Most Americans today would probably agree with the proposition that success in education leads to success in career / business. Many parents spend a great deal of time and money preparing their kids for college entrance exams. Indeed, in 2004, the Census Bureau published results that showed the difference in average income between adults with a bachelor’s degree and those with just a high school diploma was $23,000.
But today, the costs of a college education has skyrocketed. A survey for 4 year and 2 year institutions, both public and private, shows that tuition costs have nearly tripled during the since the id 1980′s. On average, college tuition has risen to over $14,000 per year; almost double that for private colleges. And these costs don’t take into account the non-tuition expenses associated with sending a child to college. A whole school loan industry was born to support sending our children to college. USA Today reported in 2005 that the average undergraduate student left college with a degree and $19,300 in debt, paying on average $210 per month upon graduation. This represented a 60% increase from the early 1990′s. These trends operated across economic strata, with borrowing increasing among students from families in the top income brackets. The situation has only worsened since. Yet, according to a recent report by the Economic Policy Institute, median family income in the first part of the 21st century have actually declined 2.% in real terms. To quote the authors in the introduction to the report:
The answer to be gleaned from this year’s edition for people who want to know how to get rich is the same as for the little girl who wants to know how to become a queen: Be born that way. The book shows how the growing concentration of capital income and wealth among the very wealthiest few and the parallel shift within the economy from labor-based to capital-based income is fueling the widening inequality gap not just between the top and the bottom, but also between the top and both upper-middle and middle income families. The authors calculate that the shift is equivalent to an annual transfer of $3,043 from every wage-and-salary employee in the bottom 80% of workers to those in the top 20%.
Couple this with the growing trend in offshoring routine professional and white collar work, and the return on investment in a traditional college education is not looking that good for today’s families.
So what about those who have been successful in terms of growing their family net worth (vs. just growing their income). In his book The Millionaire Mind, Thomas Stanley published the results of his survey of nearly 1,000 families that had built a networth of $1 million or more, without having inherited it or attained through any other kind of largess other than their own work. He examined the factors that this group reported as contributing to their success. Good grades in school and high SAT scores were a neutral to slightly negative correlate. The key contributions of education for these individuals were:
Learning to fight for your goals because someone labeled you as having “average or less ability.”
Influential in determinig that hard work was more important than genetic high intellect in achieving.
Helping our kids develop and leverage their strengths, as well sa giving them the freedom to explore and expand their character are be true road map to success.