There are many people who write about finance. There are also many people who write truly entertaining content. There are very few who do both. Nelson Smith, who writes at Financial Uproar, is their standard bearer. He combines authority, intelligence, and wit, and has been an inspiration to me since I’ve started writing.
In what can only be described as a stunning coup, guess who I’ve wrangled to provide my first ever guest post today? Oh and it gets even better. Not only is Nelson writing here – in his worst trade ever, he’s also agreed to let me post on his site.
Get ready for some dueling banjos. Nelson, having eschewed college and done just fine without it, is here to tell us why college IS a good idea. I’m writing on Financial Uproar why college is a waste of time and money despite having gone myself.
Please join me in welcoming Nelson!
Throughout high school, I always assumed I would be heading off to college.
I was interested in three things back then: sports, business, and girls. I was hopeless at the latter (edit from Nelson\’s wife: STILL IS), and my teachers were very insistent college was a necessary path for the prior two.
So I started to make preparations to go, starting in grade 10. I intentionally took the hard math and English classes. I reluctantly enrolled in physics and calculus. And despite my inherent laziness, I planned to graduate high school with more than the minimum required number of credits in order to make my inevitable college application look all the better.
And then I got introduced to the concept of earning money.
Suddenly, my studies were secondary. I was taking every shift I could get my hands on at the local Dairy Queen. By the time I finished grade 10, I was working five or six nights a week flipping burgers and inventing terrible new Blizzard flavors.
Peanut butter Oreo? What was I on?
My studies took a back seat to the $5.50/hour I was getting from my part-time gig. The job that was supposed to help me earn money for college was now taking over my life. Work offered cash now. Going to college only promised the potential for more money at some point in the future.
By the time grade 12 ended, I had parlayed that Dairy Queen job into one at a grocery store making $8 per hour. That came with a promise of $10 per hour once I could work during school hours. I was going to make $21,000 per year. That was all the money in the world!
So I did what many other 18-year-old kids would do in my shoes. I officially abandoned any college aspirations for a different plan. I was going to earn as much as possible, live in my parents\’ basement, and invest every spare nickel.
I started with real estate, buoyed by my dad\’s experience as a landlord. I spent my entire college nest egg on the saddest rental house you\’ve ever seen. It cost $16,000 and was renting for $285 per month. I confidently strode up to the door shortly after buying it and raised the rent to $350. The tenant — who was at least 20 years older than me — responded by promptly giving me the (figurative) finger and moving out.
I didn\’t do this willy-nilly; I had a plan. During my last year in high school, my teachers had given me a document to \”encourage\” going to college. It said that the average college graduate out-earned someone with a mere high school diploma by about $500,000 over their working lives.
Assuming a 50-year working life, I only had to generate $10,000 annually in passive income to earn the equivalent of a college education. So, I bought another house. And then another. By the time I was 23 I hit my goal of $10,000 a year in passive income, so I expanded into a myriad of other assets. Today I invest in everything from stocks to private mortgages.
I\’ve continued to grow my portfolio over the ensuing decade to the point where I\’m comfortably in the top 1% for my age — despite taking some missteps in my career and, of course, never setting foot in a college classroom.
I’m the poster child of the not-going-to-college movement. It\’s worked out very well for me. And yet, if I had it to do over again, I think I\’d take a different path. I think I\’d go to college.
Access to better jobs
I like to think I have a pretty good resume. I have tons of grocery experience, both working in the store and for outside vendors. I also temporarily sold real estate (poorly, I might add) and I\’m currently a freelance stock market writer. I\’ve never spent longer than a month in my adult life without a job.
And yet, I\’ve noticed something over the years. Whenever I apply to better jobs, I usually don\’t do too well. There\’s zero chance I\’m getting a job for the government, for instance. I was laughed out of a financial services job interview partially because I wasn\’t wearing a suit and because I didn\’t have a university degree.
(Why\’d they even interview me then? Damned if I know.)
And those are the jobs that called me back. I know I\’ve sent dozens of applications in over the years that disappeared into the ether because some software program identified me as a schlep without a college degree. Hell, I\’m told you even need a college degree to work at Starbucks. Starbucks!
A college degree is no guaranteed path to a fun and interesting job. I get that. Correlation (having the degree) does not necessarily equal causation (getting the job). But it sure helps.
A few years ago, I found myself in a strange city with no job, only a few friends, and no idea what to do next. Luckily, the city was booming, and I had a couple of offers in less than a month.
Still, I couldn\’t help but regret not having a better Rolodex. My peers who went to college had dozens of contacts they could have called looking for a job. I had contacts too, but after years in the grocery business they were more blue-collar in nature. This wasn\’t very helpful when I wanted to break into a white-collar world.
The ability to hit up your college buddies for opportunities should not be discounted. It can be incredibly valuable.
Those of us who stayed at home used to mock our friends who came back from university endlessly. \”Oh, your professor said that? Aren\’t you Mister La-De-Da.\”
The truth is, we were all jealous. College is a bunch of kids all trying to better themselves while having a lot of fun doing it. It\’s easy to see why many people look back on their campus days as the happiest of their lives. Who wouldn\’t be happy with the equivalent of a part-time job surrounded by all your friends? That\’s an early retiree\’s wet dream.
There\’s one reason that trumps all the rest, though. Here\’s the biggest reason you should go to college.
It\’s a hell of an investment
The gap has widened over the years since I was presented with the data, but let\’s just go with those numbers. We\’ll assume the average university grad makes $10,000 more per year than someone with only a high school diploma. I\’m told it\’s closer to $20,000 today, but we\’ll go with the smaller number.
I live in Canada, so I\’ll use Canadian numbers. The average student pays $6,373 in tuition annually. Add on another $627 for books and $8,000 per year in food and shelter costs, and it costs the average Canadian $15,000 each year to go to school.
Say our imaginary student is a bit of a slacker and only makes $5,000 each summer. They\’re forced to borrow $10,000 annually to remain in school. Assuming no parental help, scholarships, or any other assistance, and our graduate would start their working lives $40,000 in the hole.
The current average Canadian student graduates with just over $27,000 in debt today, so we\’re being conservative on both estimating income and debt. But that\’s okay, it\’ll prove our point all the same.
From a purely financial perspective, a college education is a fantastic investment. Most people can expect $60,000 in total expenses to turn into $10,000 annually, for a return of 16.7%.
I would strangle a hobo for a 16.7% return. You think I\’m kidding, but I\’m not.
If you borrowed $40,000 towards an education at 5% annually, an extra $10,000 in permanent earning power would cost you $2,000 a year. It would also represent a 25% annual return on the borrowed money, less any interest cost.
Remember, we\’re just talking averages here. My high school buddy currently making six figures as an engineer owed $15,000 when he left university. He doesn\’t regret that debt for a second.
Another friend ended up owing $40,000 after an aggressive three-year program allowed him to enter the workforce a year earlier than his classmates. He paid off his loans in two years and his house five years later.
Yes, not every college degree ends up paying as well as those two. The world is filled with Starbucks Baristas with Literature degrees. And I\’m the first to admit university in Canada is cheaper than the United States. It\’s probably easier for Canadians to get a decent return on their schooling.
But ultimately, the evidence is clear. I eschewed college and I\’m doing well financially. I am a distinct minority. Defying the odds is probably not the way you want to go through life.
Wrapping it up, yo\’
Ultimately, it comes down to this. I\’m a firm believer that ambition, intelligence, work ethic, and the ability to seize opportunities will always be more important than your alma mater. Those are the qualities that ultimately make a graduate successful.
But having a college degree opens all sorts of interesting opportunities, something this non-graduate is starting to realize. It\’s a great investment too, and guys who didn\’t go are too quick to discount intangible benefits like the experience and having a network of former classmates looking out for you.
Go to college. If you\’re smart about the whole thing, you won\’t regret it.
10 thoughts on “Go To College. You Won\’t Regret It.”
Sorry, but college is not just a numbers equation.
Most of us grow up in our little fishbowls without ever really experiencing anything outside of our wheelhouse.
We are pretty much acclimated to our world as we know it by the time we are done with high school. This is not a bad thing, it is how we develop a sense of community with those people who share our values and our zip codes. It makes for decent folk and for nice places to raise a family, but our evolution as human beings and certainly our education should not stop there.
College is there to challenge your notions of what is normal, moral, acceptable, sufficient, orthodox, and expected. It is for many people the first time they really encounter ‘the other’ whether that be in the form of race, class, ideology, or lifestyle.
College is meant to push buttons and boundaries.
It you are looking at college as simply a means to an end, i.e. trading money for a future job/career, then you really mean Voc-Tech. College is not only for expanding your knowledge, but also the freedom and breathe to explore your interests and to expose you to things to which you are not accustom.
Had you ever really met a Dominican before, or a communist, or a Satanist, or a gay person?
I am bothered by this modern movement regarding; trigger words, safe spaces, and micro aggressions. If you care about any of those things, YOU ARE MISSING THE POINT. If you want to feel safe and that everything you currently know to be correct is in fact correct, go home to the place you grew up in and be that way. This is why we send people off to college at age 18 or thereabouts, they have some life experience but they are terribly green about the big wide world around them.
College is meant to be a swirling mass of sometimes confusing, sometimes intimidating LIFE from which you can absorb what you will.
Just think, everything I have mentioned so far is mostly just in relation to the other people who are also going to college at the same time you. We have not even touched on the fact that there is no other source of knowledge as in depth and thorough as a college campus. Even if you are smart and well read, some professor will come at you from a different point of view and rock your world. Wisdom will make its first appearance in your life if you realize maybe you don’t know everything or GASP, a belief you have long held was wrong.
College is a time and a place in your life.
I would never expose myself again to those same tired discussions nor subject myself to those people who desperately need to be punched in the face, but I loved it at age 20. So go on, bathe in it, bask in its chaos, lap up those 500 level courses and know you will become a slightly better citizen when it is all said and done.
College can indeed (or at least could indeed, perhaps in your and my time) do a lot of things, but I think you could get many of the same learnings and experience piecemeal – read voraciously, have detailed debates with an intellectual mentor / superior, travel the world (particularly the part of the world different from yours), and of course study.
I worry that college today doesn’t fulfill its traditional classical goals, and leaves a lot of folks with a mountain of debt to boot. But if you can do it somewhat affordably, and go to a place that challenges you as you note, then perhaps it’s still a great way to start a career and an adult life.
I was laughing about your Dominicans comment – I met a LOT of Dominicans at my university, and it’s no coincidence I met no Satanists 🙂
Thanks for the thoughtful note
I think the big caveat is to fund your college experience with your future in mind. Emerging from college as close to debt-free as possible should be just as important as the degree you choose to pursue. The degree doesn’t mean anything if you’re in $100,000 of debt with a $40,000 salary.
Definitely agree. It needs to be evaluated as a return on investment, but perhaps the “return” can be very broadly defined – practical skills for a career, new subjects to broaden your mind, and social and cultural growth – all at a price that doesn’t hurt your future life prospects or happiness. And you should compare it against the next best alternative to see if college is a good value. A mountain of debt will make your post college life hard and unpleasant, no matter how cool college was and what you learned. Thanks for the note!
I really think the odds of college paying off are vastly improved if the degree is strictly vocational. I majored in engineering and the payoff has been huge. Because it is either too difficult for most people to master or perhaps too boring for non-geeks you enter the workforce with much less competition than someone with a liberal arts degree. And competition, while good for systems by weeding out the inferior, is a terrible thing for individuals that get weeded out. That engineering degree let me compete with maybe a dozen people for the top job in my corporation and win it, where no liberal arts major could have ever been considered for the position.
Definitely agree. Engineering seems like it’s going to be a strong course of study for a very long time. I do wonder if the enormous potential and possibilities from an engineering degree sometimes helps explain why it’s not more popular – 18 y.o.’s can’t grasp all of the different doors it’ll open, and some of the career opportunities from engineering haven’t even been invented yet. Degrees that are easier for kids to grasp (e.g., liberal arts, marketing, sports management, pre-law) sometimes beckon because the fantasy job is easy to dream, even if the reality is different and dire.
Nice work on a degree that’ll be an asset for the rest of your life!
I’m a big fan of going to college as you said from the networking aspect alone. I feel like when I go to a networking event and I can connect with someone that went to school with me or was a rival that I have an instant connection that can lead the convo in different areas. While it may be an expensive investment it has definitely been worthwhile to me 🙂
That instant connection can be really valuable – there’s something tribal about it that breaks down barriers, and the dividends from it are real if hard to predict. I think I’ve gotten more benefit from meeting fellow alums and then connecting than I have from my actual classmate relationships. It’s been modest in both cases, but it’s interesting to note that just having a school in common with an alumni population can be valuable.
I value my degrees far beyond the jobs they got me. I think a degree will get you more interesting, more creative work that still pays the bills.
One thing about getting a university education – it lowers your ability to work at boring, mindless work. You just can’t do it anymore.
I wrote a post on how to manage post-secondary education without a lot of debt.
More interesting and creative work is certainly part of the allure of a degree (along with higher pay). However, there is a risk that what you think would be interesting work may not be (lawyers come to mind), and the added risk that the dream job you envisioned may never come to fruition.
Some folks are doing boring / mindless tasks (underemployed / not using their degrees) while also saddled with student debt – that’s the worst case scenario, and it seems to be more common nowadays. It’s a strong argument to have a good plan and a practical course of study.
I saw your post – some good tips in there! Thanks for stopping by.