SPECIAL FROM Grandparents.com
Over half of U.S. grandparents currently contribute or plan to donate to their grandchildren’s college funds, according to a 2014 education study from Fidelity Investments. Of those, 35 percent will kick in at least $50,000.
It’s a generous gift, no doubt. But is it worth it?
Thanks to $1.2 trillion dollars of school loan debt and a recent-graduate unemployment rate of 8.5 percent, there’s a burgeoning movement in America arguing that students should reconsider college, or even skip it altogether. You hear it from people like CNN’s Mike Rowe, whose Profoundly Disconnected organization exists to “challenge the absurd belief that a four-year degree is the only path to success.” You see it all over the national media and in dozens of emphatically anti-college books. You hear it from PayPal co-founder Peter Thiel, whose foundation offers a $100,000 fellowship to promising young entrepreneurs—provided they drop out of college to pursue their dreams.
One of those fellowship winners is Dale J. Stephens, author of Hacking Your Education: Ditch the Lectures, Save Tens of Thousands, and Learn More Than Your Peers Ever Will and founder of UnCollege, a program preparing young adults for the real world without a traditional university education. "There’s a lot to be said for having four years to grow up," he says. "But do we need to spend those years spending $50,000 a year?"
On Reconsidering College
"In writing my book, I talked to pretty average people with pretty average professions," says Stephens, "and the common thread is that what they did professionally had nothing to do with what they learned in school." According to a 2014 study from the Pew Research Center, this is true to an extent; while 60 percent of those in science fields said their major was "very closely" related to their line of work, 28 percent of employed Social Science, Liberal Arts, and Education majors said their studies didn’t relate to their current job at all. Another 29 percent said it was "not very close" or only "somewhat close."
Stephens, himself a dropout of Arkansas’ Hendrix College, argues that astronomical student debt—currently averaging $29,400 per student—is a solid reason for exploring other options. "There’s an economic case that you should go and major in computer science, but not everyone can do that," he says. And he’s not happy with the American "monologue" that college is the only way: "If you look at other countries, particularly ones with low unemployment rates, there are different paths, [and] multiple ways to enter the work force." For example, many students in Australia go through a Vocational Education and Training (VET), a skilled trade program boasting an 86 percent employment rate between ages 25 and 32; it's 8 percent higher than general program grads.
CNN’s Rowe is a big proponent of the skilled trade approach. The Somebody’s Gotta Do It host rightfully extols blue-collar jobs—construction, electricians, plumbers—as sensible career paths for some. "I would never say, ‘Don’t go to college,’ unless you can’t afford it, or if you’re not sure why you’re going," he told CNN. "I think what’s really important today is to make sure you talk about the value of a skilled trade the same way you talk about academic success." Bringing up the salary potential of blue-collar jobs could help. While day laborers have a tougher time making a liveable wage, more experienced tradesmen do quite well. Plumbers, for instance, earn a median yearly salary of $49,000, with the potential to make six figures down the road.
For those not inclined toward trades, two-year colleges, professional certifications, and enlisting in the military offer other alternatives to college, though job and salary prospects vary widely. There are so many options, it almost seems like a Bachelor’s degree isn’t necessary at all.
That is, until you look at the numbers.
A High School Diploma Ain’t What it Used to Be
For most American high school students, college remains the simplest and most direct path to a stable career and a good standard of living. Here's proof: According to the National Center for Education Statistics, in 2012, the median salary for a college graduate between ages 25 and 32 was $46,900. For those with only a high school diploma, it was about $30,000. More bad news: That number has dropped steadily for 35 years; adjusted for inflation, it’s actually $2,300 lower than it was 1979.
That’s not all. The Bureau of Labor Statistics reports, as of September 2014, college grads age 25-plus had a 2.9 percent unemployment rate. For high school-only grads, it was 5.3 percent (and 8.4 percent for those who never received a diploma or GED). Additionally, Pew says those with Bachelor’s degrees have higher job satisfaction, clearer career paths, and substantially lower rates of poverty. The statistics on that last point are particularly persuasive: In 2012, 6 percent of college grads ages 25-32 lived in poverty. For those with no college, it was a staggering 22 percent.
Without an advanced degree, your buying power is substantially reduced, as well. In 2012, the median home price was $242,100, according to the U.S. Census Bureau. That’s around 4 years of median salary for two high school grads between 25 and 32, but only about 2 1/2 years for the college grads. Again, this is quite a difference from 1979, when a pair of 27-year-old high school grads could buy a house with a little over three years' pay.
Needless to say, a high school diploma alone doesn't get you nearly as far as it used to. For those with a Bachelor's degree—about a third of Millennials over 25 have one—the road is much easier.
Proper Planning Prevents Poor Performance
Of course, students can't afford to stomp ahead without a strategy. They must choose their studies wisely, prepare for careers, and manage their debt loads in a new economy. They should know that, in general, STEM majors—science, technology, engineering, and math—are more actively recruited and highly paid than liberal arts majors, from graduation until retirement. They have to understand simply having a degree doesn't guarantee success; hard work and a good attitude go a long way. That holds true for any job, which is why parents and grandparents shouldn't dismiss alternative career tracks out of hand, either.
Ultimately, the next time you shell out for your grandchild's education, be reassured that it’s a worthwhile investment, as long as she has a plan.