Why College Is Not Worth the Cost

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Many Internet articles inexplicably conclude that college is a must for your child. But based on basic economic facts, college is NOT worth the cost.
Costs for four years in college average between $44,000-165,000 (public to private schools) JUST FOR TUITION.  Adding minimal living costs, this total could easily balloon to $84,000-$205,000 at 5% interest. Meanwhile, the median entry-level salary for a college graduate is only $48,000. But, more and more college graduates are stuck in low-wage jobs when they can find a job at all.
Going to college could be the single worst financial decision of your life. If you look at it honestly, you’d be hard pressed to make an economic case for college.

Why College Is Not the Key to Success

Historically, college graduates tend to do well financially. However, don’t get the causation wrong. College does not make people successful. 

The top half of the income distribution earns 77% of all bachelor’s degrees; children of the top quarter of income earners gain 50% of all degrees. As the New York Times provocatively points out, some colleges have more students from the 1% than the bottom 60%.

Wealthier people go to college and wealthier people have better outcomes. College predicts these students’ success – it does not cause it.

And if college students aren’t from wealthy backgrounds, they’re smart and/or hard-working, as evidenced by applying to and being admitted to college. Going to college is irrelevant. The colleges saw these traits and rewarded them. But at no point did the colleges nurture these traits.

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. It’s an apples to oranges comparison.
It’s like concluding that going to the Olympics means you’ll run faster, while ignoring that Olympic-qualifying runners are faster than those who don’t qualify. The Olympics doesn’t make you fast – it just identifies who is fast. Similarly, college doesn’t make you successful, but colleges can identify who will be successful. You can attain the same outcome by being admitted to college as attending.

When High School Graduates Beat Out College Graduates

Another hole in the $1M analysis notes the study’s failures to account for 1) those 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.

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 makes sense given that those who forego college earn money earlier, have no student loans, and have 4 more years for your money to grow.

College Can Decrease Your Market Value

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.
Rather than being a surefire hit, college might actually DECREASE your market value. Are you starting to see how college is not a slam-dunk decision?

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. Currently, 33% of adults aged 25 and older have a college degree. It has been an continuous upward trend starting from 1940, when only 5% of adults held a bachelor’s degree.

While it’s true that in 1976, college graduates performed better than high school graduates, it is not true for students today. The cost of college is so high and the value of a degree so low, the investment is now very risky.

Why Student Loans are Not “Good Debt”

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. You can sell that duffel bag for money, whereas you can’t sell a college degree.

If you are wealthy, you assume you go to college. Those that are not wealthy have to weigh the options. Thus the people who are deciding about college 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. But I think it still shows that when we talk about college being a good investment, we are looking at old or biased data. I wanted to set the record straight. I’m so sick of people saying that college pays off when it clearly doesn’t for so many people.

4 Types of Students Who Do Not Benefit From College

Students Who Are Exceptionally Bright or Wealthy Don’t Need College

In 2012, 71 percent of students graduating from four-year colleges had student loan debt. That 71% represents 1.3M people. Thus, approximately 1.8M people graduated in 2012. The 29% of college students without loans (550,000 people) 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 without needing to borrow money. 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 already successful. People like Natalie Portman and Yara Shahidi at Harvard, Emma Watson at Brown, Brooke Shields at Princeton. 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 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 these people never attended college, they would be fine.

Students Who Don’t Graduate Do Not Benefit From College

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 one study show that some college credit is associated with slightly higher wages (~$6,000 more) and employment, it’s a curious study.  The highest bump in salary occurred between high school graduate ($37,675 mean earnings) and those earning between 1-12 college credits ($43,732). The mean salary actually fell by $3,000 for those with more college credits ($40,315 for 13-60 credits and $41,576 for 61+ credits). So more education does not necessarily lead to more skills or a bigger salary.

Plus more research is showing that nearly half of “good” high-income jobs are held by blue-collar workers, not requiring a college degree.

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 and making dropping out look so glamorous and profitable.

Students With a Lopsided Student Loan-to-Salary Ratio Do Not Benefit From College

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.

These are the people for whom going to college may have put them in a financial hole for the rest of their lives. These are the cautionary tales.

Students Who Go to Graduate School Did Not Get Their High Earnings From College

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, 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 summarize by saying 44% took undesirable or out-of-field jobs, 40% are set to default, 43% are under- or unemployed, and 37% went to graduate school, in part, because of the lack of opportunities from college.
Let’s say on the low-end, 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.
50-50 odds are not great for all your work and money in attending college. Would you bet $100,000 that you would be on the winning side, if financial ruin awaited you if you were wrong?

The Students Who Benefit from College

So after taking out the people who don’t benefit from college, there are 650,000 people left (half of 1.3M). The last group of people have low debt and found employment requiring a college degree at ok-paying jobs.
I’m not saying these people have dream jobs or are happy. They’re not necessarily rolling in dough either. The college success stories are those with a stable college-degree calibre job and an amount of debt that is not crippling. 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 leaves the last 15% (and this is a HIGH estimate) or 650,000 students who are getting the advertised benefits of going to college.

Are You Feeling Lucky About College, Punk?

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.”

TL:DR, The Math of College Costs

In the BEST case scenario, going to college is spending four years and, say $80,000, for the chance to COMPETE to work 40+ hours a week for 50 weeks to earn a salary high enough to pay off your college loans (and you might not even like the job).
The worst case scenario is that you spend $200k to attend college and end up at a job you could have gotten straight out of high school because you did not learn any relevant job skills in college.

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.

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.

Because of COVID-19 – 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 administrators have not done much to offset this thinking.

Some students are withholding spring tuition payments until 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.”

College in the Age of COVID Makes Even Less Sense

People have a lot of fond memories of their colleges, clouding their rational judgment. But colleges do not care about you.
Colleges unceremoniously kicked students out of their dorm rooms – rooms that these students paid for in advance. This forced students, who may have contracted coronavirus over spring break, to make quick travel arrangements home, likely infecting themselves and the rest of the nation. It’s not that the colleges cared about their students’ safety – they just wanted to avoid liability.
Colleges also refused to give exemptions to many students who had nowhere to go. Even with millions or billions in endowment funds, 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?

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. People who go to college, people who teach at college – they live in the non-college world as well. You can meet them there. You don’t have to spend tens or hundreds of thousands for serendipity. 

Who You Meet in College

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. College gains nothing from creativity but everything from 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. These days though colleges are moving away from objective measures like the SAT/ACT. The most likely effect of removing the tests is the admission of more wealthy students who can’t hack the SAT without cheating. As I shall say again and again, being rich is a very good predictor of success. Of course, meeting rich people is not a bad thing… but college is not necessarily the best place to meet smart, passionate people.

How College Stifles Your Education

With the ridiculously high cost of tuition, it makes sense for students to make every credit hour count. That means each student is incentivized to choose courses that will have a good return on investment. Those courses would be those that fulfill a graduation requirement, or that could be used toward a major or minor that would look good on a transcript.

This kind of incentive rules out taking random courses for the fun of learning. And the thing with education, and with life, is that you have some idea of what classes or teachers you may like, but you don’t know the whole story. Likely everyone has a friend or colleague that they misjudged. Everyone has some story when they thought this or that would be interesting, but they were wrong. Most people have a tale of serendipity – being at the right place at the right time, finding something new. College doesn’t allow that. You aren’t taking Portuguese, or calligraphy, or basket weaving for fun at $55k a year. And that’s a shame, because if you went to a cheaper online course, of course you would.

How College Stifles Your Career

At my college, becoming a college tour guide was a very prestigious activity and thus it attracted social climbers. Thus, when my family toured the university that my sister and I would eventually attend, we all hated it. Every single other university we visited had student volunteers as tour guides and we found those people to be delightful.

So much of college is like my college’s tour guide system – a ladder-climbing exercise. It obfuscates passion by getting people to compete for roles they don’t want while keeping out – others who might love the role. Especially at elite colleges, there’s such a mad scramble for prestige – it really gets in the way of what most people actually want in their lives – happiness and meaning. It’s hard to justify going to follow one’s passion when you’re investing so much money into college. And the funny thing is, if you didn’t go into college, maybe you wouldn’t feel so bad traveling the world, starting a risky business endeavor, or just opting out. Rather than giving you all the options in the world, college limits what you perceive to be your options to investment banker, doctor, consultant and lawyer. And surprise, surprise, these professions are some of the most miserable.

Let’s Teach Our Kids Some Real Personal Finance

Whenever I read about someone in college, I hear about their low-budget ramen-loving lifestyle. 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.” Yet people 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. Instead, they are lured by an industry of adults telling them the costs are ok when they’re clearly not. Let’s not be those adults for this future generation. Let’s give them clear guidance that college is often not worth the cost.

Is there an Alternative to College?

I know you’re going to say – college is a risk but there is no alternative. 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.

The Uncollege movement has some ideas of life without college. Billionaire Peter Thiel offers a scholarship for bright students NOT to go to college. The idea is, give a smart kid some money, and they’ll probably end up better than a cog in the student loan machine.

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 know what it’s like to apply for a job and to support yourself. 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

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.  College is an expensive gamble and you should treat it as such.

Author: Lisa

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

14 thoughts on “Why College Is 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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