The narrative is consistent. Every high school teacher, parent, and politician regurgitates the same advice to every student. Get a higher education.
I remember seeing this chart on the wall of one of my high school classrooms showing the average lifetime earnings of different education levels:
There are two major flaws with this type of rhetoric.
1. My statistics II teacher once said, “Numbers don’t lie, but statistics do.”
The classic example is of a factory consisting of 21 employees, and they create an ad for a job opening. 20 of the 21 employees are regular factory workers all making $20,000 per year. The other employee is an executive and makes $2 million per year. On the ad for the job, they say that the average salary at the factor is $114,285. This is true. But it is misleading. Applicants should not reasonably expect to make 6 figures. Often times, the median amount is the most telling statistic (which would be $20,000 and a more realistic for their expectations). I genuinely believe that if you removed the outliers from the lifetime earnings in the chart, you will end up with much lower numbers. A handful of millionaires and billionaires drown out the millions with degrees that are still stuck waiting tables or jobless. Stop the madness.
2. Revenue is a pointless number if you don’t know your expenses.
Let’s say that the misleading numbers in this chart are fair. We will give them the benefit of the documented doubt. So how can you give merit to value when you don’t know the cost? According to the chart, going from a high school diploma to a bachelor’s degree gains you a net of around $900,000. College at a decent state school only costs about $100,000 for four years. Over the course of a lifetime, that is a huge return on your investment. Think again.
A simple loan calculator on the internet can tell you: If a student is lucky enough to be able to afford to pay $586 per month toward his or her student load, they will only be paying this amount for 50 years… The total cost including interest for this $100,000 student loan? $351,000.
But this is still profitable overall if you are adding $900,000 in lifetime value, correct? Let’s delve deeper. During the 4 years in college, most students spend around 40 hours a week either in class, doing assignments, or studying. This is time that was not spent at job earning an income. For easy numbers, let’s add $25,000 x 5 years (the average time spent to obtain a degree). This extra $125,000 brings the total to $476,000 so far.
But there are costs that are not quantifiable, but extremely valuable. Experience. Many employers (such as Google) are beginning to value experience over degrees. As an employer myself, I have the same policy. College graduates usually graduate without the ability to perform the job they want. The potential need of unpaid training, the possibility of getting a lower level job due to lack of experience, and many other factors add up to almost break even. More importantly, how do you put a price on four years of your life? You might want to add that in, too.
But the previous scenario is one of those trusty averages. So many don’t even break even. Not every degree is treated equally. Not every school gives the student $900,000 worth of added value. So many graduates don’t make the additional $900,000. I wouldn’t call hoping to break even a very good gamble.
But I did it. I finished. I caved to the pressure of society that says you are a failure if you don’t play the game. And to be fair, there are some professions that we have deemed difficult enough to require stringent education and licensing. Unless the law changes, you are always going to need schooling if your passion is law, medicine, or accounting.
So what was the biggest mistake of my life? If I could live my life all over again, I would have never set foot in a college classroom. I would have reached my goals much faster and would be twice as far along as I am now.