WP: Some say bypassing a higher education is smarter than paying for a degree

[elessar78]

Interesting article in today's Washington Post about the value of higher education. Curious to hear the frugal-set's thoughts.

Across the region and around the country, parents are kissing their college-bound kids -- and potentially up to $200,000 in tuition, room and board -- goodbye.

Especially in the supremely well-educated Washington area, this is expected. It's a rite of passage, part of an orderly progression toward success.

Or is it . . . herd mentality?

Hear this, high achievers: If you crunch the numbers, some experts say, college is a bad investment.

"You've been fooled into thinking there's no other way for my kid to get a job . . . or learn critical thinking or make social connections," hedge fund manager James Altucher says.

Altucher, president of Formula Capital, says he sees people making bad investment decisions all the time -- and one of them is paying for college.

College is overrated, he says: In most cases, what you get out of it is not worth the money, and there are cheaper and better ways to get an education. Altucher says he's not planning to send his two daughters to college.

"My plan is to encourage them to pursue a dream, at least initially," Altucher, 42, says. "Travel or do something creative or start a business. . . . Whether they succeed or fail, it'll be an interesting life experience. They'll meet people, they'll learn the value of money."

Certainly, you'd be forgiven for thinking this argument reeks of elitism. After all, Altucher is an Ivy Leaguer. He's rolling in dough. Easy for him to pooh-pooh the status quo.

But, it turns out, his anti-college ideas stem from personal experience. After his first year at Cornell University, Altucher says his parents lost money and couldn't afford tuition. So he paid his own way, working 60 hours a week delivering pizza and tutoring, on top of his course load.

He left Cornell thousands of dollars in debt. He also left with a degree in computer science. But it took failing at several investment schemes, losing large sums of money and then studying the stock market on his own -- analyzing Warren Buffett's decisions so closely he ended up writing a book about him -- for Altucher to learn enough about the financial world to survive in it. He thinks he would have been better off getting the real-world lessons earlier, rather than thrashing himself to pay for school and shouldering so much debt.

washingtonpost.com

[frugalgirl]

"He left Cornell thousands of dollars in debt. He also left with a degree in computer science. But it took failing at several investment schemes, losing large sums of money and then studying the stock market on his own -- analyzing Warren Buffett's decisions so closely he ended up writing a book about him -- for Altucher to learn enough about the financial world to survive in it. He thinks he would have been better off getting the real-world lessons earlier, rather than thrashing himself to pay for school and shouldering so much debt."

Well, if Mr. Altucher did not have his Cornell degree how well could he have really done in the world with only his self-taught skills? Certainly there is some monetary value to the doors this degree opened for him that he is unwilling to quantify. And, he certainly learned some analytical/organizational/social skills while at Cornell that helped him in his future endeavors. Cornell is a very high-priced education. He could have gotten his computer science degree for a lot less at a state school.

I feel that there are certainly kids going to, and paying for, college that would be better off learning a trade or other skill than floundering around trying to obtain a degree in a field that ultimately offers few, low-paying jobs at the other end.

Each person has to look at the cost/benefit. If one wants to be an engineer or lawyer or scientist or countless other things, one must obtain a college education. How much one spends is up for debate. Is it necessary to get a private school education or will the state school get him to the same point?

If a kid doesn't know what he wants to do, isn't a good student, and/or wants to pursue a career that traditionally pays a low wage, then re-thinking that expensive private school (or college at all) may be prudent.

[Joan.of.the.Arch]

We told our son that we would be equally willing to either help fund him in a first business as or help him go to college. To be honest, we did not have a lot to put into either, but we were as willing to pay for tools, van, building lease, etc, as to pay for school related expenses. He did have the skill to start that business, but chose college. I do wonder what his choice of study will mean for his future.

I looked up average pay rates for his profession in his city. I had to laugh to see that a person with four years experience plus a bachelor's makes more money than a person with four years experience plus a doctorate. Great. He's in the PhD program, living in a studio apartment, and commuting by bike 12 miles a day. No doubt he could be making much more money now and perhaps in the future, too, had he chosen some other route....As a parent, when I saw those stars in his eyes when telling me of his studies first semester of freshman year, I knew he'd chosen well for himself, money or not.

[MonkeyMama]

It's kind of weird to wrap my brain around, because I was raised in a house where education was strongly emphasized and yet not overly pushed (is that possible?). My dad came from poverty (his parents didn't even have a grade school education) and so he pushed education very heavily. A lot of my mom's family did very well with no college education, so her take was that it wasn't the be-all, end-all. So I kind of see both sides. My parents both agreed a college education was not worth large debts or tremendous financial sacrifice.

For now, public education is still extremely affordable (& good) in the state I live in. I will encourage my kids to get degrees while it is at a discount. IF their only option was to go into deep debt for college, I don't think I would encourage it as much. Thankfully there are plenty other options (community college, for one).

My dad has an engineering degree that cost him pennies and earns him very big bucks. My accounting degree cost less than $10k. I believe there are still educational bargains to be found. Problem around here is that the public schools are getting so fiercely competitive. When I went to public school, I didn't have much competition (most my friends parents were using their homes as ATMs to send their kids to private schools).

Along with what Joan said - I think it's also really important to talk to mentors and understand the field you are getting into. In my particular career path, a graduate degree is not very favorable - more education tends to mean less pay and less job opportunities. It happens. My field really values experience over education. People with business sense don't buy useless degrees (or pay 10 times as much for the same degree at a private school).

[jIM_Ohio]

Education is the key to success in the USA.

However it's not book smarts which makes a person educated.
Its about interacting with people, solving problems, and being successful which makes someone educated.

[jIM_Ohio]

It depends on what you study really.

For examples, I think it's pointless and unnecessary to get a degree in

Art History, Sociology, Psychology, Business Administrative, Foreign Languages, Marketing, Library Science, Exercise Physiology, Social Work , Ethnic Studies, Religious Studies, Women's Studies, Homosexual Studies, Race-elated Studies, Athletic Training, Health Education & Promotion, Criminal Justice. etc.

I personally believe degrees like that will be replaced by short-term certificate programs one day and it's just the matter of time.

By not stating it you imply that a degree in engineering, accounting, business, law or pre-med is better.

It's not the degree silly, its the person which holds it.

College is good for developing social skills and pursuing interests which high school restricts. What is taught in the classroom (whether history, english or tax law) is 95% irrelevant.

I have a Mechanical Engineering degree from a top 10 school, and I use about 1% of my degree every day. What I do use is my problem solving ability, technology knowledge and ability to work with people to find solutions.

[LaVicky]

Sociology, Psychology, Homosexual Studies,

Just had a girlfriend finally complete her PHD as a Sociologist, shes done a lot of work in Homosexual and Sexual studies.

She put herself through school, did not go to a big college, paid for each class as she went herself, no loans. Shes mid 30s and has been able to work as a College Instructor and is now heading up an organization after she got her PHD, making very good money, a lot of paid travel to other countries also.

Shes done quite well for herself but a lot of hard work and sacrifice to get there, but minus going into debt and for now its paying off as she ventures out into the world.


I was hearing a teacher at my sons High School say yesterday, the job market is not the same anymore. He was a former athlete and personal trainer, who is now a teacher and motivational speaker and a coach.

He said "The job market is not the same, I want the students to think OUTSIDE THE BOX and see other opportunities"

The same thing has happened with my husband, he made a totally strange career path because of his thought skills, hes an outside the box thinker, technical, does well with systems, is into computers, took a temp job and ended up in a line of business cause he passed all the classes with no college, got bumped up, is 5 1/2 yrs in a field hes never gone to college nor has a degree for. But he has the mind for it and has been utilitized by people who appreciate those who can think outside the box, and get the job done. But we had to explore other areas during the unemployed time he had off, and just go out on a limb applying for some jobs that maybe didnt seem the norm for him.

[MonkeyMama]

The other thing that always comes up in this conversations is how ready most 18-year-olds are to select a career path. College can be a pretty expensive place to "find yourself."

I think this point is very in line with my last post. People really just need to step back and think things through a little more, before signing up for student loans.

[asmom]

There's a way to do anything. He didn't have to go to Cornell and rack up that much debt. Why do some people do everything to excess? I'm preparing to send my daughter to college now. I've been very frank with her in that she will be attending a state school and she needs to research job opportunities and salary info in her chosen field. She can pursue her dreams on her own dime when she is self-supporting.

Also, you don't have to go to school on all loans. In addition to working and paying as you go, there are still scholarships that go unrewarded. I'm on the awards committee for my national professional committee. We offered two scholarships this year. For one of them, we had only one weak applicant and she gets the money because she is the only one who applied for it.

[elessar78]

Asmom, I think that's the point of the article. After he realized that he didn't need his fancy Cornell education he wants a different path for his children.

[cypher1]

Even at 29 I'm still torn between education (debating about finishing) vs experience topic. I respect education, but definitely value work experience more in my field. I'm sure I'd get torn apart going so far as to saying its even overrated. Another area I think is absolutely critical is networking. How I got to what I was doing, was all through friends, so I'm very fortunate for their employers to invest in me. From there it was all about taking advantage and constantly taking certifications and updating my resume dealing with the latest technology, etc.

Of course everyone is different on how they learn, whether its audio, visual, or kinesthetic learning process. I;m a definitely hands on learner, and admit it was difficult taking electives towards my degree (at the time) that served no purpose in my field. Common sense, street smarts, communications/social skills, problem solving vary among everyone. Just because people find their "passion" doesn't mean they can do that for a living unless they're willing to make more sacrifices and apply along term path which realistic to their living standards.
Examples, I have friends who want to be film directors, artists (animation/graphic design) who all have their degrees but can't find a job. Then I have friends of sociology/psychology majors, got their degrees, and want to go back to school again since they want more money or can't find a job to their "standards". And then theres the friends with architect, medical/engineering degrees (in debt 100k+), upset with not getting interviews since they have barely any work experience and practically blame the system for lack of networking. I just keep my mouth shut to all those examples since I went a different direction. I have another good friend who got his degree in sociology, to taking over his fathers auto shop for the last 10 years very successfully in what he does as people person or a born salesman in someways. Just shows how little or large decisions we make can have extreme ramifications and lead us to completely different paths in life with no guarantee of positive success.

[asmom]

Asmom, I think that's the point of the article. After he realized that he didn't need his fancy Cornell education he wants a different path for his children.

So it's Cornell or nothing? That's my point; there is a middle ground.

[elessar78]

To me it's a thought provoking article. My family values education greatly. Of the 13 adults in my family 2 have PhDs, another 5 more have Master's degrees, and the rest have bachelor's degrees save for one.

-One PhD is broke because of an inability to handle personal finances, the other is quietly wealthy.

-Two MBAs are married to each other, one is a stay at home mom and the other is a real estate agent—arguably they ultimately did not need their MBAs although they may be handy in the future.

-One Master's degree is in Social Work and another in theology, albeit questionable financial value but there's great societal value to their work and it reflects their personalities.

-Two of the bachelor's degrees are second and third generation farmers. So you could say that their college degrees were unnecessary, but IMO it really takes their farming to the next level. It's enlightened, innovative, and profitable farming.

As cypher1 said, and I don't know if it was his point, but there just isn't a way to tell what will work out for you or not. As in any "purchase" in life; people overpay or people get a great value or paid just right.

I would take out student loans again to attend my out-of-state "State" university again. I believe the price was worth it for me a tad on the high side maybe but I don't feel ripped off. But as the cost of higher education rises we really do have to weigh what we're paying for and seek alternatives to get to the same ends. Isn't that basic economics? Once the price of a good is too high, then consumers seek alternatives.

Unfortunately, many universities have gotten into this "arms race". The amount of building and new facilities at mine are definitely unsustainable. I think it's definitely a reflection of a generation suffering from "affluenza"—nothing but the best. I was right on the cusp, so I can't really complain.

My university underwent this huge capital campaign to erect all these new buildings but I really doubt 10% of that went to anything that would enhance the learning of 80% of the student body.

I'm considering grad school now (MBA/law school/etc) but also considering augmenting my current skill set. I'm a graphic designer (employed, cypher) but I could branch off into web design or photography for a fraction of an MBA or law school.

[KTP]

Hmmm, so my wife's college degree from an ivy league school cost her about $80K out of pocket (with some grant/scholorship money to make up the rest). It was painfull paying off these student loans when we were first married, but now she makes over $200K a year plus full health/retirement benefits...so...I dunno...seems worth it to me.

I think perhaps the lesson learned is don't go to a $30K to $40K a year school and major in "Ancient study of Egyptian underwater basket weaving" unless you really feel like there will be lots of demand for that degree in the future. Or at least get a PHD in basket weaving so you can fall back on teaching it to other sucke...I mean students.

edit: Further reflection. If she had taken that $80K and invested it in Microsoft, or later in Yahoo or Google, then I guess we would be rich. Otoh, if she was remotely good at the social game or playing golf with her boss, she would probably be a vp by now and making $1 mil+ a year. She is that good, but tends to take no bs in product design and development. This unfortunately is not how most major US corps operate now...to advance you need to brown-nose and be very agreeable to your superior's ideas (while keeping a deniable escape route if things go south). I tried once to explain this to her but she still will speak up in meetings if she sees a problem with a new product or feature. Too bad.

[jIM_Ohio]

Hmmm, so my wife's college degree from an ivy league school cost her about $80K out of pocket (with some grant/scholorship money to make up the rest). It was painfull paying off these student loans when we were first married, but now she makes over $200K a year plus full health/retirement benefits...so...I dunno...seems worth it to me.

I think perhaps the lesson learned is don't go to a $30K to $40K a year school and major in "Ancient study of Egyptian underwater basket weaving" unless you really feel like there will be lots of demand for that degree in the future. Or at least get a PHD in basket weaving so you can fall back on teaching it to other sucke...I mean students.

edit: Further reflection. If she had taken that $80K and invested it in Microsoft, or later in Yahoo or Google, then I guess we would be rich. Otoh, if she was remotely good at the social game or playing golf with her boss, she would probably be a vp by now and making $1 mil+ a year. She is that good, but tends to take no bs in product design and development. This unfortunately is not how most major US corps operate now...to advance you need to brown-nose and be very agreeable to your superior's ideas (while keeping a deniable escape route if things go south). I tried once to explain this to her but she still will speak up in meetings if she sees a problem with a new product or feature. Too bad.

How many people does wife work with which make 200k?
Did every one of them go to an ivy league school?

Did your wife start at 200k right out of college?


If you look at college as an ROI proposition, what you will see is that its worth it if you use the degree (big if, but the ROI is worth it). Even if you spend 200k in college costs to earn 30k as a teacher, that 30k is for 30-40 years, with raises and paid pension at retirement, and many teachers do not have to pay into SS (6.2% raise compared to me making 30k in private sector and 12.4% raise if I make 30k self employed).

Without the degree, that same job is impossible to obtain. The ROI on that is "infinite" depending on how you look at it, or at minimum positive.

When someone suggests they got a 200k job based on WHERE they went to school, I think that is a crock (no disrespect intended). What probably happened is this...

Person goes to an expensive school and the degree gets them hired. Might start at 50k-75k. That might be 5%, maybe 10% higher than other people from other schools (for example 50k starting from Ivy league, 45k if person went to State U). Within 3-4 years both people will have assimilated into the normal "wage curve" at that company. Wage curve means that HR is required to make sure there is not wage discrimination, and the lower salaried people get higher raises, so people doing same job are paid the same (if one or the other get laid off, there is a chance employer could get sued if this was not the case- my wife makes a living on laws like this LOL).

If your wife is making 200k and others are making 100k, its because she is better at what she does than they are, not because of where she went to school.

Back to the ROI thing... the only thing an expensive school does is drive down the ROI. Meaning if I spend 120k to get an engineering degree, and an MIT grad spends 240k to get same degree, my ROI will be higher. The MIT grad would need to start at a salary twice as high just to get the same ROI, and I can tell from having worked with MIT grads, they do not make twice as much, and they are not twice as smart either. Maybe a little more higher motivated (than me), and that motivation might translate to more promotions faster, but its not the school which motivated them, it was the person.