@mjukr – If I had to do it all over again, I would do a lot more research into what a typical day looks like at various career stages and what it would take to advance and what the placement ratios are. I would also ask questions about the meritocracy/politics balance in the given “industry”. I would try to find out whether there was a difference between the official story and the real story. I would try to dig up dirt. Thanks to the internet, this is way easier now than in was 10 years ago I would ask both those who made it and those who did not make it to see what their explanation was. (Often those who make it think they did it because their skill and those who did not think they were unlucky).

The hardest part would be in trying to compensate for what kind of person I would be in 10 or 20 years. For instance, in terms of experience, values and attitudes (but not personality) I am very different now compared to ten years ago.

Depending on what the student debt is going to be (I would opt for none far preferring state schools over brand name schools), I would actually not be so concerned about salary levels. If the debt is 10k, they are not so important. If it is 50k, salary is quite important. If it is 100k, salary and placement is crucial!!

Remuneratively, my PhD has definitely NOT been worth it. Figure 4 years of grad school earning $25k following by 3 years as a researcher earning $40k and currently earning $68k. If I wanted to earn money, I could have done far better as a UPS driver ($65k) or a toll booth operator ($40k). I got class mates, which I used to help out with their homework, who left with bachelors and master degrees and today they are managers and VPs in industry in charge of their own groups and earning six digits.

On the other hand you could say that grad school gets you used to living on a low income level and it does not get you tempted to buy into mortgages, loans and nor do you get the wage necessary to develop an appreciation for shiny and expensive objects — basically because your life (research) is interesting.
Then there’s also the kind of rewards that money can’t buy … for instance, you can’t pay to get your name on a journal paper as the person responsible for first discovering something.

Seth, you are my hero! I hate that students are propagandized by the educational industry. My motto has always been, a degree only tells someone what your minimum ability is, it says nothing about your maximum.

I also think that higher education in particular is a racket. Economies and prices go up and down, but tuition never does! The market plays no role in forcing schools to deliver value for cost. Notice that when you work for a living there’s an exchange — you do the work and you get paid. But when you go to school you do all the work -AND- you give them all your money! And are the colleges and universities accountable? No. Students are forced to take bone-numbingly boring required classes taught by inept or abusive instructors, along with their regular courseload, as a way of “proving” they can obey the system.

Colleges and universities rely on us swallowing the idea that we are “less than” if we don’t buy their goods. Jacob talks about enslavement to debt – what about enslavement to the lies that get pushed into our heads?

I am THRILLED that you are in the educational system with your ideas. The most important thing is to follow our authentic dreams, develop our true skills, and give back. School and its hoops might do that for some people — if you want to be a dentist (really) then it’s important to learn a bunch of stuff about physiology, health, and dentistry. But there is NOTHING WRONG with wanting to be a farmer, an air conditioning mechanic, a hairdresser, or a dog groomer. In the old days, even royalty learned a trade — there were kings who learned blacksmithing and cobblery.

The university thing too often sells an empty promise — and again, is not accountable. We don’t get to sue them later for the useless degree and the huge debt we ended up with, while the regents and provosts drive around in their Audis.

Keep up the good work!

Where I live (Canada), student stipends and bursary are not taxable.

That is, when I was doing my master’s and I was getting a 30,000$ stipend, none of it was paid to taxes(which are quite high here). Even though I was not making much in gross dollars, my net amount was quite high.

I finished my degree with more than 30,000$ in the bank.

Students absolutely must take a Discounted Cash Flow approach to viewing college as an investment. The only thing is, I’ll bet very few at all ever do that and they’re not getting such help from parents.

Statistics prove that an undergrad degree, and a masters degree at an even higher level, can provide lifetime earnings that greatly exceed that of someone with no undergrad degree. That part is common sense, and doesn’t need to be debated.

However, it’s the cost that’s involved that can make some alternatives really good investments and others really poor alternatives. It should not be assumed that one should expect to go into debt to get a degree.

For example: one school may be private and cost $200,000 over 4 years, and another may be public and a commuter campus costing $50,000 over the same time period. Is it automatic that the more expensive private school will offer greater salaries and lifetime income than the public commuter school? One must weight the costs/benefits and discount the cash flows over a lifetime of projected earnings (though admittedly that’s hard to do). In that case, I would guess that an Ivy League education, for example, would provide a far greater NPV on investment than the public commuter school. However, if the private institution is not an elite school, then it might be a far worse investment than the public school.

Bottom line is that to some degree (not entirely, but to a large degree), a college education or advanced degree is an investment, and should be evaluated as such when compared to alternatives. Using a DCF analysis to come up with an NPV of the investments is a great idea, at least to ballpark the figures.

Here is my experience with education.

A while back, my wife decided to go back to school. She was making $40K, and after three (more) years of school we estimated she would make $60K. I did the math and came to the conclusion it would take around 22 years to break even from where she would have been without the degree (and I hope to be retired long before that). But she said it would make her happier, so even with my concerns she went ahead and did it.

Present day. She has graduated, and in the process of getting her degree she found new opportunities in her new area of expertise, resulting in getting paid much more than the $60K budgeted. So she now has more choices in employment, she is enjoying her work, and we will reach the break-even point 4 years after her graduation.

So for us it has paid off, but we took on substantial financial risks, and there was some luck involved. Like investing in the stock market, investing in your education is far from a sure thing.

If Parents would require this type of analysis of their high school children maybe we would graduate fewer Women’s Studies major’s with $200K loan balances. I am very pro education and firmly believe that additional schooling has many worthwhile life long benefits that may not easily translate into higher earnings.

However, the minute you start borrowing money to go to school you would be foolish not to treat this as an investment. Potential borrowers should carefully research what jobs might be available to them with their desired degree and what salaries are being paid.

One must remember to factor in the interest expense and the risk (remember student loans are almost impossible to have forgiven) before determining if the possible reward justifies the investment.

It is a shame that many families spend much more time and effort researching their automobile purchase then the purchase of the much more expensive and permanent education of their children. Thanks for addressing this important issue.