Degree vs Experience

A college degree is really an investment. I started out thinking the issue is might be one of tuition inflation, which I talk about later, over salary growth. However, even with tuition inflation a college degree is still a good investment from what I can see. ROI would be a good measure of the worth of the investment.

This article talks about educational ROI.

https://www.investopedia.com/advisor-network/articles/calculating-roi-college-education/

My exercise below makes me wonder about that 18 year number and how it was arrived at. It could be when loans are paid off on average, which could include people who default (likely those ones that started and never finished).

Simple exercise using data from previous post with bar graphs
salary
median salary school cost over 40 years less education
High School Diploma 718x52=37,336 0 1493440 1493440
Bachelor Degree 1819x52=94,588 160000 3783520 3623520
Formatting lost during posting. Sorry.

Clearly a degree is a good investment.

If I look at education as a 15 year mortgage (could only pick 15 or 20) of 160000, I come up with a monthly payment of $1350/month at 6%. Total of 243,031. It is still better to get a college degree.

Relative to tuition inflation:

https://www.marketwatch.com/graphics/college-debt-now-and-then/

 

The problem I have with some of those stats showing higher income from getting a degree is that these people would likely do better even without college. Not showing up in these numbers is the huge segment of people who were born into dirt poor families. You're basically looking at charts of the most well off segments.

 

I started out thinking that the cost of education might be the issue, but after running the numbers I made the following statement.

Clearly a degree is a good investment.

Essentially it doesn't appear to be significant enough to make the investment a bad investment. Thinking a little more about this and this goes to what has been mentioned earlier, the type of degree can make a big difference. A degree in Artic history costs as much as an Engineering degree, but the ROI is less, particularly if you end up working in the fast food market.

 

Of course, some people are better equipped for success. Does education make the man or does the man make the education? It's not clear if you went to college, but assuming you didn't, where would you have been if you did? If you are successful now, would you have been even more successful? I'll even go out an a limb and say you are probably an outlier like Mr. Wrye as a young expat entrepreneur living in the Philippines.

Things like opportunity, timing, etc are very tough to quantify. How much of success is made and how much is luck.
In the end, it's all about preparing for life and education is just one piece of that. Another piece is experience as you call out. The numbers say having both is the best path to success. It's hard to argue that an education hurts you and I've shown a good ROI. It's much easier to argue that not having one does. Statistically speaking the numbers show that a degree clearly has value.

In the end, I think we just have different perspectives because we look at life through different glasses. What's right for most people isn't necessarily right for everyone.

In many circumstances, a degree begets experience, so it's not really one versus the other, but the best way to get the experience. If I want to work for General Motors as an engineer it's going to be a lot easier with a degree. I could also start my own company and do some really cool stuff which also might get me there, but my money is on the degree.

 

Software is really one of the few sectors where proof of experience and one's capabilities is given easily by an individual, with or without any sort of degree. Show me your github account and I tell you what good a developer you are. That's how recruiters in this industry roll, for good reason. But it's a little bit quick to dismiss degrees in general because of that "anomaly".

its much harder for a hardware engineer or chemist to come up with their own impressive side projects published for everybody to see and inspect. And it may well be impossible for a nurse or similar.

I'd always encourage my kid to get any education and degree they want. The classic "job" where you learn something and do that for the rest of your life is dead. learning how to quickly acquire new skills is the only really important thing. And that's best practiced by doing just that.

 

I'll refer you to Maslow's Hierarchy. Money is a means to an end, you can't eat it and it's not that comfortable to sleep on. Money is not evil. Using a financial terms to demonstrate why a college degree has value may be a little cold, but the fact is very few people are doing what they are passionate about.
Money does not equal happiness. Not having to worry how you are going to your kids what they need is priceless.

Passion is an interesting discussion. According to:
https://www.prnewswire.com/news-rel...is-passionate-about-their-jobs-300469952.html
only 13 percent are passionate, so I like to add a little bit of reality to the fair tale. Bass fishing doesn't pay that well for most people. Heck, a lot of people if asked what they are passionate about would say things that have nothing to do with money or a job. There are lots of unhappy millionaires.

By all means, go to college for something you have an interest in. I think most people do. Much easier to be successful following an interest. If it was all about money, we'd all be doctors and lawyers. I too have an Engineering Degree and I've worked for some very large companies like GM, GE and Boeing. I now work for a large IT hardware company. I like what I do, but I still call it a job. My customers are bleeding edge from a technology standpoint and do very interesting things. I'll leave it at that. Personally, it's more about being able provide for my loved ones and helping others when able.

 

Software development is an interesting example. I attribute that to it being a relatively new and dynamic technology. How many new languages have been developed over the last 20 years? The fundamentals behind Engineering Mechanics hasn't changed much in 100 years. I remember 20 years ago, high school kids that knew HTML could get $100/hr doing websites, then automated web development tools came out and supply approached demand reducing the profitability of such skills. I had a friend who would get trained in the next hot software (SAP/SAS/SF/Siebel) and make a killing for a couple of years, before moving on to the next big thing.

Agreed, AI/ML is the next big thing, along with data lakes which feed the technology. Many companies are under going a digital transformation to stay relevant.

As an example, how much data a car generates and what Tesla is doing with some of this data.

https://www.siliconrepublic.com/enterprise/data-privacy-connected-cars-infographic

https://www.colocationamerica.com/blog/how-big-data-drives-tesla