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Is It Worth It To Go To College?

Disclaimer : Anything mentioned in this post is not financial advice and is for informational purposes only. All investments carry risk and there is no guarantee of profit nor protection against loss. WealthGap does not provide any legal, tax, or accounting advice.

It depends, but for most people you should not go to college at all. Tech firms like Apple and Google no longer require a college degree from their employees. College has become an expensive joke. With that said, there are cases where you should actually get a college degree.


Tuition Is Way Too High


College tuition costs are through the roof. For example, the 2019-2020 academic year at UCLA would cost you ~$35,000 per academic year for in state students. Keep in mind this is a public school and this is in state tuition, which is much lower than out of state tuition. An out of state student would pay ~$65,000 per year at UCLA. Now, let's look at a private school NYU, which costs ~$78,000 in the 2019-2020 academic year.


To graduate from a 4 year college, you would be at least spending ~$35,000 x 4=$140,000 as an in state student at a public college. If you go to private school, you can spend roughly ~$78,000 x 4= $312,000. I did not even consider the fact that college tuition increases 3-7% per year.


Opportunity Costs


When you go to school for 4 years, you don't earn any income from working (Since I ignored the annual tuition increases, I am going to ignore the marginal income from internships). Even after you graduate, you are not guaranteed a decent job because there are just so many spots for the most desirable jobs. Not every Harvard graduate can get the job that he or she wants. If you invested your tuition money into the market instead of going to college and worked for 4 years, you would be debt free and probably be a relatively senior level employee at a company with a sizable investment account.


So Who Should Go To College?


A student who has a full package financial aid should really go to college since it is free and you should have a good time when you're young. People who aspire to be doctors, lawyers, or finance professionals...etc should also go to college because these professions require degrees and pay very well. Lastly, students whose parents can afford the tuition without hurting financially should also attend college.


Some argue the true benefit of a college degree is intangible and that you get into the school's social network, but is it worth hundreds of thousands of dollars? If you are a social person, you can make friends without being at school. If you are not a social person, you would not be able to make a lot of friends even if you go to class every day. If the school's social network is what you're after, then you might as well go buy a Ferrari with the tuition money and I bet your network would be much higher quality than the average college.


As a general rule, you should only spend that absurd amount of money on a college degree if you can go to an institution that is ranked above ~30 in the US News Best College Rankings or any particular program/major that is ranked top 5. If you go to an average college, how are you going to compete against thousands of Harvard and other top tier schools' college graduates who are eyeing for those limited desirable jobs? You still can, but you are taking a huge risk. If you truly want to pursue knowledge, you can always take free online classes at Stanford, MIT, and Yale...etc. No one would question the quality of these online courses.


I have a friend who couldn't find a decent job after graduating from a top tier undergraduate business school and he went to a 1 month coding boot camp. Then almost immediately, he found a $100,000 annual salary job. Imagine if he didn't go through 4 years of college by saving ~$300,000 on tuition and worked during that time. As a fifth year coder he could have made more than $150,000 a year as a senior software engineer. Of course, not everyone should become a software engineer (currently the hottest profession in my opinion) but the point is if you have a profession (graphic designer, music composer, art dealer..etc) that you want to pursue and if that profession does not require a college degree, it would be much better to take vocational classes instead of going to college.


What You Learn In College Is Mostly Useless On The Job


Yup, for most people what they learn in class is mostly useless unless you major in technical fields such as mechanical engineering, electrical engineering, premed...etc. I myself went to a school that supposedly trains you for Wall Street, but in reality you had to be trained all over again at a bank or other financial institutions before you start full time. The first day I went to my microeconomics class, my professor said, "Employers don't care about what you learn in college and you graduating from this school signals to them that you are a smart person who can undergo a rigorous curriculum".


~$300,000 of tuition is a pretty steep price to pay for that signal, which is why I mentioned previously as a general rule you should only attend top tier schools. I am not an elitist, but I believe you are more likely to have a positive net present value from attending top schools. If you watch professional poker players on YouTube, you would find out that most of them only play premium hands (in our case, top tier schools) because you are more likely to win the pot when dealt a strong hand. That is called positive EV (expected value) play. They don't play bad hands (in our case some random community college) because they know they are more likely to have negative EV.


To Close Off


I am not saying all colleges are bad and everyone should skip college, but there are a vast number of people who should really think hard about whether they absolutely need to go to college.


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