Three degrees below zero

Written by on May 28, 2018

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The American dream starts with the American education.  Everyone knows that if you want to get ahead, school is the answer.  Even past your required 12 grades, if you want to succeed, the obvious (or at least most common) choice is to go to college and get a degree, or three.  We don’t always know why we need the degree, just that it’s probably the answer.  Anyways, it gives us something to do and give us some hope that our piece of paper will be our magic carpet to the life we desire.

The Dirt:  Success is going to school and getting a degree.

There was a time when higher education was based in education and not just getting a degree.  It was the acquisition of knowledge and skill with the piece of paper being what happened after you achieved a certain level of competence.  Perhaps there is still a remnant of this old system but as with anything great, there will be those who see the opportunity to capitalize on such greatness for their own great profit.  This is no slap on the wrist to those folks who have set the trap, rather a wake up call to the new reality of our higher education system. What if your belief in higher education is correct but the system you’ve been told to use is lacking both the higher and the education?  Even the great Mark Twain quipped, “I never let schooling interfere with my education.”

“Most people (70% to be precise) go to college to start below zero…literally in the hole….in life.”


I dunno

This is not a treatise on the demise of our higher education system.  There are many great institutions that train, develop, and prepare students to work at levels required to move medicine, technology, and our economy forward.  If acquiring these skills is necessary to participate in your chosen career path, then school might be your best option. In this aspect, isn’t school only a tool to get you from where you are to where you want to be?  

Why is it then that we go to school (or back to school) to figure out what we want to do.  This is an expensive lesson in the basic economic concept of ROI (again, likely not taught in our primary schools).  ROI, simply put, is the ratio of what value you get in the future in exchange for what you must give up today. Using school to ponder your life’s purpose is like buying a Ferrari only to find out you want to go a block down the street.  You now own a vehicle that’s overqualified, you paid too much for it, and it’s worth about half of what you paid for it the moment you took it off the lot, and will continue to depreciate over time.


Working for a living

The lesson gets even more expensive when you consider the cost of such education without any guarantee of working in that field.  According the Federal Reserve Bank of New York, only 27% of college graduates actually work in their field of study. This means that over two-thirds of graduates were unable to find a way into their field.  Or another way of looking at it, they did not have to graduate to work where they are working.

What’s more, if you consider success to be a measure of freedom – enough money to do what you wish and the time to do it – then we find a strong case to make for entrepreneurship.  Do most people really get wealthy working for someone else? So how is that we must get a degree to work for someone who doesn’t need one? This might seem like a more challenging path until you consider the challenge of being underpaid and underappreciated for 45 years at a job only to find out your 401(k) cannot retire you.  Again, not a judgement, just another piece of information to take into consideration.


Dire in the hole

Finally, let’s explore the true cost of going to college without any specific intent.  Most people (70% to be precise) go to college to start below zero…literally in the hole….in life.  Surely we can look at the $1.5 trillion student loan debt, or the 11.5% student loan default rate, or the 45 million people with student loans and pretty much see we have a train wreck around the next curve in the tracks.  Instead, let’s look at a very specific example that might apply to you.

Let’s assume a $20,000 per year total cost for college and a 5% student loan rate that you will actually pay back with 10% of your income post-graduation.  You attend a 4-year college, graduate, and head to the workforce. If you get a $40,000/year job and pay back your loan at $4000/year, it will take you 61 years to pay it back.  Yes, you might hit retirement age and still owe money. With an $80,000/year job and pay back the loan with $8000/year, it will take you less than 15 years. By comparison, looks great, but that still could be a significant burden.

If we tack on the opportunity cost of paying the loan instead of investing, we can horrify ourselves to sleep tonight.  If we were to put the $4000/year into an investment instead of to the loan over those 61 years, assuming 10% interest rate, we’d have over $26 million.  The $8000/year invested likewise would give us $267,000 after 15 years, which if left alone (no further contributions) for another 45 years would yield well over $21 million. Again, not a judgement, just another factor to consider.


If you find the ROI on your desired career path in life doesn’t lend itself to a debt-ridden college degree, here are a few other things you can do with the $80,000.

  1. Start a business.  From Richard Branson of the Virgin Empire to Dave Thomas of Wendy’s to Larry Ellison of Oracle, there are thousands of people who’ve built their empire the old-fashioned way.  Hard work and mental toughness. Most had very little money to their name, so you’d be ahead of the curve.
  2. Solve a need, get a patent and license it.  If you’re not the build-a-company type, then you could use your creativity to solve a need and sell it to someone who does want to build a company or movement around it.  If you don’t think you’ve ever had a good idea, you’re not paying enough attention to yourself.
  3. Hire a mentor in your desired field.  Outside of formal education, there are many ways to learn new skills.  There are mentors who can help teach you, apprenticeships for those that are more hands-on, and an endless sources of book and audios about everything under the sun.  Don’t forget, if you want to be successful, find a successful person and do what they did.
  4. Invest it for 60 years at 10%. If we assume an average salary of $100k for a person’s lifetime, that would add up to $6 million.  As we’ve seen, in either income scenario above, our opportunity cost of paying the loan over investing the money was more than $20 million.  The cruelest part is that you had to work for the $6 million while the money would have worked hard instead for the $20 million.


The good news is that you now have a choice.  I understand you were told that college was the only way.  It’s not just your parents that are smiling at this advice, but the schools and the banks as well.  If you can take the lesson of ROI and run the numbers, you may set yourself up for running a better life down the road.  The alternative may be a hole from which there is no escape.

“The only time my education was interrupted was when I was in school.”

–George Bernard Shaw

I appreciate you for spending time with me.  I challenge you to share this with every high school student and recently-laid-off adult you know.  It just might save their life. We’ll meet again at the top, for the bottom’s much too crowded.

Josh Zepess


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