Recently, I wrote a blog post that asked the question, “Is College Worth It?”
For me and many other personal finance bloggers, the answer is “Yes.”
A college degree is a smart investment.
Not only do you learn from great minds and meet interesting people, but most important, you set yourself up to earn substantially more money over your working life than if you settled for a high school diploma.
But sadly, your college education wasn’t the golden ticket to financial success that you hoped for. It’s been more of an obligation than an asset.
Unable to find a decent job and burdened with massive student debt loads of tens, maybe hundreds, of thousands of dollars, you’re worried your energy was wasted chasing a degree you’ll never use.
So, why did a college education pay off for some people, but was a complete bust for you?
If you want to do it all over again, you need to know why your college degree failed you the first time around.
You Forgot that a College Education is an Investment
The first question you should ask yourself before deciding on whether you should pursue a degree is, “What is my return on investment?”
Simply put, your return on investment (ROI) is what you’ll get out of what you put in.
Let’s say you loan me $10,000 on January 1, 2013 with the agreement I’d pay you $11,000 in one year. You invest $10,000 (what you put in) and receive $11,000.
Your ROI is 10%, the extra $1,000 (what you actually got out of the investment).
Now what if you loan me $100,000 on January 1, 2013 and stupidly agree to receive $101,000 at the end of the year? What’s your return on investment then?
You’d get the same $1,000, but your ROI shrinks to 1%.
Think of the above example in terms of your college education.
You can reasonably expect your salary to fall within a certain range given your field of study.
Whether you pay $20,000 or $120,000 for that accounting degree, you’ll earn about $50,000 per year as an accountant.
How you find yourself in trouble is when you overpay for the degree.
- For the love of all things pink, get in and get out! I’ll never be able to understand people who spend six years getting a 4-year degree. Not because they changed majors or because their GPA wasn’t high enough, but because they took the wrong frickin’ classes! Don’t enroll in courses that aren’t necessary for your degree.
- Borrow responsibly. If you know nothing else about student loans, know this, whether public or private, student loan debt is almost impossible to discharge in bankruptcy. You cannot ignore your future earning potential. You’ll need your income to pay back the money you borrowed and engage in fun activities like eating and stuff.
- Get a job. According to the National Survey of Student Engagement, the typical full-time college student studies about 15 hours a week. As early as you can, visit your university’s career services office to figure out which cooperative education and internship programs you qualify for? Surely you can find a few hours of paid work to reduce the opportunity cost of delaying your entry into the workforce.
You Picked the Wrong Major
The main argument for acquiring a college degree is the increased salary you’ll be able to demand. However, any ol’ degree won’t do. Graduate with a degree in puppetry, and you might be shocked to find that no one is willing to pay a premium, or anything at all, for your newly obtained skill.
There’s a risk of losing money on any investment, but there are ways to reduce your chances of suffering a loss on your college education.
- Get an idea of what the job market will be like for the careers you’re interested in. Check out the Occupational Outlook Handbook. Are more jobs being created for your possible profession or are they being destroyed? What’s the starting salary, the opportunities for career growth, the working environment? What additional certifications will boost your income or marketability?
- Pick a specialty. Choose a major that will make you the most marketable when you graduate. Some employers don’t care what you get a degree in as long as you have one. Others are very specific about the majors they’re looking for. As an accounting major, you’d get considered for jobs that required an accounting degree, any business degree or any degree whatsoever. That’s not the case when you get a degree in liberal studies.
- Find out where your skills and passions lie. Take the Myers-Briggs Type Indicator assessment. Ask yourself, “What do I want to do? What am I good it?” Don’t start aimlessly taking classes before you undergo a thorough self evaluation. You’re less likely to change your major and more likely to excel in your career once you start working.
You Weren’t Prepared to Enter the Job Market
Regardless of what the economy is like when you graduate, you’ve got to make yourself as attractive as possible to employers. Waiting a couple weeks or even a couple months before graduation to start prepping for a full-time job isn’t gonna cut it. You’ve got to be aggressive in your job search. And the search starts the moment you step foot on campus.
- Network with people who work in your chosen profession. Talk to recruiters at career fairs. Find out what prospective employers look for in job applicants. Join student organizations that frequently invite working professionals to speak. Gather information from classmates who’ve interned with companies you’d like to work for.
- Make good grades. Although you don’t need a high GPA to be successful, it certainly doesn’t hurt. I can’t imagine a hiring manager tossing your resume in the trash because your grades were too good. Your professors may know of job openings they could refer you to. They’re less inclined to stick their neck out for average students. BONUS: Many auto insurance companies offer “good student” discounts for drivers with a “B” average or higher.
What steps did you take to make sure your college degree was a worthwhile investment?