A bunch of people e-mailed me about the Drop Out and Grow Rich article I posted yesterday. A friend of mine pointed out a few things, most importantly that I failed to give the college grad interest on his money. Fixing that (and making him pay interest if he was negative, but only after the first 4 years of college) put him very close to the high school grad with private school money. Never charging him interest for being negative got him slightly above that same person.
Then it was pointed out that the difference in earnings wasn’t 900k as the college-mongers claimed. It was more like 1.3mil. I had no good data on salary increases, so I assumed the inflation rate. I guess it stands to reason that after a while job experience means more than the degree, so the gap gets smaller.
If I fudged the grad’s income to equal a 900k lifetime earnings difference, the Dropout with Private School money is again the winner, but is still followed closely by the grad. If I fudge the dropout’s starting income (to $29,692) to get the 900k difference, the grad still beats the dropout with public level money, but only by 300k. Also, the dropout would be beating him until age 58.
People also pointed out that college loans and such reduce the cost of school, and that most people who don’t go to college aren’t going to have 22k a year to play with.
What does this all mean? Mainly that the experiment is flawed. It’s impossible to get accurate data. I was trying to get more and more info to make it more and more accurate, but there are too many conflicting sources. There are also far too many individual factors to make this an accurate representation of YOUR experience.
The reason I wrote the article was to get people thinking, and to realize that college is not NECESSARILY going to get you more money. The 900k figure always bothered me because it makes it seem like college is a guaranteed ticket.
And in truth, I think everyone should go to college for a year or two. It’s a fun time and is an important experience. Not the school, but the social life. I had some of the best times in my life there, and I’m very glad I went for a year and a half. I’m also very glad I dropped out.
What prompted me to write the article is that I see a lot of people who have no intention of even using their degree for a profession. They stay in because of parents, apathy, or because it’s “the thing to do”. I also see a lot of budding entrepreneurs who are just waiting to get out of college and have no interest of ever getting a real job. I firmly believe that all of those people should drop out immediately.
On the other hand, if you don’t want to be an entrepreneur and are still trying to figure out what you want to do, staying in school is probably a better idea. It’s easy to get exposed to a lot of different subjects there.
When I was in school, I was there because it was very important to my parents that I stay in. No one in my father’s family had ever gone to a four year university until his generation. The same was true of my mother’s family. My mother was the first in her family to go to college, and she had gone to Columbia. Her parents were very poor when they were young, but they worked very hard and built their own business (after working up to four jobs at a time) which was very successful. Rather than amass their money and distribute it when they died, they invested a portion of it for every child in the family when he was born. That money was intended to pay for college.
My mother’s dream was for her children to go to college. After Columbia she went back to school at UT to get a Master’s degree. Needless to say, education was very important to her. When I called her to tell her that I was dropping out of school, she was FURIOUS. I knew this was the case, and was the main thing holding me back.
But I knew I had to drop out – I would have considered myself a huge failure if I ended up at a typical 9-5 job. I wasn’t learning anything that would help me with my own business, and I just didn’t like doing the work. I felt like it was a waste of time for me to do most of it, so often times I would refuse to complete assignments or study for tests.
For two months my mother barely spoke to or acknowledged me. I hated hurting her, but I knew that it was what was best for me, and that ultimately that’s what she really wanted. As time went on she started talking to me… mainly along the lines of “When are you going back to school?”
The irony is that now our relationship is better than ever. All of the arguments over school, report cards, and majors are gone. She’s seen that I can support myself without a degree, and that I really am very happy. My parents even let me use their house as collateral when I bought my house – a testament to their faith in me now that I’ve proved myself.
My grandparents were also understanding – I was worried they’d be angry I used the money they gave me for business, but they were very supportive.
So take a look at your situation. What benefits is your degree going to get you? Why are you in school? What would you do if you weren’t in school? Money is important, but what’s most important is your happiness. Which will lead to greater happiness down the line?