James Altucher, financial columnist and managing director of Formula Capital, joins the “college isn’t worth it crew” when he points out in this article in the Huffington Post, that at an average cost of $104,000 over four years, the benefits of college aren’t really worth the price:
Over the course of a lifetime, according to CollegeBoard, a college graduate can be expected to earn $800,000 more than his counterpart that didn’t go to college. $800,000 is a big spread and it could potentially separate the haves from the have-nots. But who has and who doesn’t?
If I took that $104,000 and I chose to invest it in a savings account that had interest income of 5% per year I’d end up with an extra $1.4 million dollars over a 50 year period. A full $600,000 more. That $600,000 is a lot of extra money an 18 year old could look forward to in her retirement. I also think the $800,000 quoted above is too high. Right now most motivated kids who have the interest and resources to go to college think it’s the only way to go if they want a good job. If those same kids decided to not go to college my guess is they would quickly close the gap on that $800,000 spread.
The trouble is that it’s based on the magic of investment, ignoring the seemingly obvious fact that one can also lose a great deal of money though capital speculation. Remember how people were supposed to be able to fund their retirements by investing their own Social Security money? Right.
The ability to make investments that will yield an almost six fold increase is very difficult to do. It seems a little questionable whether someone who didn’t go to college (or even most people who do) has the financial savvy to make that sort of investment. That is, after all, the point of college: to learn how to do things.
The other problem is for years Americans have been actively discouraged from making Altucher’s kind of rational calculation about paying for college, at least in part because going to college is about social class. The, perhaps tong-in-cheek, premise behind Altucher’s article is that he’s planning to dissuade his primary school-age daughters from attending college. But despite the fact that Altucher (who earned his undergraduate degree from Cornell, which now costs $37,954 a year) is fully aware of the way colleges are overpriced, it’s unlikely that when the time comes he’s actually going to refuse to pay for college.
Only in American, of course, is this sort of discussion valid. Much like with health care, no one outside of the U.S. would consider spending roughly the financial equivalent of a three-bedroom house to send a kid to college. Reasonably inexpensive higher education is something people in most advanced democracies take for granted.