During his weekly radio show, in May, New York's billionaire mayor, Michael Bloomberg suggested that middle-of-the-road students should abandon the idea of college and become plumbers. I disagree with Bloomberg, who received a Bachelor of Science degree from Johns Hopkins University and a Master of Business Administration degree from Harvard Business School.
While I often agree with the amply educated Mayor, and I certainly do not want to take away from the value of tradesmen such as plumbers, the discussion would be more productive if it were framed differently.
Education is important in so many ways, but let's look at the financial side.There is no denying that college degrees are expensive. According to research from October 2012, these are average total tuition, room and board rates charged for full-time undergraduate students in degree-granting institutions:
- All Institutions: 18,497
- 2-year Institutions: 8,909
- 4-year Institutions: 22,092
Last year, the average annual cost for the top ten most expensive colleges and universities exceeded $45,000. Keep in mind, none of these figures include additional necessities such as books, laptop and transportation.
Bloomberg is only looking at the immediate unemployment rate and not at the long term. The U.S. Bureau of Labor Statistics shows the financial benefit of education is clear. Without a high school diploma the median weekly earning is $471. With a high school diploma (or GED), that number jumps to $652. An Associate degree brings the median salary to $785 and a Bachelor's degree to $1,066. A doctorate degree comes in at $1,624.
Unfortunately, paying for those degrees just got even more expensive. Because of the inability of Congress to reach an agreement, interest rates on new federally backed student college loans doubled. As of July 1, subsidized Stafford Loan interest rates jumped to 6.8 percent. In real terms, that means an extra $2,600 per student over the life of the loan.
Be honest with your child and yourself. If you know that you cannot afford a private college, come clean and tell them that they should only apply to state schools or schools that will give them enough aid. There is no shame in setting expectations that are realistic -- it is much worse to let a kid get into school and then say "We can't afford that."
- Start saving when your child is born. Set up a 529 savings plan and fund it regularly. Have relatives contribute instead of or in addition to holiday gifts. Kids need to understand that they will also contribute to the college fund.
- Instill and inspire -- the world is a classroom. A very good way to help reduce the the high cost of higher education is through academic or merit scholarships. In order to get one of these scholarships, the student needs to have very good grades -- top five to ten percent of the class. Merit scholarships are related to academic performance, but can also be given for artistic or athletic excellence. Heavy involvement in extra-curricular activities strongly increases the students chances. This is a long term plan, once accepted, the student has to maintain good grades and meet proscribed standards in order to continue the merit-based aid.
- There are many grants that go unclaimed each year. Have your kid go online and look for ones to apply for.
- Direct your kids. Help your high school student to choose his education and career paths wisely. Consider a balance between a career your child will enjoy, and a path to employment.
- Have your kid take AP courses in high school which can replace more expensive courses in college.
At first glance, an article in MSN Money appears to support Bloomberg. It points out that 284,000 college graduates are making minimum wage, with degree holders taking jobs at companies such as Costco and Starbucks. However, the article then goes on to confirm my perspective: "people without an advanced education are getting pushed out of the labor market altogether. The 36 percent of American workers older than 25 with a high school education or less started losing jobs in 2007 and haven't stopped. About 767,000 fewer of them reported having a job in 2012 than in 2010, and 2 million workers in that demographic left the job market altogether during that span."
While a four-year traditional university is preferable, it may not be for everyone -- other post-high school education is also beneficial. Community colleges, vocational training and even online universities play a valuable role. They offer an alternative higher education and training that is more affordable and convenient.
Education is the starting gate for life. Set goals. Work hard. Aspire to be more than middle-of-the-road. The position of New York City Mayor is up for grabs.
Please share your experiences or comments on the value of education in the space provided.