Today I’m going to talk about one of the biggest expenses a family ever has, and that is college, and the money it costs to send somebody to college. One of the big questions is, first of all: Is it worth it? Should it be done? Should somebody go? I want to discuss all of these.
Just an aside, colleges and universities are really in trouble right now. They’re bloated, and they’ve had rising tuition for many years, decades actually, and now they’re trying to figure out how to make things match for the students, because quite frankly, it’s becoming more and more difficult for people to go to school.
The solutions that are being proposed are usually: “How do we subsidize the kids, or something else?” The real problem is the colleges themselves have bloated administrations, and bloated faculty in many cases, with incomes that are really unrealistic for what they should be getting. I say “should be getting,” because really, they’ve been negotiating from the standpoint that they always get this money from just raising tuition or alumni donations, pleading and begging for additional donations. Those two sources are not like you’re really negotiating directly with the person that pays the money. Somewhat similar, in essence, to the government. That’s just a little backdrop to give you where the problem really starts and started; not your solution to it.
You have to make the decision. First, college costs $40,000 to $50,000 a year. I hear several that are over 50, a few that a slightly under 40, but that’s an awful lot of money. Think of it in these terms: What is the ROI? What is the return on that investment? Let me give you some comparisons. If you took that $40,000 to $50,000, let’s say you took $40,000, and that 20-year-old child (not an adult yet), that was put away in some sort of trust for them that could not be opened until they were 65 – they would have a retirement that would take care of them the rest of their lives. The second one could have been put aside for a house when they’re 30 or 32. All of these things, because of the compounding of interest, would be great investments.
Let’s get back to college. If a parent, you have to say: Why? Everyone says that you have to get to college, it’s the ticket to a good or better job. Some say that it’s just what the kid wants. Ask the question: Is it worth it? Second: Does Jack or Jill deserve it? Three: Am I doing it because of peer pressure? Remember the peer pressure episode. Peer pressure, even indirectly. Somebody might not be saying to you: “What school is your kid going to?” but you see everybody else preparing their kids, and everybody else is talking about where their kids are going to go, and when they’re going to go to college, etc., and that indirect peer pressure. “Is it really worth it?” first of all.
Is there a strong reason for a potential career that requires or should have college? The reason I say this is because I see so many people that finish college, and I meet them every day, and what are they doing? They’re working retail in Best Buy or someplace else, or they’re doing something else that doesn’t require or shouldn’t have ever required college. If they’re working as a waiter, waitress, or bartender, they don’t need to have gone to college. Many other things don’t require it.
It used to be that college was a ticket to show future employers. It didn’t really prepare you by teaching you, necessarily, the skills; although, it did the skill of logical thinking, etc., but also perseverance and determination. It used to be 30-40 years ago, three quarters of people were failed out of college. Then they started more and more needing students to stay in to pay the bills, and they started with student evaluations of faculty, which when I was in college, they were just starting that, and I thought that was absolutely ridiculous. The student is going to evaluate the faculty, so what are the faculty going to be doing? They’re going to be trying to please the students. Not necessarily teach them, or make them better people, or more mature people, but rather please them, be nice to them, befriend them, and make sure to give them a good grade. After all, they’re evaluating you; you not them.
But furthere on, is it worth it? You’ve got to take a look at what the child is going to get out of college besides just a degree. Is there some reason for them to be going there? I’ve had so many people, and this happens more with women than men. It’s interesting, some recent surveys have shown that when the guys go into school, they’re thinking about what money they can earn; when many of the girls go into school, they’re not thinking in that term at all, they’re thinking about things they like to do, and many of them go into things like social work, etc. You take a look at, then, computer science departments, electrical engineering, etc. – you’ll see much fewer women.
Does Jack or Jill really deserve it? Have they shown in high school, and around the house, etc. to have maturity, or dedication, or perseverance to really do well in college yet? That is: Are they ready to go to college? I’ll discuss that in the fourth item as an alternative. Are they ready to go to college?
Number three: Peer pressure. All your friends have kids, your neighborhood maybe… Remember the example that people tend to buy a house that they can’t afford, and then they have to buy a car that they can’t afford to go with the house they can’t afford. Just watch it if you move into a brand new neighborhood. It just recurs over and over again, and that’s peer pressure; indirect peer pressure. Also, colleagues at work talk about where their sons are going to go to college, when they’re going to be ready. That peer pressure tends to be part of the decision, and maybe not the best part.
What are alternatives? Well, if the money is set aside, I mentioned it before, you can leave it in something, and let the child go, go out and get a little bit of education for a while through real work. Let them go and work for a year or two. That actually is what happened to me. I wasn’t prepared for college, and most people I see really aren’t prepared for college, and you can see that if you just visit any college – they’re spending more time partying than they are studying. When I had experienced the real world, I came back and I was determined to do well, to do very, very well, and I was willing to push aside anything else and not let anybody interfere with my success in college. That’s a big thing. Why? Because all of a sudden, you don’t have realistic expectations.
What I like to say sometimes to high school kids or somebody a little bit younger, I’ll ask them: -“Are you really anxious to become an adult?” -“Oh yeah, yeah, I can’t wait to be an adult.” I say: “You like that? Why do you like that?” They’ll mention some of the typical things; I’ll have my own car, I’ll do this, I’ll do that, etc. I said: “Do you realize once you’re an adult, there are no longer summer vacations, there are no longer Christmas breaks, and those spring breaks and all those holidays? You’re getting maybe to start two weeks’ vacation a year – that’s it.” Their eyes light up, and I tell them: “Don’t ever grow up. Stay a kid if you can.”
When they leave high school, if they actually have to have a job and they have to use that money, they’re not just living in mom’s house and have all their money to themselves; they have to be paying for some things; they have to have some obligations, and then all of a sudden they realize: “Wait a minute. This isn’t what I expected it to be.” If they want to really have something, a house or something, then maybe they’ll change, then maybe they’ll want to go back to college. Or maybe they’ll go and get a certification of some sort for some other job. They don’t have to be in college to be satisfied or to be happy. There are many jobs that the requirements maybe prefer to have a college degree, such as a computer programmer or something, but you can get all of that experience and all of that education for your computer programming without ever going to college.
Another alternate strategy used to be that you go to a two-year school or so, and that’s very low cost, and you have some of the credits then to apply to college so your real big debt is not as big, because you’ve had some community college transfer credits. That’s an alternative, too, to save some money. Best of all: You can always get your college fully paid for by going and serving in the military for a few years. Do that, and you may get that entire college paid for with the GI Bill.
The idea is that if somebody is going to college, ask yourself… One of the biggest things is, you hear all these college kids, how much fun they’re having, all the partying and everything else – quite frankly, I don’t know many families that can afford to give their kids every single year for four years a $40,000 to $50,000 vacation.
Again: Do they have maturity? Ask the question. Even allow some choice, but decide whether they should go or not. Is there a reason to go? Is that really a career move, or is it just something that I’m doing to make myself look good to my friends, along with the kid wanting to go off and have a good time? I have seen so many that actually have the choice between a party school and a really good academic school, and they pick the party school, and the parents don’t even interfere with the decision. Then I wonder who the kid is.
So the important point is: Make the college decision a decision, not a default option, but a real decision. Should they go, yes or no? Should they go now? Should they go at all? And how should it be paid for?