In order to provide some texture to this conversation and demonstrate how education expenses are affecting people’s lives, here are the stories of 3 people I recently met who are having very different educational experiences.
Story 1: Anna-21 yr. old Senior at Georgetown
Anna is a spunky 21 yr. old from Chicago. She graduated at the top of her high school class and enrolled at Georgetown to fulfill her dream of studying French.
Anna said her parents weren’t rich, but they agreed to pick up the $200,000 tab because they “believed in education.”
She ended up studying French for about a week before realizing she was hopelessly outgunned by her already fluent international cohorts. She decided to switch her major. Now in her 4th year, I asked her how she felt about staring down the barrel of a degree in Government Studies.
“I don’t even like the government.”
Anna says she’s not really sure what she wants to do when she graduates, but is thinking about going to grad school.
The financial and psychological reality of this situation is staggering. How did a family spend close to a quarter million dollars on something that is neither desired nor particularly useful? Did she get something she couldn’t get anywhere else?
A good state school like the University of Illinois has heavyweight academic credentials at half the cost.
Unfortunately for Anna and her family, it sounds like she is 0-for-2. She isn’t going to be doing something she loves and probably won’t be making much money doing it with a lame duck degree like government studies.
Here’s a suggestion for all the people in the world interesting in studying the government.
Get a summer job at the DMV and you will learn everything you need to know.
Story 2: Ryan-22 yr. old Kansas State Grad-Marketing
Let’s move on to the next subject, Ryan, a 22 yr. old recent graduate of Kansas State University with a degree in advertising and marketing. In order to work on his copy-writing skills and beef up his portfolio, Ryan has enrolled at the Chicago Portfolio School.
I did some research and found out that his 1-yr. program was going to cost him about $20,000 for what looks like mostly self directed independent projects. When pricing in his lost income of $35,000, the price tag on this operation comes out to about $55,000. This had better be one ridiculously awesome portfolio Ryan, because you are going to be paying for it for a LONG time.
Not only is this a very expensive decision, but the strategy doesn’t make any sense either.
As a would-be copy writer, Ryan will be competing with creative types. Creativity isn’t something that can be taught in the classroom, you either have it or you don’t. And if his goal is to work on the ‘business side’ of advertising, he would be better off just going to business school.
Making things even worse for this hapless soul, his $55,000 one-year investment buys him admission into an industry that has been getting crushed for the last 5 years as technology has completely remodeled the face of advertising.
In the old-days, advertising was driven by cutesy Super Bowl ads and Regional TV Campaigns.
But now, it is a world dominated by software programs and algorithms, guerilla technology blasting the right people at the right time on the Internet and other targeted venues.
You wanna be an advertising guru?
Study programming and learn how to spam.
Are There Any Winners?
Now that we’ve spent some time discussing how easy it is to spend lots money on education for little in return, let’s take a look at someone who has developed a winning formula, focused on 2 key criteria.
- Specialized skills in a growth industry
Our final subject is Travis, a 22 yr. old who just graduated from the University of Texas with a degree in computer science. He paid in-state tuition and finished debt free. This clever bastard is now on his way to the University of Chicago on a partial scholarship to study mathematics.
I know people who have graduated from this program, they can expect to make between 90K and 100K in their first year as companies jockey for candidates with highly technical and quantitative skills.
His first-year earnings will equal the total cost of his 6 years of secondary education; placing his education/earnings ratio at 1:1.
What about Anna? She paid twice as much to earn half the rate. Her ratio is 5:1.
Here is a question I want everyone to think about.
If each of these individuals was a stock, which one would you want to buy? I don’t have to think about this for even a second, the answer is pretty obvious. And that is exactly how we need to start thinking about education, as a long-term investment that has serious financial implications.
You’d be hard pressed to find a rationale person who didn’t think there was inherent value in almost any kind of education. And you can never put a price tag on doing something you love.
But the cost of education has gotten so out of hand that it now requires a vigorous financial examination.
So whether you’re a parent, student, or a professional thinking about acting like Rodney Dangerfield and going back to school, it pays to use a strategic cost analysis when making your decision in order to get the most bang for your hard-earned buck.