Paying for College is Not a “Cost”

This may be a reflection of my Chinese heritage, but the Chinese generally believe there are two things in life worth investing in. One is real estate, because they’re not making any more of it. And the second is an education. I’m not sure about real estate, but I’m certainly sure about an education.

In my view, our national conversation about college costs is really misplaced. First of all, when you purchase a stock, mutual fund, or real estate, you don’t generally consider that to be a “cost” -- you correctly classify it as an investment. You know that the investment may make you very rich or your investment might dwindle down to nothing. It’s not a cost in the sense of paying your utility bill, having your car maintained, or paying your landscaper to fertilize your lawn.

All the evidence demonstrates that even during the Great Recession jobseekers with at least a bachelor’s degree did far better in the job market than those without one. There is almost a direct relationship between the degree earned and your lifetime salary potential.

Rather than see college as a cost, let’s classify it for what it really is – an investment. As an investment, I also believe that some investments in college are terrible ones. If you’re paying tens of thousands of dollars out-of-pocket for a college that has abysmal job placement rates, or emphasizes athletics over academics, or doesn’t have a national alumni reach, then let’s face it. You’ve made a bad investment decision.

On the other hand, if you’re investing your money in a school that provides your kid with a terrific education grounded in the liberal arts and provides him or her with critical thinking skills and has a superb track record not only for job placement but also for graduate school placement, congratulations – you have made a wonderful investment.

Let’s change the parameters of the conversation. Let’s call higher education what it really is – an investment, with a great deal of risk involved. And let’s make that investment wiser with more information.