It's that time of year again.
Graduation for love or money
The springtime of life always arrives in May carrying the promise of summer: the sun is finally shining and the leaves are finally green. Everywhere you look, high school graduations are underway. They too carry promises: the fulfillment of seeds planted years before, keys to the golden door of a better life and – whoops – getting a job.
Sorry to break up the happy mood but that’s not a light at the end of the tunnel, it’s a train.
As usual at this time of year, a mob of stories about education is swarming the media. Lately, not all of the news is great. Times are tough: a new Economic Policy Institute report suggests that the class of 2010 will have “"the highest rates of unemployment in at least a generation.” Cold comfort. Worse yet, “unemployment rates for both college graduates and non-graduates younger than 25 are nearly double their pre-recession levels.”
In this economy you have a few options. You can get into the race with all those other job seekers or you can go to college. In the West Bend School District, about 50 percent of graduating high school students plan to continue into a four-year degree after graduation, and 20 to 25 percent plan to attend one of the state's tech schools. College has traditionally provided a route to a better life and to a better paying job.
Education still turns out to be a major factor in lifetime earnings. For the past few years the media typically reported the College Board calculation which showed a difference in lifetime earnings between college and high school graduates of around $800,000. You still see that figure a lot. But lately the Wall Street Journal took another look at the numbers. Factoring in increases in tuition, debt load, and salary levels from 10 years after graduation, they came up with what they called “a mere $279,893” – a lot less than a million, but it’s still a fair amount of cookie dough ice cream.
One of the other news stories circulating has to do with the insane debt levels a lot of college students seem to be accumulating. It’s important to calculate the economic costs and benefits of a college degree carefully and remember: you can’t improve your earning potential by starting your career with $200,000 in student loans. Shockingly, this isn’t difficult to do anymore: especially if you borrow in hopes of eventually earning the kind of money you could as a doctor or a lawyer.
Crushing debt is a danger if you borrow recklessly to fund a degree you hope will give you increased earning power. The traditional university system can be a trap if you’re not careful, but it looks like the new “convenience degrees” offered by for-profit universities like the University of Phoenix, can be even more hazardous to your financial, and educational, well being.
Some people want one of these drive-through degrees to cash in on the promise of increased earning power, and the for-profits are a temptingly convenient way to go, but a recent Frontline investigation on PBS found that they can cost more per credit hour than the average state university and that they seem to be putting students even deeper in the hole. They do this by hooking up students with lots of easy to get loans that, pretty quickly, sink the student into impossible, and irrecoverable, debt.
Frontline found that while these schools enroll 10 percent of all post-secondary students, they receive almost 24 percent of all federal financial aid. By itself, that might be a good investment in retraining Americans for the knowledge-based economy, but this same 10 percent is now also responsible for 44 percent of all students who default on their loans within three years of graduation.
A quick degree from a for-profit doesn’t give you any real value if it plunges you into what they’re calling “debt slavery.” These students, for all their good intentions, are wasting their time and our tax dollars.
So, you’ll have to navigate these traps: a tough employment market, working out the cost/benefit of a college degree, and being prudent with your spending. The greatest danger of all, however, lies in thinking about college education as a merely financial investment. I’m hopelessly Old School on this topic, but the argument still sounds right to me. Here it is: earning more money can improve your circumstances – a more comfy recliner, more BTUs in your AC, more horsepower in your car, more expensive shoes – but, if you think about it, earning more money doesn’t actually improve you. Money doesn’t make you a better person, it only makes you more comfortable.
It's far better to find a job you love and make enough money than it is to work at a job making lots of money that isn't satisfying. Steven Jobs, someone who knows something about making money, may have said it best: Find a job you love, and you'll never work another day in your life.
College is still the quickest route to a better financial future, so long as you don’t put yourself in a financial hole to do it. More importantly, college remains the best way to find a life you'll love living or, what those of us in the philosophy trade call, “A Good Life.” A good life is not guaranteed to make you a lot of money, but it is guaranteed to make you happy. You don’t always get to choose both love and money in life but, if you can choose one of them, remember make yourself happy.