Is education worth it? There seems to be a general inclination in our country to suggest that you can’t put a price on education—whatever the cost, it is worth it to get the best education possible. This applies both to arguments for funding elementary and secondary public schools as well as to individuals looking for the perfect college program.
While I would agree that education has great value, both in your own quality of life and for effecting change in the world around you, I would also suggest that education is not always “good debt.” If you can’t afford an education at a specific institution, seriously rethink your approach to your education.
First off, how do you determine “the best” education? It would probably be easier to debate a topic like abortion than try to pin that one down. There is a lot of subjectivity regarding what is best for people with different interests or for those pursuing different professions. For example, if I’m planning on becoming an airplane mechanic, an engineering degree from Stanford’s engineering program in Aeronautics and Astronautics probably won’t help all that much. I would be better off both financially and in my professional preparation, by looking for a two-year vocational program.
But you may have heard the argument that going to an Ivy League school is your best route, because Ivy League graduates tend to make connections with important people and have better job opportunities after graduation. While in some instances this may be true, I recall reading an article several years back—which unfortunately I could not find—suggesting that the reason students who attend top-tier schools tend to get better job offers after graduation, is not necessarily because of the school itself. Rather, it is because they tended to be wealthier and better connected to begin with. Students who are wealthier and have solid family and professional contacts tend to go to more prestigious universities, and because they are already wealthier and better connected, they tend to get better jobs after graduation.
High school and college students are done a disservice when they are constantly told that they need an education to succeed but aren’t taught how to figure out what educational opportunities make financial sense. An article by Sandra Guy on FastWeb has a good suggestion: At a minimum, create a budget based on how much you are likely to make after you graduate and include the expense of repaying your student loan. You can estimate the loan repayment with a loan calculator (I recommend using Microsoft Excel’s loan amortization calculator). This could be a reassuring exercise or a wake-up call about your educational aspirations.
Personally, while I didn’t perform the exercise Guy suggests, I did consider my ability to pay for school. After applying to graduate school, I was accepted to my two top picks: 1st) University of Michigan’s School of Information, and 2nd) Indiana University’s School of Library and Information Science. At the time, the two schools had relatively similar programs and were ranked neck and neck by U.S. News & World Report. However, among universities as a whole, Michigan was ranked in the top 25 but Indiana (IU) wasn’t even in the top 100. Not coincidentally, Michigan also cost twice as much as IU. I wondered if the additional expense for Michigan was really worth it, but a part of me kept thinking, “Yeah but wouldn’t it be so much cooler to tell people you went to Michigan?” That was the vain part of me. Then the rational part of me would say, “Yeah, but that is a lot of money. Do you really want all that debt?” Then my better half (my wife) said, “Why don’t you go with the one that is working for you?”
That was the best advice I could have received. There were a number of things that had happened with IU that just seemed to be clicking with me and fitting my needs. I accepted IU’s offer and it continued to work out. I loved the program and had a great experience. It prepared me very well. It’s possible life would have turned out differently in terms of my career and pay had I gone to Michigan, but I doubt it. Nothing against Michigan but considering my industry’s salary range and what I earn, I’d be surprised if I made much if anything more as a result of a degree from Michigan. I doubt it would have been enough to warrant the additional student loan debt I would have incurred.
Financially speaking, all of your education has failed you if your major or graduate program is something like ancient Roman history, with the intent to teach high school and the tuition alone costs you $25,000 a year—unless you have the money to pay for the program. A lot of things besides education have value—cars, houses, boats, family vacations—and some things certainly have more value than others. But they also have a price. Just be smart about how you weigh the value of an education.
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I'm Michael Crowther, and I'm passionate about sharing the peace of mind that comes from budgeting, saving (including debt elimination), and investing.