Josh Kaufman

Bestselling Author, Business & Self-Education

How to Get a Valuable Education Without Mortgaging Your Life

When Kelsey and I moved to New York City, we made a game of identifying the “rules" of living in New York. Every place has its own little quirks and implicit rules about how things work, and searching for them is quite fun.

One evening, as we were exploring the East Village, we came across a little stand that specialized in mixing fresh fruit and vegetable juices. We were thirsty, so we went in to see what they had. We chose a 8oz bottle to go - it didn’t have a price tag on it, but we expected the cost to be reasonable.

That little bottle of juice ended up costing over $## 9. (It was good, but not that good.)

Not long after our juice adventure, we were picking up some groceries from the local market, and decided that cookies and ice cream sounded like a good complement to the movie we planned on watching that evening. There was no price tag on the cookies, but we expected the cost to be reasonable. That package of cookies cost $## 8. As it turns out, the same package of cookies from another store less than two blocks away cost $4.

That’s when we formulated one of our rules of New York: “if it doesn’t have a price tag clearly displayed, don’t buy it." If you don’t know what something actually costs before you decide to purchase it, it often costs you much more than it’s worth.

The Price of a College Education

“Price is what you pay. Value is what you get."

Warren Buffett

In the market of goods and services, college education is unique in the respect that people typically assume that no price is too high to pay for a “quality education." According to , a college financial aid website, the average cumulative debt for a student who has just completed an undergraduate degree is $22,500. For students who choose to pursue an MBA program after undergrad, total average cumulative debt is $41,687.

The implicit (and sometimes explicit) assumption is that any amount of money spent on higher education is money well spent, since it will always improve your ability to get a high-paying job after graduation. As a recent New York Times article points out, many recent graduates are finding out the hard way that this assumption isn’t quite true:

“You often hear the quote that you can’t put a price on ignorance," said Ezra Kazee, who has $29,000 in student debt and has been unable to find a job since graduating from Winona State University in Minnesota last May. “But with the way higher education is going, ignorance is looking more and more affordable every day."

An oft-quoted pro-higher education statistic is that college graduates will make $1 million more than non-graduates over the course of their working life. As a recent article in Forbes points out, this statistic is very misleading:

Like many good cons, this one contains a kernel of truth. Census figures show that college grads earn an average of $57,500 a year, which is 82% more than the $31,600 high school alumni make. Multiply the $25,900 difference by the 40 years the average person works and, sure enough, it comes to a tad over $1 million.

But anybody who has gotten a passing grade in statistics knows what’s wrong with this line of argument. A correlation between B.A.s and incomes is not proof of cause and effect. It may reflect nothing more than the fact that the economy rewards smart people and smart people are likely to go to college. To cite the extreme and obvious example: Bill Gates is rich because he knows how to run a business, not because he matriculated at Harvard. Finishing his degree wouldn’t have increased his income.

All the while students have been lulled into thinking of the extra $1 million that will be theirs, they have been forced to disgorge an ever larger fraction of it in pursuit of the degree. While the premium that college grads earn over high schoolers has remained relatively constant over the past five years, the cost of acquiring a degree has risen at twice the rate of inflation, dramatically undermining any value a sheepskin adds.

Offsetting that million-dollar income discrepancy is the $46,700 four-year cost of tuition, fees, books, room and board at a public school and $99,900 at a private one—even after financial aid, scholarships and grants. Add all this to the equation and college grads don’t pull even with high school grads in lifetime income until age 33 on average, the College Board says. Even that doesn’t include the $125,000 in pay students forgo over four years.

Whenever you take out a large loan for any reason, you’re essentially mortgaging your future earnings. Starting your independent life tens of thousands of dollars in debt (before factoring in things like car payments, housing, wedding-related costs, etc) is a major burden that most college students simply don’t consider before enrollment.

The primary reason people spend decades working in jobs they hate is to pay off personal debt. Fortunately, you have a choice in how you go about educating yourself - a choice that can save you hundreds of thousands of dollars over the course of your life.

9 Ways to Get a Valuable Practical Education Without Mortgaging Your Life

  1. Recognize that most of the value of a higher education degree is in social signaling. It’s true that many employers will screen out your resume if you don’t have at least a bachelors degree. It’s a short-sighted policy, but it’s a reality, so the best thing to do is find ways to obtain a bachelors degree as quickly and inexpensively as possible. Reputable online accredited colleges like Excelsior offer test-out options, minimizing your time investment and cost.

  2. Recognize that higher education is not as useful if you plan on starting your own business. If you already have skills you can use to create value for other people, no one cares where you went to school. If your goal is to become an independent entrepreneur, you’re best served by investing your time in improving your skills and actually launching the business.

  3. Recognize that all education (including higher education) is fundamentally self-education. Teachers, professors, and advisors can help guide your learning, but it’s always ultimately your responsibility to learn the material. If you’re capable of succeeding after graduating from a highly-selective private college, you’re capable of succeeding after graduating from a state college / community college / online program - or without graduating at all. In the words of Jeffrey Pfeffer, professor of organizational behavior at Stanford, “If you are good enough to get in, you obviously have enough talent to do well, regardless."

  4. Separate price from value. It’s common for people to associate high prices with high quality, but you can often find huge educational value by taking advantage of inexpensive resources. If you do your research, there are many ways to minimize your educational costs: borrowing books from the library, using the internet for research, taking online courses, volunteering as an assistant or apprentice, etc.

  5. Self-finance as much as possible. The less debt you take on, the better - look into ways to generate income while learning, either by working a day job or running a side business to cover living expenses. Avoid the temptation to rack up credit card debt - find creative alternative ways to fund your education.

  6. Minimize your living expenses. The less money you need to live on, the more resources you can devote to educational opportunities and tools while minimizing your total debt burden. Resist the temptation to keep up with your peers when it comes to material possessions: simple exercises like “100 Things" can help you realize that you can live a very rich life without much stuff.

  7. Invest in quality tools and experiences. Trying to teach yourself on crappy tools doesn’t make sense - effective learning relies on fast and accurate feedback, and the friction created by poor tools is a very real drag on your ability to improve your skills. If you’re teaching yourself computer programming, get a good computer; if you’re learning a second language, find a way to live in a country where that language is the primary dialect. As a rule of thumb, get the best quality tools you can afford.

  8. Focus on learning economically valuable skills. In the immortal words of Zig Ziglar: “You will get all you want in life if you help enough other people get what they want." The more you increase your ability to create real value for other people in the real world, the more you’ll prosper, regardless of what aspect of life you choose to focus on. Don’t ignore less economically useful skills like philosophy and history, but avoid operating under the assumption that knowledge in these areas will somehow translate directly into income.

  9. Focus on learning directly from practitioners. Find a few people who are already successfully doing what you want to do, then find or arrange some way to learn from them directly. The lessons practitioners teach you will always be the most valuable, and you’ll learn how to make your goals a reality by following their example.

Follow these tips, and you’ll be well on your way to obtaining a practical education without giving up your personal and financial freedom. Education is great, but education with freedom is even better.

Published: April 20, 2009 Last updated: April 20, 2009

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