Is College Really A Good Investment?

This question ought to be top-of-mind for parents and students alike. To anyone who's paying attention, it's obvious that a college degree isn't the start of a road to riches. In reality, it's a well-publicized debt trap if a graduate has taken out student loans to pay for their education. 

Zero Hedge reported yesterday that student loan debt in America has risen to an all-time high of $1,08 trillion. New graduates are taking longer to find jobs, and many of the jobs they find don't pay as much as they expected. 

The media and universities still try and sell the story that someone with a college degree will make more money over their lifetime than someone who doesn't. While that may have been true in the 20th Century, I don't believe it's true in this century. Or if it was true, the proponents of this meme are using outdated numbers. 

In an interview with Nick Gillespie of Reason magazine, Mike Rowe (star of the TV show Dirty Jobs) says it best:

'If we're lending money that ostensibly we don't have... to kids who really have no hope of paying it back, in order to train them for jobs that don't exist... I might suggest that we've gone around the bend a little bit." 

If you haven't watched the interview, it's worth 40 minutes of your time. Rowe makes some excellent points about the decades-long "you must go to college to be successful" PR campaign. Just like in politics, the best way for your candidate or issue to win is to present the case for how bad the other side is. 

His high school counselor talked to him about how going to a four-year university was the best option, and if he considered doing blue-collar work, that wasn't "living up to his potential." The same kind of thinking was promoted by school administrators, counselors and teachers when I was in high school in the mid-80s. 

I grew up doing dirty jobs on a farm and ranch, and I'm grateful for it. I got a PhD in real-world common sense, plenty of exercise, and those long days driving the tractor I got plenty of time to think. And thinking is something very few Americans seem to engage in these days. 

So let's think and analyze the premise that a college degree is a good investment for your mind and your pocketbook. What we're all told from the time we head off to Kindergarten is this: "Study hard, get good grades, get your degree so you can find that safe, secure well-paying job with your 401(k)." 

Job security is as big of a myth as Bigfoot or the Loch Ness Monster. Companies are always looking for reasons for cut employees and pad their bottom line. When American firms started to outsource jobs overseas in the 1990s, the concept of loyalty went along with it. Gone are the days when you would work with good people at a good company for 20, 30 or more years... have a nice retirement party with your friends, get your gold watch and live happily ever after. 

An equally outdated myth is that working for someone else will make you wealthy. When you work for someone else, you trade hours for dollars and make your employer more money. The way our tax code is setup, employees are the highest-taxed people around. Plus, employees don't have an option when they pay taxes, they're deducted directly from every paycheck. 

Business owners have a multitude of deductions available, and have more flexibility when they pay their taxes - on a quarterly basis or the following April 15th. With good tax planning, a business owner can drastically reduce his tax liability - even down to zero. You may think it's not fair, but that's the way the tax code works. 

For all intents and purposes, you are now a perpetual free agent. You can't depend on a company (or even a government entity) for a 'secure' job anymore. And the premise of putting money in a 401(k) so you can have a comfortable retirement is also false. Inflation will eat away a large chunk of your dollar-denominated wealth, and Baby Boomers (by law) will have to start liquidating the stocks and mutual funds in their plans in 2017.

Boomers' buying of stocks and mutual funds from 1982 to 2000 drove stock values higher; their selling will force stock and fund values lower (unless the US dollar goes into hyperinflation from Fed money printing gone mad - then the inflation will cancel out the real value of your nominal gains). 

When you graduate college and go to work for a company, you assume they're competent and know what they're doing. Unfortunately, my experience in the Dilbert cube showed me that was the exception instead of the rule. I hated having to deal with corporate politics and games in the white-collar world. 

In the blue-collar world, this happens a lot less. The focus is more on getting the job done right and on time. It's more about common sense and common courtesy, instead of sucking up to a boss or HR hack that you don't like. 

College has been sold as an institution of higher-learning, where you discover and hone critical thinking skills. Given the cognitive skills of the average American, I don't accept this premise. John Taylor Gotto, a former New York state Teacher of the Year and author of the book Dumbing Us Down, said that our current education system is based on the Prussian model. It's a system designed to create good employees and soldiers, and people who blindly follow orders, waiting to be told what to do. 

With maybe a few exceptions, college is nothing more than an extension of this Prussian-like K-12 system designed to churn out an abundance of obedient employees. Not the next batch of entrepreneurs or competitors to existing corporations. 

In the 21st century there are plenty of good-paying blue-collar jobs available - and have more career security than the white-collar variety. If you're a high school student reading this (or know one) who has an interest in becoming a carpenter, electrician, plumber or mechanic - get excited! This is a great time to have and use your skills, and the market couldn't be better. 

These so-called "dirty jobs" will probably provide more satisfaction than the highest-paying white-collar gig you could imagine. I discovered I wasn't cut out to be a Dilbert Drone, so I don't think much of climbing the corporate ladder. 

From my personal experience, I learned more about how to succeed in business from my dad and savvy business owners than I ever learned in college. The good part about college is you learn to live independently from Mom and Dad, and have some fun in the process. But it doesn't provide a lot more benefit than that. 

Here's a quick sub-8 minute video of Mike Rowe testifying before Congress, talking about his experience growing up and the skills gap we have in America between the number of available "dirty jobs" and the number of qualified workers to take them. 

Mike is living proof that you don't have to be pigeon-holed "just" into the occupation that you choose. He's a very articulate and bright guy, a former opera singer and TV spokesman for Ford. Although you may not be as famous as Mike is, you can still do a variety of things in your life. 

If college isn't the best investment for young students or adults, what is it? It's the investments you make in yourself. In my next blog post I'll reveal one of (if not the) best book I've read on how to do just that.