I don’t know about you, but I’m fed up with the ancient “college savings tips” so-called experts keep force-feeding us:This is a fascinating article, not only for pointing out the pitfalls of going into debt for an education, but also for the heaps of practical advice for avoiding that debt and still getting your degree.
“Fill out the FAFSA before senior year to maximize aid eligibility!”
“Buy used textbooks, you’ll save hundreds!”
“Apply for scholarships. Try FastWeb.com!”
If you follow this advice, you will be thoroughly and totally prepared for college…in 1995. (You know, just in case that year ever comes back.) But in 2013, these strategies will get you slaughtered by the “Student Loan Industrial Complex.”
Why You Should Look at College Like an Investment
If this post makes it sound like you’re “Frankensteining” your education, cobbling various exams and credit sources together to form a degree…you’re right. That’s exactly what I’m advocating.
This might seem strange at first, but I encourage you to look at it differently.
Why do we see college as this magical guarantee of financial success? It’s because of these oft-cited studies on how much more graduates earn over their lifetimes than non-grads. We hear sweeping statements (“people with bachelor’s degrees earn $1 million more!”) and assume that it MUST be a great investment, no matter what it costs.
Actually, we don’t just assume it — we’re explicitly told that it’s true:
“Over a lifetime, the gap in earning potential between a high-school diploma and a bachelor of arts is more than $800,000. In other words, whatever sacrifices you and your child make for [a] college education in the short term are more than repaid in the long term.”
That’s from CollegeBoard, the organization that makes the SATs. They’re basically telling you to just pay whatever a degree costs.
It’s horrible advice.
You don’t make huge financial decisions with simplistic rules like “whatever sacrifices you make are worth it in the long-term.” How is that any different than telling you to shoot first and ask questions later? No — you make huge financial decisions is by running the numbers.
Which brings us back to these studies on college graduate earnings. They aren’t “wrong,” but they are misleading.
Here’s why: earning a higher income doesn’t automatically mean you’re getting ahead. You can earn $20,000/year before college, get a $60,000/year job afterwards, and still be no better off. If you spend $100,000 for a degree (and take four years off of work to do it) you have incurred a huge financial and opportunity cost.
You took out a loan against your future earnings which must now be repaid over five, ten, maybe even fifteen or twenty years. Even then, once all the loans are repaid and you’ve earned back all the income you lost by not working, guess what? All you have done is break even!
You’re back at square one. Finally, after years of repaying loans and interest, you can start actually benefiting from the higher income you earned your degree for. Most college students don’t realize that this is what they’ve agreed to until after they graduate. They just see college as a magical guarantee of financial success. Yet whether they realize it or not, their student loans often chain them to a life of indentured servitude.
The return on an investment is inversely proportional to the time and money invested. In plain English: the longer it takes you to graduate, and the more you pay, the less valuable your degree ultimately is. [...]
The comments after the article are just as interesting. The author is criticized for his advice, and he answers his critics. A very lively, informative discussion.
And this isn't theoretical; people are actually doing it:
The DIY Degree: Using Self-Education to Earn a Bachelor’s Degree in 1 Year
“What’s the point of learning, if you don’t get a degree after?”See how he did it. This is must reading for anyone who is considering going into deep debt for a college education. There ARE alternatives. I wish I had known this back in the day, when I dropped out of college because it was so enormously expensive. These are alternatives that can really work.
This has been the biggest criticism of my MIT Challenge, and honestly, it’s not an easy one to avoid. Even if weirdos like me are willing to learn a degree outside of school, the truth is the world still values that piece of paper. Unfortunately, until recently I’ve had little answer to this complaint–it seems if you want the degree, you have to suffer through an often slow and expensive process.
That was before I met Jay Cross. Jay in many ways did a project similar to mine–he completed a bachelor’s degree in less time, mostly through self-study. The only difference? Jay got a real degree for his efforts.
I asked Jay to write a guest post to share his method with you. Not only does it work, but it gets results in the real world as well. Jay has already had career opportunities that would be the envy of a lot of college grads, having staff writing positions for major publications and entrepreneurial ventures. Jay demonstrates that not only can self-education work, it can be a true alternative for many students hesitant about college.
The DIY Degree, by Jay Cross
Today, I’m going to show you a totally new twist on self-education.
We’ve long been told that learning is an “either/or” decision. You can either spend four years in college and earn a degree…OR study on your own with no degree to show for it. But what if you could have the best of both: the credential employers crave, with the speed, personalization and low cost of self-study?
Using the “degree-by-examination” approach, you can earn a bachelor’s degree by taking tests instead of classes. It works no matter where you live, lets you graduate in one year instead of four, and costs roughly 1/20th the price of a regular degree…with the exact same legitimacy and earning power.
The problem: society DOES still value degrees
Some jobs require degrees no matter how smart you are. Even in more flexible professions (like programming) there’s always one or two “By-The-Book Bob” types who reject non-grads on principle.
This concerned me, even with all I had accomplished already. If there was any way to graduate for minimal time and cost—and eliminate this potential obstacle—it seemed worthwhile to try. Of all the different approaches I researched and read about, degree-by-examination was the college shortcut that actually worked.
Before I explain, allow me to share the struggles that led me to this discovery in the first place. [...]
Graduate faster and spend less money with DIY Degree’s “Cost-Per-Credit” Calculator