Financial Literacy

In a USA Today story published today, Sandra Block questions financial return on investing in a college education during a recession. Citing one student who graduated from college and then lost her job, she paints a picture of the now-graduate who is struggling to pay back her student loans.

To this day, I have yet to see the complete value of my education, she says.

Of course she hasn't see the full return on her investment! She has been out for four years. In this pellet-from-the-feeder-bar, instant-gratification world, folks forget that investing takes time; even more time in an economic downturn.

Block continues with:

For years, an article of faith in this country has been that college is the
gateway to a better life. So deeply held is this belief that many students, such as Horn, borrow tens of thousands of dollars to attend prestigious public or private universities. But as the worst recession since World War II trudges into its 21st month, many graduates are discovering that the college payoff could be a long time coming — if it comes at all.

I will agree that it may be true that a college degree may not pay off. But, if you coast through college and you coast through life, then yes, you may not see a return. But facts (which can be stubborn things) show that college graduates earn more over time. Folks like me (and my brothers and parents) would argue rather convincingly that you don't need an Ivy League education to be successful. I wouldn't consider myself wealthy (I have Google ads on my blog for cryin' out loud!), but my degree from Ohio State has served me quite well throughout the years. There is a classic scene from Good Will Hunting:

See, the sad thing about a guy like you is in 50 years you're gonna start doin' some thinkin' on your own and you're gonna come up with the fact that there are two certaintees in life. One, don't do that. And Two, you dropped a hundred and fifty grand on a education you coulda got for a dollar fifty in late charges at the public library.

But there is something to be said for a degree. To quote my brother, Greg, "The only thing a bachelor's degree proves is that you can earn a bachelor's degree." And that proves you have work ethic, can prioritize and have basic time management skills.

We need to teach our high school kids about how to figure out a return on investment. And, that if you want to get ahead in life; you have to invest - mainly in yourself and in an education. Good education doesn't have to be expensive. But you need to get it. In a great piece in the Wall Street Journal set for publication tomorrow, William McGurn show that you don't need a four-year degree, but you do need to learn a skill. How do I add value? What can I do that can't be outsourced?

I have 12 years to teach my two young ones to ask those questions and then hope they figure out how to answer them.