Investing Your Money In Your Future
Growing up, college was where everyone who wanted to be successful went.That meant getting good grades in high school so that a scholarship will be available to cover the majority of the cost of the college, but even with that loan, it was understood that some debt would be accumulated.Of course, no one worried about the accumulated debt because it was assumed that college would lead to a job that would allow a student to pay off those loans rather quickly, and the interest rate was fixed so low that even if a good job wasn't immediately available, there wasn't a big problem.
Now that college tuition has skyrocketed out of control and Stafford loan interest rates are set to double in July 2012 unless Congress takes action and the only jobs available are part time or minimum wage or both, the question becomes is college really worth the investment.
College is a big expense in anyone's life.Tuition, housing, books, and food are among some of the expenses that a college student will be faced with when away from home, but there is also the opportunity cost of going to college.The opportunity cost is the amount of money the student could have made if he or she had taken a job and worked those hours that he or she spent in college classes and studying.Over the course of four years of education, this opportunity cost could easily be a hundred thousand dollars if the student is able to obtain a job that pays $25,000 a year.
So not only does the student miss out on making $100,000 but he or she also spends at least that on classes that may or may not be useful for his or her next stage of life.That is a cumulative loss of $200,000 over the course of four years.
Take that a step further and say that the student was able to save just $5,000 a year by living at home with the parents.Now at the end of a non-college life, the person has accumulated a plus $20,000 without including any interest that may have been made on the money saved.Those costs are massive, and not all parents and children want to live together after the child turns 18, but for a majority of current college students, it may be financially better for them to go to work straight out of high school.
Using these numbers illustrates how far the United States has fallen in terms of livability and quality of life.If high schoolers ever become math proficient to figure these numbers out, the U.S. may find itself with the least educated population in the world. Taking action against this by investing in a college education is one of the best decisions you will ever make for your future.
So is college worth the investment?That depends on the student and what his or her goals are.If getting rich is the goal, then college may not be the best way to go, especially for someone who knows how to invest wisely and make money through trading stocks.
For someone who values education for itself and not for the earning potential that it can provide, then college is certainly a good choice though the debt that is accumulated makes it seem like a terrible investment.Since college no longer guarantees a good job, it is up to the student to decide if the debt is something he or she can handle.The way that debt is accrued is a killer.The price of textbooks is out of control.That combined with the doubling in interest rate makes college seem like a very poor deal indeed.