Why College Makes Sense for Your Kid
By Larry Light, Editor-in-Chief
Aug. 1, 2014
College? Isn’t it too expensive? And given high unemployment among Millennials, what’s the point anyway? Financial advisors increasingly wrestle with these questions. Clients want to know whether the exercise is worthwhile.
The overwhelming answer is: Yes. We’ll discuss this in a minute. But it is darned expensive, with higher education costs as much as $60,000 per year. Well, there are remedies for that problem.
In that spirit, we’re running a sweepstakes for a free college education in conjunction with National Financial Advisor Week, Sept. 15-19. Run by our parent organization, AIQ Inc., this contest will cover expenses for a student entering a four-year college in fall 2016. Other ways of paying for college include 529 savings plans and student aid, which you can find out about at studentaid.ed.gov.
Barry Glassman, founder of Glassman Wealth Services in McLean, Va., wrote in an article for us: “You want to give your children the best chance of success. Funding their education is one of the best ways to do this.”
College is worthwhile, the record shows. As David Leonhardt writes in the New York Times: “For all the struggles that most young college graduates face, a four-year degree has probably never been more valuable.” According to the Economic Policy Institute, getting a four-year degree allows you to earn almost double what those without one make.
In fact, MIT economist David Autor, writing in the journal Science, calculates that the real cost of college is negative $500,000. In other word, over a lifetime, grads’ superior earnings eclipse the college price tag. It’s a half-million-dollar benefit to graduates.
Young people (ages 20 through 24) with a college degree had half the unemployment rate of those without. Moreover, stats from the National Center for Education Statistics show that 83% of those who graduated in spring 2008, right before the worst financial cataclysm since the Great Depression, are working today. While the flip side of that is that 17% are not working, note that people pursuing graduate degrees are in that 17%.
So when you are planning with your advisor about how to chart your offspring’s future, remember that the more education they get, the better. They will thank you for it.