Jul 31, 2020
This week, I’m talking about how to pay for your kid’s college and save for retirement at the same time. And today, I’m talking about the importance of considering the ROI or the return on investment of college.
Would you ever spend $100,000 or more on something without expecting a big payoff in return? Of course not! But people do it with college all the time.
Kids go to college without a clue or a direction of what they want to do with their degree after school, all the while racking up student loan debt and spending your hard earned money.
When I was in college, I worked in the admissions office. My job was to learn to walk backwards giving campus tours, and then for a couple months during the summer, I would meet with big groups of incoming students to help them register for classes and answer their questions about campus life.
That was about 15 years ago, but I still remember one overbearing father in particular, who was picking the classes his daughter would register for....Hovering over her at the computer, telling her which classes she was going to take. At the time, I remember thinking that his daughter should be the one selecting her classes, not him. But now, I get his logic.
See, he was paying for these expensive classes, and he didn’t want any of his money to be wasted on bowling electives.
College is an investment...a very expensive one. So I encourage you to think about this today:
What is the expected 30 year net ROI? In other words, what is the amount of money earned by an individual over the course of 30 years minus the total tuition cost. Is the selected school and the major chosen going to payoff in the long-run?
I find that a lot of parents are happy to keep writing checks and flushing money down the drain for expensive college bills for a worthless college degree that won’t have any practical applications in the real world.
When you and your college-age kid view college as an investment - and it is - you can make clear-headed decisions about how much to spend, which school to attend, which classes to take, and which majors should be selected.
That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.
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