is not limited to the college campus, either.
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