Student Debt Exceeds $1 Trillion. Is College Worth the Investment?

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Secondary education in the United States drastically increases in price every year. Total student debt in the U.S. now tops $1 trillion, surpassing even credit card debt. (And we know how much Americans love their credit card debt -- all $712 billion of it.) Student loans drown more than two-thirds of college graduates in an average of $35,000 of debt.

At the same time, our perception of how valuable college really is continues to deteriorate. The global recession of the late 2000s left many college graduates underutilized or without a job in an ever more competitive job market. Recently, a poll by Allstate and the National Journal found that 52% of Americans do not believe a four-year college education is necessary for success. Americans have historically revered the idea of higher education, but many are now asking whether the costs are worth the gain, especially given the rise of free or affordable options such as online courses and experiential education.

Is college still a worthwhile investment? Let's dive into the details.

Option A: The traditional four-year degree

In Scenario A, you choose to invest in a college degree. If you pick a small university or specific degree program that suits your interests, you may benefit from hands-on learning and networking opportunities. If that weren't enough, the Department of Education's College Scorecard database reports that on average, college graduates earn $1 million more over their lifetimes than high school graduates.

At face value, this seems like a triumph for the U.S. secondary-education system. However, we can't forget to factor in the cost of tuition, which has inflated faster than the price of any other product since 1978. Tuition is astronomical in large part because of the corporatization of the modern university. Your money goes not only toward your education, but also toward a growing administrative bill. Universities are criticized for building expensive on-campus mini-cities in order to entice high-paying out-of-state students and outdo other campuses.

While top universities, such as MIT and Harvard, produce high-earning graduates and therefore a high return on investment, lower-tier universities with high costs don't do as well. Shaw University, for example, generates a negative annual return of 15% for graduates. The typical five-year Shaw graduate spends $106,400, racks up $31,160 in loans, and earns an average of $35,100 within five years of graduation, according to a PayScale report. Moreover, according to the Federal Reserve Bank of New York, the bottom 25% of college graduate students may fail to earn a salary above the median high school graduate.

On top of that, 68% of students take more than four years to graduate, and 44% take more than six, according to the 2014 documentary Ivory Tower . In other words, you don't know how much your education will really cost you until you're finished.

A traditional college education can certainly pay off. It may even enable you to get rich while doing a job you love. However, you need to weigh the cost of tuition, the long-term cost of any debt you'll accumulate, and your potential future earnings before you decide to enroll.

Scenario B: "Uncollege U"

If Scenario A doesn't look all that appealing to you, there are a myriad of alternative learning options. PayPal CEO Peter Thiel created a fellowship that offers students $100,000 to drop out of college and start their own businesses. The Thiel Fellowship, now boasting $1 billion in aggregate company value, continues to inspire a network of 104 fellows and alumni who champion the "Uncollege movement."

Meanwhile, Uncollege , created by a Thiel fellow, expands the traditional idea of the "gap year," which is the extra year some high-school grads spend traveling and exploring before heading off to college. The experience-based program, called Supported Self-Directed Learning, incorporates real-world experience, which is a powerful resume-builder that employers value highly. "Skills -- not degrees -- are what matter most," states Uncollege.

In this sense, Uncollege may be a supplement to college, rather than a replacement. But many Thiel fellows, Uncollege graduates, and participants of similar programs may never need to go to college, as they are supported from day one by mentors in creating their own business. Of course, this path is more suitable for entrepreneurs, freelancers, independent contractors, and anyone else who wants to work in a field where a four-year degree is not required to get your foot in the door.

Meanwhile, the Minerva Project , a for-profit organization, provides alternative courses to students living communally and traveling to different cities around the world for the price of $10,000 per year. Other alternative options include intensive online courses from a growing number of providers, including Udemy, Skillshare, and Coursera. There are also opportunities to watch free lectures such as TED talks and Open Yale Courses . You can also take advantage of free online platforms such as language-learning app Duolingo .

Ultimately, it's important to take a serious look at the options and costs a prospective college student will incur. What tangible skills you bring to the table and who runs the company (whether that be you or someone else) will drive your career opportunities and thus your financial status. Explore alternatives, and consider integrating experiential and online learning opportunities into a hybrid education plan.

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