13 Jul Higher Education Doesn’t Mean Higher Income
A College Degree Won’t Guarantee Financial Success
There are a lot of people these days heading back to school to get a higher education. I’ve talked to quite a few of them who are pursuing a college degree in an effort to advance their financial position. That sounds like a good idea. In fact, I’m all for it. I’m all about personal accountability. If you don’t like your situation in life, the person responsible to change that situation is you.
So I applaud those who are working full time and taking classes simultaneously. I also applaud those who have left their former careers behind and are doing the student thing full time. I myself am back in school working on a second masters degree and it’s a lot more work than I anticipated.
Scary Trends in Higher Education
But in the quest for higher education I’m seeing some alarming trends. I’ve met a lot of people who are going to school without a longer-term plan. They don’t know what the career opportunities are for the degree they’re pursuing. They don’t know how much money they can expect to make starting out with their degree. They don’t even know if they have a chance of even landing a job in their field.
All they know is they’re getting a degree so that a) they can have a more rewarding career, b) they can make more money when they graduate, or c) they can continue to collect unemployment while they’re in school and hope they’ll get a job when they graduate. These aren’t just my opinions, these are actual reasons people have given me for why they’re back in school.
The Cost of Having No Plan for College
Quite frankly it scares me to see a lack of planning at such a large level. The reason it scares me so much is the cost of this lack of planning. With the cost of higher education so high, it’s very easy to rack up some serious expenses over the course of a few years. The average cost of a college degree today is about $30,000 for a four year public university. That’s just tuition. Expenses come on top of that and can add up very quickly if you aren’t working while attending school.
It’s possible with some good planning to reduce your out of pocket expenses and pay much less than $30k for your degree, but it requires some good planning. But too many people are approaching their college education from a seat-of-the-pants point of view and it costs them dearly. With no plan to reduce their costs, student loans begin to balloon and get out of control. It’s easy to graduate with $30k or more in student loans if you’re not careful. And that’s just for a regular ol’ degree. Nothing fancy like a masters degree or a medical degree, which can cost a heck of a lot more.
Student Loans Delay the Financial Pain
It’s funny when I have conversations with folks who chose not to put any thought into their education. They know they’re amassing tons of debt. They know it’s a bad thing. They know it’s going to haunt them for years. And they know they don’t want to do anything about it now. They don’t want to deal with the stress. They’ll just figure something out when they graduate and the loans come due. All they’re doing is delaying the pain of the problem and making it worse. The symptoms of a problem are there but they’re going to wait until it really bad before they treat it.
Here’s what that lack of planning means: When someone graduates from college with $30k or more in debt and then tries to get a job as a social worker, the numbers aren’t going to add up. You can’t make things work when your annual income is less than your total debt load. It just doesn’t work. As a financial coach I work with way too many people in this situation. They went to school with no plan other than borrowing their way through the program, and then they graduate with $50k in student loans while trying to land a job making $30k. They set themselves up for financial failure by having no plan for their education.
This trend is not isolated to a handful of people. I see it over and over again, and it really concerns me. We’re placing far too much emphasis on getting higher education at all costs, with the hope that it might mean a slightly higher income someday. Hope is always an option, but it is never a good plan. If you’re considering going back to college, please sit down and count the costs before you begin, lest you set yourself up to be worse off than before you began.