by mikekarnj on January 18, 2011
We’ve been brainwashed to believe that a college degree is an “investment” in your future. A college degree can lead to higher lifetime earnings, access to successful circles, and opportunities you would have never gotten otherwise.
This claim is backed by a really convincing statistic: college graduates earn $1 million more over their lifetimes than workers with high school diplomas.
Who wouldn’t invest $100,000 for the guaranteed opportunity to turn that into $1,000,000? Before you believe that a college degree is the key to lifetime success, let’s take a closer look at the numbers. Like the old adage goes, if it’s seems to be good to be true, it is.
In 2002, the US Census Bureau published a report titled, “The Big Payoff” which reported that the average high-school graduate earns $25,900 a year, and the average college graduate earns $45,500, based on 1999 data.
The difference between the two figures is $19,500 and when multiplied by 40 years, it turns into $780,000. Round it up to a whole number like a million, and voila! You have a pretty convincing statistic that colleges can put into their brochures.
Here’s the reality: there’s a couple of things the Census Bureau forgot to mention in this report: 1) it ignores the cost of a college degree (over 4 years, the average cost of a bachelor’s degree is $100,572 at a private college and $26,340 at a public college); 2) the opportunity cost of forgoing 4-years of working (more for those that don’t graduate on time or go to graduate school); and 3) ignores the role of race, gender, and class.
Would you still believe college was valuable if it didn’t yield a million dollar return? A recent Wall Street Journal article estimates that “the actual lifetime-earnings advantage for college graduates is a mere $279,893.” (They included tuition payments and discounted earning streams, putting them into present value.)
But here’s another way to look at this million-dollar earnings claim. Over time, this difference will move closer and closer to zero.
We know that college tuitions will increase at a staggering rate and more students will default on their student loans. And as the world moves into the innovation age, the unemployment rate for college graduates will continue to increase as the “careers” that college prepare for you will be outdated and irrelevant.
Here’s a better question to ask yourself: how would you spend the $100,000 to follow your dreams? The opportunities and possibilities are endless when you find your own path. Here’s another adage that holds true, “follow your passion and the money will come.”
Michael Karnjanaprakorn is the Co-Founder of Skillshare, which is a marketplace to learn anything from anyone.