As the federal government clamps down on student debt collection, I am reading a fair amount of advice about when and how much education young people should buy. This has always been a sound question but largely obscured by bombastic answers like “You can’t be too educated” or “Education is your best investment.” The latter statement may be true, but you can still invest poorly, no matter what the goal.
Meanwhile, I watched videos by the Washington Post and Suze Orman trying to help with this topic and found both to be sadly wanting in practical advice. So, I have tried my own hand at this hoping I might be a bit more concrete.
The first question is what occupation do you aspire to? This itself requires some realism and moderation. Perhaps you want to be a broadway actor or a sports talent agent. Now you have to ask yourself how many of those jobs are really available and how do you get there. I am amused to see colleges and universities offering degrees in these areas. And I wonder how many applicants ask how many grads with these degrees are placed in their chosen fields and at what salaries after three years of experience.
So what you want to be and the likelihood of successful placement are the front end questions. Want to be a teacher or a nurse? Prospects today are quite promising. Want to be a novelist or a video game creator? These are speculative careers where some make millions while the vast majority have long hard roads ahead. Not to say they won’t be fulfilling. But they are likely to be economically challenging.
The next question in your education purchase is the cost to secure the degree and the time investment. I recently represented a parent whose child aspired to be a chef. He was laying out $60,000 a year for his son to attend the prestigious Culinary Institute of America in Hyde Park. I noted that while this degree was going to instantly open doors of employment, this is a field where you can secure reliable employment at no cost and secure great training while employed; again at no cost. Walk into your favorite pattiserie with some baking experience and tell them you’ll work for $12 an hour. My bet is that you will instantly be handed an apron, a toque and a chance to watch experts create what you aspire to.
Meanwhile, aspiring teachers, nurses, lawyers and architects have more challenging milestones to pass. All require an undergraduate degree and some will go far beyond that. So how does one measure a proper amount to invest in that training?
To me, the Pennsylvania Department of Labor provides a great resource. It can be problematic, but there is no 100% predictor of outcomes in this arena. I came to it in litigation conflicts over what people can earn in a given field of employment. The website is CWIA and here it is:
Workforce Statistics (CWIA) | Department of Labor and Industry | Commonwealth of Pennsylvania
So, you have suggested to your child that while he is as handsome and certainly as talented as Alec Baldwin, he may need to be a bit more modest in terms of his career search for the time being. The kid comes back and says he wants to be a teacher. That’s a sound choice and just about every undergrad school in America has a progam. But the cost will vary from $20,000 to $80,000 a year or $80,000 to $320,000 in the aggregate over four years.
What do these jobs pay? Let’s ask the Department of Labor what they know.
Center for Workforce Information & Analysis – Occupation Profile
There lot’s to learn here but there is a button for Employment & Wages. Then go to “Teachers” and start looking for the type of teaching job your child wants to consider.
I went to “Secondary School” on the somewhat wonky website and found data that entry jobs in secondary teaching are starting at $54,000 a year. Realize that is a statewide average and that your child teaching in Lycoming County is not going to earn at the same rate as teachers in suburban Philadelphia or Pittsburgh. But, this website allows you to navigate from county to county. It turns out that Lycoming County teachers earn just a little less than the Pennsylvania average and that similarity bears out as the teacher transitions from start to “experienced.” Actually the data seem to show that the average wage isn’t all that different across the state. But also bear in mind that these are averages and incorporate wages for private and parochial school teachers (usually slightly lower).
Now it’s time to look at cost. Teachers in Pennsylvania seem to start in the mid $50,000 range and top out in the high $80,000 range. That should help govern your investment decision on whether the kid should go to Gettysburg or whether West Chester University might be as good. There are times when you can bargain hunt. The best architecture schools in the U.S. are M.I.T. and Harvard. But George Tech is ranked No. 8 and outranks its ivy rival the University of Pennsyvania. Georgia Tech is about half the price of its lofty competition and if you happen to be a Georgia resident, the cost is ridiculously low. How about moving the child to Georgia and letting her work for a year to become a resident? The four years savings of doing that would appear to be more than $80,000.
The point of this is that we have long assumed that every dollar invested in post secondary education is a dollar well invested. But, as with all investing, the outcomes range from poor to excellent and those outcomes are often unexpected. Bill Gates dropped out of Harvard but has done OK. Again, we don’t know where life will lead us but if it is going to lead us into debt, we should at least study the data and compile a map. Finally, note the title of this article. This is your child’s career and he or she should be doing the research and playing a major role in the decisions. Unfortunately, divorce lawyers are too often saddled with the consequences where a couple allowed their child’s educational aspirations to rule household finances for years at a time. Don’t become one of those casualties either as the student or the supportive parent.