Is a College Degree Still a Good Investment?

Photo by Alice Pasqual on Unsplash

It’s been almost three years since I decided not to go to college.

While it wasn’t easy at first, I’m now out-earning people twice my age and living in the city of my dreams.

Despite my success, one of my relatives insisted that, “a college degree will earn you a million more dollars over the course of your life”.

Why then, are so many college graduates struggling financially? Why is there so much pressure to forgive student loan debt if borrowers have an alleged surplus of one million dollars?

Statistics on Student Loans:

  • The average student loan debt in 2020 reached $38,792.
  • The average interest rate for said loans is 3.73%.
  • The average person takes 21 years to repay their student loans.
  • During those 21 years, the average person will have paid $56,006 in total (including interest).

Ultimately, $56,006 doesn’t seem so consequential in the face of an additional one million dollars. Hence, (assuming you fall squarely into these average calculations) college may be a good investment.

However, averages never tell the full story.

The average mid-level salary for any engineer is roughly double the mid-level salary for humanities majors ($70,000 vs. $35,000). Additionally, there are roughly 7.5 million people with more than $50,000 in student debt (which is much higher than the average debt).

Assuming you make $35,000/year and have $50,000 in student debt, you’d have to live off of $29,000/year (before taxes) for 10 years in order to pay off your loans.

Meanwhile, the average salary for a high school graduate is $38,373/year.

So while a college degree may be a good investment on average, there are many people for whom it is absolutely not.

What if that money were invested, instead?

The average college grad pays $238/month in student loans.

If they instead invest that money in a 401k, for example, at a conservative 5% annual return, they would accrue $102,709 over the same 10 year timeframe.

Now, I know it’s a little unreasonable to assume that someone without a college degree could spare $238/month to invest. However, it’s even more unreasonable to assume that a low-income graduate with debt could spare the same.

I won’t deny that most college graduates I’ve met are more financially secure than most high school graduates I’ve met. I also won’t deny that many drop-outs and opt-outs tend to value education and financial success less than those who get a degree.

How much of this mentality, though, is a deceitful societal narrative?

Social Confounders

College used to be the place to nurture intellectual passions, and a college degree used to signal an outstanding work ethic.

That’s not the case anymore.

In-house learning is obsolete in the age of the internet, and these days everyone gets a college degree regardless of their work ethic or competence.

Society needs to realize that people with successful traits will be successful regardless of their education, and we have to stop pressuring them into a life of debt.

With the right mindset, a college opt-out can far exceed the average income for high school graduates and college graduates alike. In fact, there’s a shortage of trade labor, and those jobs often make upwards of $48,000/year.

So, while a college degree may be worth a million dollars to some people, it certainly is not for everyone.



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Financial independence and personal fulfilment without a college degree