College tuition is getting more expensive every year. This is to be expected, as there is always some inflation to consider. However, tuition increases between 5% and 7% per year; much faster than the consumer price index. As college costs continue to rise, many people are finding that college is getting worse to invest in. How to know when college is the wrong investment for you?
Determine your return on investment
For every investment you make, you should determine your return on investment. In fact, every time you spend money, you are already doing so to some degree. For example: If you buy a $5 cheeseburger, your return on investment is that you expect at least $5 in satisfaction from that cheeseburger. If it doesn't meet your standards, you can complain to the manager. College costs shouldn't be any different.
Fortunately, there's a website that calculates the best colleges to attend. Each year, PayScale lists the best colleges, how much they cost and the 20-year return on investment. Using statistics based on current tuition costs and the likelihood of getting a loan, and surveying alumni to see how much they make, PayScale determines which colleges offer the biggest bang for your buck.
This is a good starting point when trying to determine if college is the right investment for you. But there is one important point you need to address. Most colleges at the top of the list are heavily weighted toward computer science and engineering; two degrees that pay a lot and are in high demand. If you received your degree in basket weaving from the #1 rated college, you will likely find that you are not getting a good return on your investment. The wrong degree from a prestigious college will land you in the same boat as the wrong degree from a state school: no job and lots of debt.
Choosing the right deal
A few decades ago it was possible to get a good job with a high school diploma and no college. That quickly changed to understanding that you could get a good job with any college degree, even if it wasn't something special. In today's world, you either need a specialized degree or you need to be very talented in your field; often both are required.
Now there are two schools of thought when it comes to getting a degree. You can learn something you are passionate about, or you can learn something that is in high demand. For example, while you may find anthropology and sociology fascinating, degrees in those subjects are unfortunately not very marketable. On the other hand, if you're studying engineering or computer science, you'll likely land a well-paying job right out of college.
For those who are paying for most of their own schooling (i.e., without scholarships and grants to offset the cost), you may have to follow your passion, which you do on the side. Instead, you should focus on a degree that is more in demand. Remember that if you don't even like the item, you have to compromise or your work life will be miserable for the next 30 or 40 years.
Foregoing the Degree
Even those who want to enter a coveted field shy away at the expense of education. With the average student owing more than $30, 000 after graduation, some skip the degree all together. That is fine as long as you can develop a skill or find a high paying job that does not require a degree.
The one thing you need to know about skipping the degree: Many employers will overlook you for the simple fact that you don't have a degree. If you get an interview, you'll need to wow employers with your knowledge, skills, abilities and results. If you are only a marginal employee, you can expect the employer to favor the marginal employee with the education over you.
The Bottom Line
Do you feel like your investment has paid off when you graduate or have already graduated with a degree? It is possible to study a subject you like and get a job in your field. But many are not so lucky and still struggle with student loan debt. So while the investment in the first example was worth it, that's not the case for everyone involved.