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What Does a Degree Really Cost – A lot More than You Think

College is expensive. Everyone knows that; it’s not exactly secret knowledge amongst those who have even thought about seeking a higher education after the high school level. But how many of us really factor in just how truly expensive college is? Factors like student living, time lost, interest paid and a number of other variables have made college perhaps the most expensive endeavor most of us will attempt in our lifetimes.

And a commitment like that shouldn’t be taken lightly.

So if you have at least a smidgen of doubt about the college experience and its true cost today, we invite you to keep reading and find out what the entire picture looks like through a more realistic scope.

Factor #1: Lost Time

Working a 40-hour-a-week, minimum-wage job with two weeks of vacation in 2011, you would have made approximately $14,500 per year. If you worked that job instead of college, you would have made a total of $58,000. (And when you consider that a lot of people don’t graduate from college after only four years, you start to get an idea of what might be lost).

Again: that’s just minimum wage. And while many people do work part-time or even full-time through their college years, there’s no doubt that the time they spend in classes is time they could have spent earning money.

If a family was to keep a child until the age of 22 and encourage them to keep all of the money they saved in those four years and put the money away for retirement in the stock market (average annual rate of return = about 12%), that money would become $2,441,309 by the time the child turned 55. The power of compound interest shows just how much potential money is lost during key years of a person’s life. What does a degree really cost? Potentially millions upon millions of dollars.

Sure, the idea is that college repays your investment by helping you get a better job. But better jobs can be found through hard work in the job sector just as easily as they can be won by college degrees, and the person who avoids college has 4 years of experience on the person who went to college. Either way, it’s hard to debate that time spent at college is time that could be spent in other valuable ways.

Factor #2: Interest Paid

If you think that paying for college is as simple as paying the price of tuition, then you should probably major in finance – because you need it.

The fact is, you have to pay interest on any loans that you take out to pay for your time at college. And as you go through your late 20’s, you’ll realize that you weren’t paying for college simply while you were in college – you’ll continue to pay for it perhaps even decades later. And guess what’s happened in the meantime? Interest has been collecting on that debt. This is, of course, the opposite of what’s been happening to your money if you’d simply taken your college tuition payments and put it in the stock market – there it would be earning compound interest for you rather than accruing against you.

The hope is that going to college is worth this steep cost. But college had better really prepare you for the outside world if it’s going to justify exactly what you’re paying – and will continue to pay – to attend.

Factor #3: Student Living

One of the “perks,” so to speak, of going to college is that you get to experience the college life. Room and board are typically inexpensive compared to room and board in the outside world.

But living as a student is living that you wouldn’t have to worry about if you weren’t attending college – any extra costs, therefore, have to be attributed to the decision of attending college. Books cost an additional thousand per year – and that’s being conservative – and commuting to college also means you’ll be spending more on your car and gasoline.

After a few years at college, these costs add up. The college quotes you a tuition price but doesn’t tell you how much you’ll have to spend to simply live as a student. Those costs are extra.

Factor #4: Real-World Opportunities

Most people will find that their college experience simply didn’t prepare them for the real world – getting a job and paying their bills did. It’s that lack of experience in the real world (as well as the lack of exposure to its opportunities) that perhaps presents the most glaring and indirect cost of going to college.

Yes, it’s hard to quantify what missed opportunities mean. But how many people find that their college degree really afforded them the opportunities it was supposed to? How many people with theatre majors are acting professionally rather than waiting tables? How many people with English degrees can avoid the teaching route and actually apply their skills in real and valuable ways? How many people won internships through school that they couldn’t have won outside of school?

Factor #5: Wastefulness

Many people go to college as an undecided major. Is it possible to be more foolish with one’s education than not to have a specific goal with it? It’s wasteful to spend so much money on a college education that isn’t pointed in one specific direction. A doctor who attends college and medical school knows that he needs certain expertise to treat people. But what does an “undecided” major ultimately get to do with the information they learned through their college experience? In truth, they have just wasted a lot of time – and a lot of money.

Making college worth the cost is not very difficult. People who attend trade schools and know what they want to do can quickly turn their learning experience into real-world income-generating opportunities.

But the way college is viewed now – almost like an extension of the high school diploma – is wasteful. Young people are growing up slower and entering the real world with hesitation instead of an intrepid spirit. Perhaps that’s the greatest hidden cost of all.

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