This is When a College Degree is "Worth It?"

A college degree should be viewed as an investment. It’s an investment in yourself and the future of your career. You’re spending money in hopes to earn more money upon graduation and the duration of your career, but is a college degree still worth it?

Unfortunately, so many young people attend college and never ask, “Is college worth it?” A college education is definitely worth it if done correctly and for the right reasons.

We’re currently cash flowing Kayla’s Master’s degree and it’s going to provide her a really great return on investment (ROI) for the duration of her career.

I attended the same online school to earn my MBA degree. My tuition was paid for and I actually got paid to go to college. Crazy right?

We’ve been able to earn 5 degrees between the two of us and have taken out zero student loans since being married over 9-years ago. In our experience, a college degree has been a great life decision.

Here’s how we determined if it was worth it to attend college or not.

Is a College Degree Worth it?

This is a wonderful debate and there are two very different camps. I tend to be right in the middle.

On one side there are people that have achieved more without a degree who think all degrees are useless. Then there are people who think everyone needs to earn a college degree regardless of what it may or may not do for them.

It’s much more nuanced than black and white, but the statistics don’t lie.

Median Income of No College vs College

According to BLS.gov, “High school graduates had median weekly earnings of $718. Those with a bachelor's degree earned $1,189. Full-time workers with advanced degrees (professional or master's degree and above) had median weekly earnings of $1,451.”

As we can see, earning a college degree will increase your income over those that didn’t earn a degree.

The question that needs to be asked is, how quickly does that income difference pay off the student loans that were taken out to achieve it?

If the monthly student loan payments are $800 a month for the next 20-years, you’re no better off than the people who didn’t go to college.

5 Situations When College is Worth it

When is a college degree worth it.png
  1. If your tuition is free or greatly discounted

  2. If you’re able to cash flow the degree

  3. If you can pay off your student loans in 3-5 years

  4. If it provides you a significant pay raise or promotion

  5. If it gets you into a new industry with more potential

10 Situations When College is Not Worth it

  1. If you’re paying full price for tuition

  2. If you can’t pay off your potential student loans in 3-5 years

  3. If your desired industry doesn’t require it

  4. If it doesn’t directly increase your pay or provide new opportunities

  5. If you’re going away to college (room & board)

  6. If you’re attending a private institution

  7. If you’re going for the “college experience”

  8. If you don’t know why you’re going

  9. If you’re doing it just for networking

  10. If you’re doing it for your parents or anyone else

As you may be able to see from the lists above, there are few situations where I believe a college education is actually “worth it and many more situations that make it “not worth it.”

You can basically distill the lists down to the following:

  1. You should know why you’re going

  2. It better provide some sort of return on investment (ROI)

  3. You need to be able to pay it off as you go or within reason

Types of student loans: Subsidized vs Unsubsidized Loans

Is a Degree Necessary for Success?

A college degree is NOT a prerequisite for “success.” What may be a success for one person may not be the same for another. There are plenty of figures current and historical that found some level of personal success with and without a college education.

A degree will no doubt open more doors to you. Networking and forging relationships with people who will go on to work in your industry can be extremely valuable in your future success.

I work in software sales as an Account Manager and my company has started requiring a 4-year degree. My coworker does not have a college degree (grandfathered in). He makes six figures a year and has been extremely successful in his career thus far.

A degree can and will likely help you achieve your own level of success, but can easily be diminished by massive student loan debt.

A College Degree is an Investment

The math should work out to give you a return on investment (ROI) within 3-5 years post-graduation. This means you probably shouldn’t take on a student loan worth more than ~$20,000 to complete your degree.

Here’s a really great example of an adult in her late 20’s earning a Master’s degree.

Kayla (my wife) is a teacher. If she completes a Master’s degree she will get a pay raise of around $7,000 per year (~$583/month).

We started cash flowing her degree in March 2020 to the tune of $805 a month. She will complete her degree by December 2020.

We’re spending (investing) ~$8,000 over 10-months to increase her income by $583 per month for the rest of her career. She’s 29 years old and could teach for another 40-years. This could earn her an additional $280,000 over the course of her career (not counting interest earned).

Look at the compound interest calculator below. If she invests her annual pay raise at 8% per year for 40-years, she could have $2 million dollars.

Image of compound interest after investing pay raise for 40 years.

Avoid Student Loan Debt

You should not leverage your college degree with a loan. The data and information exist for you freely on the internet. There is nothing that will change my mind on that statement.

There are many ways to achieve a college education without taking out loans. My wife and I have 5 degrees between the two of us since being married and have taken out $0 in student loan debt.

We went from $0 taxable income in 2017 to $63,000 upon my graduation, $92,000 upon Kayla using her degree full-time, to $140,000 (on track) in 2020.

If you or someone you care about are considering student loans, please read this first.

If you have to go into massive student loan debt in order to earn a degree that will earn you an average salary, then you’re doing it wrong and a college degree isn’t worth it.

Know Why You’re Going to College

The idea perpetuated by parents that their kid doesn’t need to know what they want to do before college. That’s it’s too much pressure and they need to enjoy their youth. This is bad advice.

18-year old’s are adults. They’re old enough to enlist in the military and go to prison for major crimes. They’re old enough to be held accountable for their decisions.

Taking out a massive loan to go away to college for an experience or to find themselves is a really, really bad investment.

Would you be OK with taking out a $30,000 loan to go to Tibet and live among monks for 4-years? That experience is probably more valuable than half the degrees available to students.

If you don’t have a plan, you should not be leveraging your actions with debt. Plain and simple. Please change my mind in the comment section below.

Summary

I believe everyone should go to college if they can do so in a financially efficient manner.

College doesn’t have to be a financial death sentence. There are plenty of pathways to earning a degree that don’t require the student to pay a premium on tuition and taking out student loans.

Kayla and I have taken some of these alternative paths and have enjoyed a massive ROI by doing so. We’re 29-years old with advanced degrees and zero student loans. Our $140,000 household income is an absolute blessing to our young family.

I encourage you to determine if college is right for you by seeking alternative routes to funding. If you can achieve a college degree with little to no debt, then I believe it’s worth the time and effort.

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