One common scenario, a student is told that they will make more than a million dollars more over the course of a lifetime with a college degree, so they borrow the average price of tuition or 24,000 a year. At the time the student finishes college he/she is $100,000 in debt.
Investment 101 Math
1. it takes on average 5 years to graduate college which is 5 years of lost income.
2. Students are coming out of 4 year degrees with $100,000 worth of debt
Assuming a loan payment rate of $10k/year on the student debt, the student is out 5 years of income for the time attending school and 10 years of paying back $10k in student loan debt. Assuming that instead of not-working and acquiring debt the student worked for 5 years and put 10k in an investment account where money generally doubles every 10 years. After 15 years, the non-student would have over $250,000 just from the money s/he did not have to go into debt to pay for college. In 25 the same non-student would have $500,000 and in 35 years, $1,000,000.
Not only does the college student lose out in lost earnings and interest for 5 years, but has to pay back money and interest after college so the time where money has the most time to grown in a person's early years, is lost.
Ask any retirement planner. A person that puts money away in their 20s and 30s will be much better off if they put in no money afterwards than a person that starts investing in their 40s.It is no misstatement that "The bachelor's degree? It's America's most overrated [and overpriced] product," says education consultant and career counselor Dr. Marty Nemko (http://tinyurl.com/b27ojp).
Nemko is also a disbeliever of University claims that college students make a million-dollar bonus over their lifetime. "There could be no more misleading statistic," . First, just look at the numbers above. Secon, the statistic misleads because many successful college kids would have been successful whether they went to college or not.
The statistic is a false product of self-serving college presidents and politicians eager to buy political favor by burdening young people with debt. Higher enrollments and government loan programs may be good for them , but they are making lots of our kids miserable, indentured and poor.