Is University A Bad Financial Decision?

University is a path to some well-paid jobs. It is often necessary to obtain work in the professional sector. But in the age of expensive living costs, huge HECS (or whatever they’ve changed the name to this month) debt and very long degrees, is it necessarily a smart financial decision?

 

Degrees Make Money

Research in both the US and here shows that people with university degrees make more money than people without them, on average. Data from the US Census Bureau shows that people with a high school diploma earn $1.2 million over a lifetime, those with a bachelor’s degree earn $2.1 million and those with a master’s earn a cool $2.5 million. So the cold hard facts of earnings spell a picture of some pretty big jumps according to education. But is that the whole story?

Early Debt, Early Expenditure, No Savings

Jack Hough from SmartMoney wrote a fascinating article on the worth of degrees, arguing that under the current system, a university degree will hamper a person financially throughout the rest of their life. The reason? Huge loans to earn the degree in the first place (a bigger problem in the US than in Australia) leading to early debt and a loss of years in which to save for retirement, pay off other debts or invest. Simply put, the slow financial start will have consequences throughout the following decades.

Extended Expense

Compounding this issue is the death of three or four year degrees. Firstly, people who are required to study part-time simply to afford being at university, thereby extending their bachelor’s to five or six years. Secondly, degrees in areas likely to make money- engineering, architecture, law, medicine- are now typically five years. Even in education, unlikely to result in huge earnings, a master’s degree is increasingly typical, making it a five year degree also. It’s a longer period out of the full-time workforce, and greater debts to pay off once you get in there.

User Pays Systems

Higher education became commercial by necessity. The extent to which university has become business drives me wild, but I understand that free education wasn’t necessarily sustainable policy.
That said, the time has come to look frankly at whether the quality of the education is comparable with the amount you are paying for it, especially considering it is having other adverse effects on your finances. University is now a product. Education is Australia’s fourth largest export. You are a customer, and deserve the quality of service that you would in any other setting. You expect your food to be decent when you pay for it at a restaurant, and there’s no difference when it comes to university. If your class sizes are too big, the contact hours too few, or you’re expected to work with poor resources, you, as a customer, have a right to kick up one hell of a stink.

Cost Versus Benefit

While acknowledging all this (and I truly believe students should be demanding a far higher quality of service for what they’re paying), university is not solely about cost. It’s also about benefit. If you are solely interested in money and setting up your finances early, think about doing an apprenticeship. Great money once you graduate, and guaranteed work. A financial win.

But if you want to learn more or work in the professional sector, then the numbers are not the entire picture. The benefits, whether fiscal or more intangible, outweigh the cost.