Five Things To Consider Before Investing in College


I’ve always believed education is a good thing; it is something that can never be taken away from you. However, during the past decade, college tuition has increased two to three times the general inflation rate, making that degree out of touch for many. This has led some to re-think the value of a college degree.

Yes, there are some, like the late Steve Jobs, who didn’t complete college and became billionaires. They were in unusual situations that don’t occur every day. Before you decide not to get a college degree, which may require taking on a lot more debt, here are some things to think about:

So A Degree Isn’t Required?

Georgetown University recently reported in the New York Times that jobs not requiring a college degree, like plumbers and construction workers, paid substantially more if the employee in fact had a degree. You may be thinking, of course a report from a university would show this; interestingly, what the study revealed was that college equips you with the skills and aptitudes to make better decisions and perform more productively, thereby allowing you to command a higher salary. Many who start out in these positions with degrees end up opening their own businesses.

Closing The Deal

With our unemployment rate at 8.1 percent, although down from recent highs, we all know we’re in a tight job market. All else being equal, an employer is more likely to hire the applicant with the degree. Anything that can put you above all the other candidates will help you land that opportunity.

The Return on Your Investment

Over the last 60 years, the average rate of return in the stock market has been around 6.8 percent, which includes all indices. A few months ago The Brookings Institute published research showing you’ll receive a 15.2 percent per year rate of return over your lifetime on your college education due to an increase in salary. This means you’ll receive a higher pay out by investing in yourself.

Make Sure You Study The Right Stuff

Getting that degree in the evolution of cave painting may be very interesting to you, but probably holds no value to a perspective employer. It is important to have a passion for what you study, but if you’re going to spend the money, make it practical. Learn about things that you can apply in the job market. A degree in accounting, finance or math can lead to many job opportunities that pay well and will allow you to pay off the debt you may incur in order to receive the degree. Once you explore all the opportunities, you may discover something for which you didn’t know you had an aptitude.

Start Out at Community College

Community college has been a great starting point for many. By starting at a local two-year college, you can save on tuition, room and board. Make sure your local college has a good reputation for their graduates being accepted at four-year colleges.

The one rule of thumb to follow when getting into debt for college is to keep your debt limited to what your first year’s salary would be. If you can stay out of debt all the better; there are many grants and scholarships for which you could be eligible.

Max Jaffe, founder and CEO of Spending Solutions, Inc., teaches people how to handle their money in everyday life. He is a CPA and the author of Maximizing Your Money. He also conducts money workshops at conventions and corporate meetings.

Max Jaffe – who has written posts on CashNetUSA Blog.

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