The ultimate goal of this online calculator section is to help you to think outside the box when it comes to choosing, planning, paying for, and paying off college.
Since there are few profits to be made selling you on minimizing the opportunity costs of college, or selling you on getting the most valuable education at the least cost, these will be the central themes discussed on the individual calculator pages within the college financial planning tools section.
I hope you will find the college financial planning tools and calculators in this section to be one of the few trustworthy resources for helping you to plan and manage your education dollars for the greatest financial and emotional returns.
To set the tone for what you will find on the calculator pages in this section, let's discuss a couple of pet peeves of mine that are related to selling parents and their kids on the importance of college.
Making Critical Life Decisions Before Being Qualified to Do So
Scientific studies have shown that the typical young adult is not capable of making wise decisions until they reach the age of 25. Yet we as a society demand these young adults decide what their lifelong livelihoods will be at age 18 or 19 -- before they've had a chance to experience the real world on their own.
Worse yet, these young adults are not afforded the opportunity to actually work in the field they choose until they have spent 4-6 years of their time and tens of thousands of dollars studying it.
In my opinion, internships (volunteering) in a chosen field should be a prerequisite to enrolling in college to study the chosen field. At least that way students would know first-hand whether or not they would actually enjoy working in the profession in the real world -- before spending so much time and money studying it.
Sure, everyone wants to earn what a surgeon earns. But give a young adult the chance to accompany a surgeon when that surgeon has to tell a family that their loved one just died, and the surgeon's coveted income-level might lose some of its appeal. This type of real world wake-up call could be applied to nearly every field of study. After all, studying a field and working in it are two totally different things.
Do College Graduates Really Earn More?
Well, that depends on three things:
- How much credibility you give to findings that report college graduates earn $1,000,000 more than non-grads over the course of their working lifetimes.
- Whether or not you factor in the opportunity costs of attending college.
- Whether or not you factor in the net-effects of higher tax brackets.
Now I'm certainly not suggesting that attending college is a waste of money. What I'm attempting to point out is that studies can easily be manipulated to find in favor of the researcher.
For example, considering "college graduates" includes multi-billionaires who graduated from college, it only takes a few multi-billionaires to make up the million dollar income difference between grads and non-grads.
Furthermore, while it may be true that college graduates earn a million dollars more in income than non-grads, how much of that million dollars is eaten up by a combination of higher marginal tax brackets and the opportunity costs of attending college?
For starters, if earning a million dollars more puts a college graduate into a 25% tax bracket versus a 15% tax bracket of a non-graduate, that means that at least $100,000 of the additional income will be going to just to pay the extra income taxes.
And finally, what if a young adult skipped college and instead invested the $100,000 in college costs and student loan interest, along with the 4-6 years of full-time wages they could have earned? Even figuring lost wages at $60,000 ($15,000 per year), if the non-graduate earned just 5% on their $160,000 investment, by the time the non-graduate reached age 65 their not-for-college fund would have earned over 1.2 million dollars in interest.
And sure, the billionaire-weighted college grads could invest the income difference, but that difference may actually be much less than a million due to higher tax brackets and student loan repayments.
The Most Important Question
No matter how much credibility you give to the findings that college graduates earn a million dollars more than non-graduates, a question that can't be answered by the study is ...
How many college graduates truly love their work?
All too often young adults end up choosing a field of study based on the wrong reasons. Reasons such as ...
- Because of the earning potential of the chosen field.
- Because of the high demand for workers in the chosen field.
- Because the chosen field has the easiest curriculum.
- Because the chosen field is predetermined by the parents.
In my experience, even if a student breezes through an easy, parent-prescribed curriculum and gets hired right out of college in a job that pays an enviable income, none of that really matters if the college graduate spends the next 40-years hating in their work.
In my case, once I finally experienced the joy of earning a living performing a work I love and believe in, I began encouraging my children to discover a work they love -- a work well-suited to their talents, abilities, genuine interests, values and personality traits.
If it turns out that the work they discover they love requires a college degree, then yes, I encourage them to enroll in college. Otherwise, if the work doesn't require a college degree, then they can probably get the training they need without experiencing all of the opportunity costs that come with getting a college degree.
Again, I'm not trying to discourage anyone from attending college. My only point here is to encourage you to think for yourself instead of relying on self-serving education sellers to do your thinking for you.
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how I went from being trapped in a work I hated to being free to work at what I love.