Why College Is Often Not Worth the Cost

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Most articles addressing whether college is worth the cost inexplicably conclude “of course!” But based on basic economic facts – college is often NOT worth the cost.
Costs for four years in college average between $44,000-165,000 (public to private schools) JUST FOR TUITION.  Adding minimum living costs, this could easily balloon to $84,000-$205,000 at 5% interest. The median entry-level salary for a college graduate is $48,000. Even entry-level salaries at the high end are $71,000 (pre-tax).

The Math of College Costs

In the BEST case scenario, college is spending $84,000 (let’s say $44k tuition and $40k living costs for 4 years and no financial aid) and four years of hard work on college, likely not learning relevant job skills. For all this effort, you must then APPLY for, and get hired to work a job that will take you, 40+ hours a week for 52 weeks in order to earn $50,000 after taxes to pay off your loans (and you might not even like this job).
The worst case scenario is that you spend $200k in loans to attend college and end up at a job you could have gotten straight out of high school.

College in the Age of COVID Makes Even Less Sense

Finally, people have a lot of fond memories for their colleges, clouding their rational judgment. But colleges do not care about you.
If ever there was a sign that no matter how much money you give colleges, they do not care one lick about you, your health, your career, or your life, it’s how they treated their own students during the pandemic. Because of the COVID-19 Pandemic – students are questioning the value of a college education more now than ever before. College students say that online classes aren’t worth the high cost of college.
And colleges, for their part, do not care. They unceremoniously kicked their students out of their dorm rooms – rooms that these students paid for in advance, forcing students who may have contracted coronavirus over spring break to travel in crowded airplanes and trains during a pandemic likely infecting themselves and the rest of the nation including their potentially elderly parents or grandparents, and refused to give exemptions to many students who had nowhere to go. (Also how embarrassing to be a student who has to explain a bad family situation to a random administrator just so she won’t be homeless).

College Doesn’t Care About You; You are a Number to Them

I know people are going to disagree with me, but kicking college students out of their dorms is no different than kicking people out of their apartments. It’s not that the colleges cared about their students’ safety – the colleges just wanted to avoid liability.
Even with millions or billions in their endowment funds and hundreds of six-figure salaried administrators, college students were forced to figure their way home by themselves. College students and alumni raised money to help, which is wonderfully heartwarming, but good god schools, have you no shame?
Going to college could be the single worst financial decision of your life, and here I will tell you why.

Why College Is Not the Key to Success

College graduates may do well financially but that doesn’t mean college is a good investment. That’s because college does not make people successful; the fact that students could get admitted into and graduate from college are proxies for all sorts of other advantages that make these people successful.

77% of the bachelor’s degrees awarded go to people who grew up in the top half of the income distribution, and 50% from the top quarter. As the New York Times provocatively points out, some colleges have more students from the 1% than the bottom 60%. So when the statistics talk about better outcomes for people who go to college, there’s a correlation – wealthier people go to college and wealthier people tend to have better outcomes. College predicts these students’ success – it does not cause it.

And if college students aren’t from wealthy backgrounds, they’ve overcome significant odds, are very smart and/or hard-working, and are committed to their own success as evidenced by applying and being admitted to college – all indicators of future success that have nothing to do with actually going to college. The traits that make people aim for selective college admission tend to be traits that would make them successful. Going to college is irrelevant – they develop these traits in high school.

Why College Isn’t a Good Investment

On purely economic terms, attending college is a suspect decision. – John Lounsbury, SeekingAlpha

The common refrain is that a college graduate will make $1M more than a high school graduate over a lifetime. BUT, as I’ve said above, those that go to college are fundamentally different people than those who don’t, so it’s an apples to oranges comparison. It’s like noting that Olympic-qualifying runners are faster than those who don’t qualify and concluding that going to the Olympics means you’ll run faster. Rather, qualifying for the Olympics means you’re a faster runner than someone who doesn’t qualify. The Olympics doesn’t make you fast – it just identifies who is fast.
Don’t believe me? Another analysis states that the $1M figure fails to take into account 1) graduates who take longer than 4 years to graduate; 2) progressive taxes; 3) present value dollars; and/or 4) those that make high incomes based on graduate school (lawyers, doctors, CEOs) and not based on college. Further, other studies show that high school graduates end up with a higher net worth than college students over a lifetime, even if the high school graduate works as a janitor. It depends on saving one’s money and investing it in the stock market. Fortunately for those with only high school degrees, you earn money earlier, you have no student loans, and you have 4 more years for your money to grow.
Peter Cappelli, a professor at the University of Pennsylvania’s Wharton School, lays out a guide for families in making this so-called ROI calculation in his new book, Will College Pay Off?: A Guide to the Most Important Financial Decision You’ll Ever Make:
Looking at the actual return on the costs of attending college, careful analyses suggest that the payoff from many college programs — as much as one in four — is actually negative. Incredibly, the schools seem to add nothing to the market value of the students.

Why Student Loans are Not “Good Debt”

With hundreds of thousands in student loans being given out like candy, mindless college cheerleading can set people back in their finances in a way that even stupid decisions like buying a sportscar cannot. As John Mulaney jokes, a duffel bag filled with fake cocaine is better than a college degree because at least you get a duffel bag.

Most of the people weighing the benefits of college are not wealthy (i.e. if you are wealthy, you assume you go to college but if you’re not, you weigh the options). So the people who are deciding are the people most likely to be ruined if they make the wrong choice. They don’t have wealthy parents to fall back on.

I wanted to give a more in-depth look into whether student loans are worth it. I will admit that some of this math is fuzzy because it comes from different years and different surveys and most of the statistics are a few years old. This is all to get a general picture, not write a thesis.

3 Types of Students Who Do Not Benefit From College

Students Who Are Exceptionally Bright or Wealthy

In 2012, 71 percent of students graduating from four-year colleges had student loan debt (The site states that 71% represents 1.3M people, and thus, that must mean approximately 1.8M people graduated in 2012). Thus, 29% of college students (ones without loans) will be included in the group of people where college pays off, though they really shouldn’t be. They are destined to be successful, with or without college. These 29% are either rich or smart/talented enough to go to college for free. These people will likely do well with or without college because of their family wealth and their intelligence/hard worth ethic.

Think about celebrities who have gone to elite colleges that were successful ahead of their college time. People like Natalie Portman and Yara Shahidi at Harvard, Emma Watson at Brown, Brooke Shields at Princeton, Dakota Fanning and the Olsen Twins at NYU, Jodie Foster at Yale. Think about famous offspring – Malia Obama and Jared Kushner at Harvard, Chelsea Clinton at Stanford, the Bushes at Yale, JFK Jr. at Brown.

These are all people who will be included in the statistics of successful graduates, but let’s not put the cart before the horse. The elite colleges picked these people because of their accomplishments or their parents’ accomplishments and connections; they didn’t become successful because of their colleges or their college performance. The colleges benefit from the celebrities, and in exchange, the celebrities feel “smart.” But come on, if any of these people never attended college, they would be fine.

The idea that exceptionally bright or accomplished students don’t need to go to college is backed by the Uncollege movement. Billionaire Peter Thiel offers a scholarship for bright students NOT to go to college. The idea is, give a smart kid some money and some time to pursue their passion, and they’ll probably come up with something better than being a cog in the student loan machine. It’s not like they can’t catch up on their college courses later.

Students Who Don’t Graduate

The 71% statistic above covers only those who are “graduating.” It does not cover those who don’t graduate. Only 41% of students graduate from a 4-year college within four years. If approximately 1.8M people graduated college in 2012, representing 41% of the people who entered college around 2008, that means 4.4M people were enrolled, and 2.6M did NOT graduate. Most of the non-graduates cite money as the reason for not being able to graduate (See above, wealth is a significant indicator of success before, during, and after college).

Though some studies shoes that some college credit is associated with slightly higher wages (~$6,000 more) and slightly higher employment,

You might point to outliers like Bill Gates or Mark Zuckerberg as successful dropouts, but that doesn’t disprove my point. Gates and Zuckerberg did not benefit from taking out student loans and would not have benefited from earning a college degree. If anything, Harvard should pay Gates and Zuckerberg for attending.

Students With a Lopsided Student Loan-to-Salary Ratio

So far, of the 4.4M people who attended college, over 3.1M (550,000+2.6M) did not benefit from college because they were already destined to be successful or didn’t get a degree. That’s already 70% of the students who enter college. What about the last 1.3M? Here are some statistics to chew on.
  • 17% of those with student loans owe more than $50k (5% over $100k). Those people seem unlikely to do well, so encumbered by debt.
  • 43% of college graduates are underemployed in their first job, meaning they work at jobs they don’t require a bachelor’s degree.
  • In 2012, 44% of borrowers in 2007-08 took an undesirable job or job outside their field due to education cost.
  • Based on projections, nearly 40% of borrowers may default on their student loans by 2023. Currently, 1 in 8 student loans is in default.
  • At 15% of 4-year private and public nonprofit schools, 15 percent of students earn less than $25,000 per year, even a decade after they first enrolled.  The data is worse for 2-year and for-profit schools.
  • Approximately 37% of college graduates obtain graduate degrees. Granted, one can only go to graduate school after obtaining a bachelor’s degree but I want to figure out the value of a college degree, not a graduate degree. Doctors and lawyers and MBAs are going to lift the median earnings for college graduates. Furthermore, many people go to graduate school because they did not think their college degree was sufficiently competitive in the marketplace.
So let’s say with 44% of borrowers taking undesirable or out of field jobs, 40% of borrowers are set to default and 43% under- or unemployed, 37% went to graduate school, in part, because of the lack of opportunities from college. I have no way of knowing where these statistics overlap but let’s say on the low-end and for ease, that there is a lot of overlap of these data points and that approximately half of people who took out loans for college are not getting their money’s worth. For instance, someone with over $50,000 in debt who is underemployed is also likely to default and may also go to graduate school.

The Students Who Benefit from College

So after taking out the people who don’t graduate, the people who would be successful without college, and the people who are made worse off (or at least no better) than college, there are 650,000 people left. The last group of people who didn’t take out too much debt and found employment requiring a college degree at ok-paying jobs.
I’m not saying these people have dream jobs or are happy. I’m not saying they’re rolling in the dough either. I’m just saying they have jobs and they paid an amount of money for the luxury of having said jobs that will likely NOT destroy their lives . Yay success!
Remember that approximately 4.4M enroll in college. 58% get very little benefit from college because they never graduate. 15% are worse off after college – because of their heavy loan burden and/or low job prospects. 12% would have done great even without college.  So that leave’s the last 15% or 650,000 students, who are getting the advertised benefits of going to college even though they had to take out loans.
You have to ask yourself, are you going to be in that 15% (and do you want to be)? Would you bet hundreds of thousands of dollars for an investment that means steady employment 15% of the time and potential disaster 85% of the time? At this rate, maybe you’d be better off starting your own company. At the very least, you get some experience, and are unlikely to blow $70k/year for four years for the experience.
College is hardly a sure pathway to success. If you still don’t believe me, you can read one of the 8 million hits for “student loan horror stories.”

Times, They are A-Changing

When we are talking about successful college graduates, we are looking at  studies and estimates from college students who graduated decades ago. So while it’s likely true that in 1976, college graduates performed better than high school graduates, what was true for them is not necessarily true for students today. And if you look at the metrics today, you can see that the cost of college is so high and the value of a degree so low, that the investment is riskier than ever before.

Currently, 33% of adults aged 25 and older have a college degree. A decade ago, it was 28%. In 2000, it was 16%. It has been an continuous upward trend starting from 1940, when only 5% of adults held a bachelor’s degree. Currently, 13% of adults have a graduate degree, up from 8.6% in 2000.

So you can see, decades ago, having a college degree was quite rare and it would certainly help you stand out from the crowd. You were competing for jobs with people who didn’t have college degrees and that degree really meant something. Nowadays you are competing for jobs with people who have college and graduate degrees. And college tuitions have gone up precipitously, more than doubling over 30 years. Consequently, the college degree has lost a lot of value by becoming so common. Further, colleges have not changed their curriculum in order to provide useful job skills. Add to that the high tuition, and college is currently a risky endeavor.

Coronavirus Changes The Game

Because of the switch to online learning in college, students are starting to wise up about the lack of college value. Some students are withholding spring tuition payments unless the college reduces tuition due to the shortened year.

As one student striker notes: “If the university truly needs our tuition, this will be a big blow and they will be forced to lower tuition. If this isn’t a big blow, then it proves what we’ve been saying — they have a huge fundraising arm, and if this doesn’t affect them, they can afford to reduce tuition.”

Is the Value of College Completely Monetary?

It’s possible that college was the meeting place for someone very important to one’s career or life – say a business partner or a spouse.  It’s possible that college is about expanding your mind. I think college CAN provide these things, but at an incredible cost. 

This is a very expensive matchmaking proposition, but meeting your spouse in college may count as a benefit. Research shows that 28% of marriages are between people who attended the same college. I can’t easily put that information into my calculus into whether college is worth it (also without figuring out whether the marriage is happy or in any way successful) but perhaps some of these effects could be replicated if you moved to your chosen college’s town and used a location-enabled dating app. This is especially true if you’re thinking of attending a school like Brigham Young.

Of course, meeting someone is luck – not college. If you have hundreds of thousands to burn, you can attend college because you hope to maybe meet someone who will change your future. People who go to college, people who teach at college – they live in the non-college world as well and you can meet them there. It’s a very expensive proposition to spend tens or hundreds of thousands for serendipity. 

Who You Meet in College

Further, college isn’t even that great a place to hang out with like-minded smart creative people. Ivy leagues and other colleges are keen to funnel their students into prestigious, high-paying jobs so that the colleges can benefit from their success but college doesn’t gain a lot from encouraging creativity. College is about churning out the next generation of investment bankers and consultants.

I went to an elite high school with a rigorous admission test. This guaranteed a certain caliber of students that colleges are likely not going to achieve in the future as they move toward admission without objective measures like the SAT/ACT. Of course you can be an intelligent person who is not good at taking tests, but the most likely effect of removing the tests is the admission of more wealthy students who can’t hack the SAT without cheating. Yeah yeah, colleges are removing the SAT because they want more diversity! Believe what you want, but I have a suspicion that they will be earning a lot more tuition dollars after this move. And as I shall say again and again, already being rich is a very good predictor of success.

Let’s Teach Our Kids Some Real Personal Finance

Whenever I read about someone in college, I hear about their low-budget lifestyle – their survival on nothing  but ramen. But there is no irony in the scrimping on spending even a few more dollars on their health while dropping hundreds of thousands on college.

People always say “I didn’t understand what I was doing when I signed my student loan payments” but they don’t need to be taught how to eat on the cheap. You don’t have to be 20 or 30 or 40 years old to understand the costs in life. I don’t blame people for being scammed by colleges. It’s not that students don’t understand money – they just are lured by an industry of adults telling them the costs are ok when they’re clearly not.

Why College Is Not a Good Investment – in a Chart


I’ve summarized this article into the above chart. As you can see, I conclude that 15% of college students benefit from college, but 85% do not.

Though it made total sense for me to go to college 20 years ago, it might not make sense for someone like me to make the same choices today. A lot changes in 20 years. Beware of people who use their own experiences from decades ago as any evidence that college is a good investment today.

Is there an Alternative to College?

I know you’re going to say – going to college is still better than not going to college because you will have a higher median salary. Given the costs of college, that’s just not true. And if you’re one of those people – upper class or upper middle class, bright and hard-working – I believe you can succeed without college. Or at least you can take a few years off trying to. College will still be there when you’re done experimenting and traveling.

If your parents have saved enough to send you to college, it won’t cost them any extra if you take one year of their college savings and use it to:

  • start a business
  • support yourself in a job learning how to pay bills, cook, clean, etc.
  • travel and learn a language fluently
  • try a risky career choice – like acting, music
  • take classes online in coding, literature, philosophy so you can take more advanced courses if you decide to attend college

You could say, all you’ve lost is time, but you haven’t. For one, you can make up the year by taking more classes in college and graduate in three years. For the second part – you will have gained so much experience. You will know what it’s like to apply for a job and to support yourself. You will gain connections in an industry you might want to go into or you will know that this is an industry that you don’t want to go into anymore. You will learn how to travel, you will learn about other cultures, you will see opportunities. If you decide to go to college, you will have a better understanding of what you can get out of it, you will have more confidence and maturity, and you will have lots of stories to tell.

How to Make College More Affordable

I think if you can afford to go to a top college without accruing a lot of debt, it will likely be an ok choice. For others, college and student loans are a calculated risk. It might pay off, but it could very well be a huge mistake.  One should consider every opportunity to save money such as:

  • Taking many AP courses in high school to qualify for college credit
  • Making use of as many free or online learning modules as you can (so you know what unique classes and experiences college can give you)
  • Delaying college until you know what you want to study, and working and saving money in gap years
  • Applying for many scholarships and financial aid
  • Attending community college for your first 1-2 years and/or taking classes at the community college in high school or over the summers
  • Going to a cheaper college if you plan to go to graduate school
  • Working part-time in college (I knew a few people who worked full-time while maintaining a full course load as well)
  • Reducing expenses while in college (some of my tips for reducing costs in law school apply here)
  • Graduating early

Conclusion- Why College Is Often Not Worth the Cost

College can be a wonderful asset to your career and a fun and rewarding four years – but don’t get blinded by the fantasy and ignore the finances.

Author: Lisa

A Washington, DC attorney discusses the financial struggles facing women lawyers.

13 thoughts on “Why College Is Often Not Worth the Cost”

  1. I had three exceptional bright kids, and while they do have wealthy parents, college was still free to all three due to their academic prowess. In their case it paid off as it did for me. But I think the biggest key decision isn’t college vs. not college, it is selecting a high paying vocational major like engineering, IT, medical vs. something that ill prepares you for a good career. Liberal arts degrees have gone way down in value while STEM degrees have continued to provide payback.

    1. IF 1) you want to be an engineer/IT/Med; 2) you are good at it; 3) you could not get your job without a college degree; 4) you end up liking your job(s) and are healthy enough to work them; and 5) you have reasonable or no debt, then college pays off. But that’s a lot of if’s.

      My point still stands though. You point out three bright hardworking wealthy kids did well after going to college. You can take this as evidence that college works, but I still suspect college is more a merit badge than a stepping stone and bright hardworking wealthy kids wouldn’t go hungry without it.

      And I’d like to point out that I’m a bright kid with a liberal arts degree, and I turned out….ok. =P

  2. most of the very top colleges now have a no student loan component to financial aid. there is a long list but they are all highly competitive to gain admission. if i had a kid, which i don’t, i would encourage them to apply to those schools. if you end up at a top liberal arts school like williams with no student loans your chances are pretty good. all that being said i think a lot of students will take an unnecessary loan just to have a more comfortable 4 years.

  3. Very interesting post! I agree, college is great but it’s definitely not for everyone and it’s not the best financial choice in every situation.

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