College – is it worth it?

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As stated elsewhere, I have been an Ironworker for over 16 years now and I am here to say it has been a good living. In fact, we are a single income family with my wife staying home and raising our children. I’m not going to say it isn’t rough sometimes when you are around many who seem to spend money without a care or those who have two sources of income but overall it has been a very good living.

I can recall being in high school many years ago and hearing teachers and admins say things like: “you have to go to college to get a good job.” Or: “you have to go to college to get a high paying job.” Maybe you’ve heard this one: “you will not make a decent living without going to college.” Has anyone else heard this before? I’m sure you have.

The thing is, it’s horse crap; absolute propaganda that has brought us to a point of large deficits in skilled trade work. I know a lot of people who make not just a good living but a great one (as it equates to money) and they have vested themselves in the skilled trades as opposed to college. I know individuals who not only earn a good wage but also have a decent amount of retirement set aside. I have met people who have travelled all over this country working at job sites honing their skills and they just so happen to make great money. Some of the most successful and intelligent people I’ve met have been field leadership and superintendents. I’ve worked side by side with a few who are the most creative I have ever had the pleasure of meeting.

It’s way past time to scrap the ideas those who do not have a college degree do not earn a decent living, have a good job, or are somehow not or less intelligent.

Let me be clear: I have made a great deal of money over the years from being an Ironworker and it had NOTHING to do with college. Now, before I continue I admit to having an Associates degree and not because it helps me at work; it doesn’t. What’s more, few if any know I have one anyway. I took the time to get it to prove a point. What point would that be? There is a vicious stereotype which basically lumps anyone who works with their hands as being unintelligent and I can tell you that again, it’s horse crap.

I paid for the two years out of pocket while getting established in my career, avoiding debt (student loans and tuition, not credit cards) and experiencing the difference between someone paying for something themselves and having something purchased for you. I can recall sitting in class with teenagers (yes, that’s what they still are when they become legal adults) and their level of attentiveness and care was mind-numbingly nil. I’m willing to bet the vast majority of them either were receiving financial aid, had their tuition paid for by mom and dad, or were receiving student loans. None of those scenarios constitutes an individual outright working to pay for college and as such they don’t feel the pain of separating from themselves the hard earned money in their possession. In short, it’s given to them and they don’t fully appreciate it.

For years now I have been ringing the bell to alert anyone who will listen that college is not for everyone; in fact, it’s not for most. Now this is a break in what people are used to hearing and doing but my point still stands as I hope to demonstrate. Check out this link for some pertinent information about college graduates:

(If you don’t click on the link and read the article you will miss out on some statistical information but the gist is more people are going to college and I allege educational standards are greatly lowered in large part because of this)

As you can see from above, the number of people going to college has increased substantially. In many cases the market has become saturated with degrees, to the point they practically become useless (unless of course you get a degree in something obscure, then it really is useless). It’s simple supply and demand economics at this point. If there is little to no demand for a large number of degrees why then do we insist sending our kids to college, take on the financial burden, setting ourselves back on the goal of retiring early or with more assurance, just to have them return to the nest because they could not find a job in the respective field they went to college for?

You know what else has increased substantially? The cost.

The simple truth is we have been lied to. For decades now we have been told working with your hands is to be looked down upon since “you can’t get a good job without going to college.” What ridiculous twaddle.

Meanwhile, what do most people do? While working in those very same “looked down upon” jobs they take on financial burdens they maybe shouldn’t to send their children to “get the education I never had the chance to get” and inadvertently reinforce the stereotype their job isn’t worth having because they themselves don’t have a college education. (Hey, maybe they are intentional about reinforcing the stereotype; after all, they have been lied to also).

I could go on a diatribe concerning this but I don’t want to digress much; I want to get to the financial ramifications of sending and paying for our children to go to college.

Let’s look at the 2016 -2017 school year as an example. According to CNN money, the figures for ONE year of college were thus:

Two year community college: $7,560

Public colleges for residents: $14,210

Private non-profit colleges: $26,100

 

It doesn’t really matter how you slice it, that’s a lot of hard earned money. Let’s look at it another way, though, to get a more in-depth perspective. What does a 4 year price tag look like?

Two year community college: $15,120 (two year figure; they must transfer somewhere else)

Public colleges for residents: $56,840

Private non-profit colleges: $104,400

Depending on where your child transfers it could cost an additional $28,420 or $52,200 on top of the two year college figure. In any case these figures are staggering. Wow!

What all that money could do for you

What could you have spent that money on instead? A LOT of things, but since I advocate saving for retirement I’m going to focus on that in this post.

Since most do not want to pay on their kids college for years and years they are either in a better financial status to pay for a much shorter time, they get loans to pay the cost, they hunker down, work some overtime or other jobs in order to pay off those tuition costs or worse yet they borrow from their retirement savings to pay tuition. The point I’m trying to make is if we can condition ourselves to do this for our kids college costs why can we not do so for our retirement? Even more is that most should take that discipline they exhibit to pay off college debt, AND the money they save for tuition, and put it towards their retirement. It’s not that hard is it?

Yet all over the country this does not happen.

Let’s look at the above numbers, figure in some more, and see just how different things could be if we were diligent about saving.

To start, let’s take the lowest amount of money above and invest it.

Assume your kid goes to community college and transfers to a public or state school. Those numbers look like this:

$15,120 + $28,420 = $43,540 total

$43,540 ÷ 10 (number of years to pay off) = $4,354 a year

$4,534 ÷ 12 (months per year) = $362.83 a month payment

The above payment per month is more palatable and is akin to a car note.

What does it look like if we take that money and save/invest it instead?

*Note: the following formula calculations come from (insert investor.gov hyperlink here). Any one could input these numbers and change what they’d like to see what outcome they get.

Now let’s assume you start out with $1,000 (it’s a nice low number)

$362.83 per month invested

15 years investment period*

4% interest rate*

$88,982.84 total with compound interest

* I assume an age of 50 when you begin saving vs paying for college and a figure of 15 years carries someone into retirement age. Also, if you have disciplined yourself for 10 years (which you would if you were paying down college tuition debt) then why not continue on for at least another 5? Furthermore, an interest rate of 4% is very low by some but when you are near retirement age you want to be insulated more by having lower risk investments in the form of bonds.

The $88,982.84 amount above is merely a small amount when you consider other factors could alter your numbers significantly. For example, here is what the amount looks like if you change the interest rate:

5% = $96,031.13

6% = $103,739.20

7% = $112,169.79

I don’t know about you but I could always use extra money for retirement!

Play with the calculator yourself and see what your unique scenario looks like. You’ll be surprised at just how much money you can save if disciplined.

 

Should you pay for college?

If you look into this subject you will find a myriad of opinions. The few years I’ve lived I have noticed so many who believe it is a parents job to pay for their kids tuition for college. I’ll save you the drama: That’s an unmitigated falsehood. It is, simply put, a load of horse manure (insert your favorite adjective here). While it may seem nice to pay for tuition, and some advocate it is, that in no way implies it is mandatory. A child, after all, is legally liable for their own decisions and they should be legally liable for their education too.

I know some people whose college attending kid stays at home while they go to school basically rent free. I know others who still have their kids on the car insurance and make them pay their portion. I know A few who pay for their children to go to the first 4 years and anything after that is up to them. Still others give their children the privilege of paying for their own education altogether. In the end it really is a personal decision which should not be made arbitrarily or under false assumptions. All I’m saying is far too often we make these heavy decisions not having all the information at our fingertips and without weighing the financial cost – the real cost at that.

Now I can hear the backlash over this and I hope I’m heard when I say college is necessary in many cases. If you want to (and have the drive to) be someone in the medical profession, an accountant, a lawyer, financial advisor, etc., basically anything that warrants going to college then yes, you need to go to college if that is your chosen career path. It’s a necessity at that point; carry on and Godspeed. For those who simply wish to “find themselves” my advice, as it is to all others in such a state, is to go get a job, any job. Join the workforce, become a productive citizen, and discover for yourself what working can do for you. A few people may stumble into a golden opportunity which they happen to cherish but if you are like most, though, you’ll get a job, work for a bit and soon discover a disdain for your job situation and the thought will likely enter your head: “This job sucks. What do I want to do for the rest of my life?” Nothing will turbocharge your decision like working a crappy job and life closing in on you.

Vividly I can remember having an apprentice as a first year on the job who owed $80,000 in student loans. He sat among other apprentices, making the same money, doing the same jobs and yet he was saddled with $80,000 which he was unable to claim bankruptcy on. He will forever be the example I use when dealing with college and skilled trades.

Addendum:

When commenting, please don’t leave studies or stats regarding how college educated people make more than those who are uneducated. While I don’t doubt that is true in some cases (a doctor should make more and many in the financial world do too just as an example) it is not true across the board. I know scores of people who have debt they can’t shake off in bankruptcy (aka student loans) and they have unfulfilled careers with a lower wage. Furthermore, if you read the article you can see I make a distinction between those who need to go to college for their chosen career field (medical, law, etc.) and those who go because their parents told them to go, they thought it was culturally the thing to do, need to find themselves, or think college will somehow help them discover what it is they want to do for a living (everyone else). Know I distinguish between the two and if I do then you should do too.

Next, I personally know people in the skilled trades who make six figures or close to it a year. I’m not merely talking about those who work a lot of overtime either (although it certainly adds up); I’m referring to those who, with reasonable overtime, routinely make $75,000 – $100,000 a year and that’s IN THEIR POCKET. On top of that are their benefits and they too add up for an even greater sum. When you isolate the examples I mentioned earlier you get a clearer picture of how wages stack up. It becomes much easier to see why I say you can make a very good living without going to college. The skilled trades are ripe for this.

So all in all I am not saying you should not go to college, but what I am saying is you should weigh everything out (student and parent) and make an educated decision responsibly.