The other day, Funny about Money started a series on making your way toward financial freedom, the state where you find yourself independent of the day job and free to do what you want to do with your life. We identified several components in this project, all of them having to do with personal finance.
Today, let’s start with the first of those: Education
One issue we should bear in mind is the difference between true education and vocational training. A bachelor’s degree in business, engineering, or nursing (for example) may line you up to get a decent job, but it may not make you an educated person.
Education furnishes your mind. Broad reading, writing, thought, and discussion make you a wiser person and cultivate your ability to think logically, to recognize flim-flam, and to make good decisions. For that reason, a good undergraduate degree in the liberal arts is useful—maybe even indispensable—to anyone who hopes to take a leadership role in industry, government, education, and the law. Those of us who aspire to high-powered careers in any of those need a strong undergraduate degree in the liberal arts followed by a graduate or professional degree in business, law, science, or technology.
Some graduate degrees are scams and should be avoided. A master of fine arts in writing, for example, will leave you fully unemployable while teaching you nothing that you wouldn’t have learned by spending the same amount of time applying your bottom to the seat of your desk chair. Graduate degrees in vague new pushmi-pullyu programs with no real entry requirements, such as Arizona State University’s “master of liberal studies,” are similarly suspect: if you want a degree in the liberal arts, take the GRE and get yourself into a solid program such as English, history, or mathematics.
Undergraduate technical degrees are useful in that they provide high-level vocational training for young people whose cast of mind is not especially academic. Often the resulting job opportunities are better paid, at least at the entry level, than a bachelor’s degree in the liberal or fine arts will generate. Over time, however, people with bachelor’s degrees in subjects like business, education, and technology may need master’s degrees or professional certifications to move up in their trades.
On the college level, vocational training—which defines a large number of undergraduate and graduate-level programs—will set you up to get a job, assuming jobs in your major are available by the time you graduate. Vocational education includes degree programs in business, nursing, medicine, engineering, computer sciences, graphic arts, education, and journalism, to name a few. It must be remembered that none of these guarantees high-paying work. To the contrary, some, such as journalism and education, pretty much guarantee their graduates low pay. Some, such as accountancy, provide entrée to trades that make a good living but that may bore the pants off you.
Many people truly are not suited for higher education. Sometimes this has to do with the student’s level of maturity—some should delay college until they are focused enough to profit from it. Having to earn a living for a while speeds maturity and creates a much better college student. Others are more likely to succeed in the trades than in low-level white-collar jobs; in the case of young people who are not interested in school or who find study painfully difficult and discouraging, a short stint in a community college and a decent apprenticeship may be a smarter strategy. A person with skills in the trades is likely to earn as much as or more than an ill-educated college graduate. Remember that most millionaires in the United States are owners of businesses that provide services like pest control and plumbing. The beauty of the trades is that the work can’t easily be offshored. Even though some of these jobs pay little more than minimum wage, an ambitious young person can learn the trade well and then build his or her own business. Once you’re hiring someone else for minimum wage, you’re in a position to make a good living.
Choose wisely and choose well: consider first what you really want to do; then whether you want to do that for the rest of your life; and finally what you can earn with the credentials the degree provides.
None of this, as we all know, is likely to be cheap. A young person who’s savvy to personal finance or an older but wiser person who’s going back to school can find ways to minimize the damage. The idea should be to avoid a heavy burden of student loans, which can saddle a young person for years—even, possibly, for the rest of one’s life.
One obvious strategy that many people overlook is simply to take your first two years of undergraduate work at a community college. These schools are much cheaper than universities and are often close enough to home that you can live with your parents for an extra couple of years. Yeah, we know: what a drag! But have you priced apartments lately? Lower-division courses at community colleges are usually staffed with professionals who are dedicated to teaching, in contrast to universities, which often foist the scutwork courses onto exploited graduate students, underpaid junior faculty distracted by the grinding quest to attain tenure, or senior faculty more interested in their research than in teaching.
It’s important to be sure that courses you take in a community college will transfer to the university of your choice. Many state universities have articulation programs with local colleges, and some state legislatures have mandated that their universities accept credit from community colleges; however, these rules may not apply to out-of-state colleges.
If you’re an excellent student but can’t afford an expensive private college, seek “Ivy League public schools,” such as Michigan or Berkeley. If you’re fortunate enough to live in a state that hosts one of these institutions, by all means try to get in. Savings can be huge, and the quality of education is good. If you have to go out of state, consider living and working there for a year or two to establish residency before enrolling—most state schools require a local driver’s license and evidence that you or (if you’re still a minor) your parents have paid state taxes.
Whether you go to a community college or an in-state university, living at home can save a great deal of money, lightening the load of student loan debt by many thousands of dollars.
Working your way through school is a hard row to hoe, but the reward can be huge: freedom from student debt. The federal government has a work-study program designed for students in need. If your family’s relative affluence renders you ineligible for this program, most universities and colleges have their own work-study programs or part-time job opportunities that provide a small salary and enough flexibility to work around class hours.
Summers offer you the chance either to take on full-time work temporarily, racking up some savings for the following school year, or to speed your way toward graduation by taking coursework. Two summer sessions of six credits adds up to twelve credits, the equivalent of a full semester. In your lower-division years, consider a community college for summer school—just be sure, before you sign up, that your university will accept transfer credits for the classes you take.
An alternative to work-study is a regular 50% FTE job at a university or college. Most institutions provide a tuition waiver for employees. Pay, especially in public schools, is usually abysmal, but it should cover studenty lodging and help pay the other bills. Jobs not considered part of a work-study program may have rigid hours that preclude attending certain classes. However, schools are famously flexible (it’s part of political correctness), and so you often can obtain work on campus that will allow time to take your courses. Pay, though poor, is usually better than student work, and you get a full range of benefits.
Look for scholarships, fellowships, and grants to help underwrite the cost of college or vocational training. A surprising amount of free money goes unused, simply because people are unaware of the opportunities. Some are offered by local groups, service clubs, communities, and churches and are so specific that even candidates who qualify for them don’t think of looking for them. Check websites that aggregate information on scholarships, and ask at college and public library reference desks for leads to funding opportunities.
Some students come up with enterprises to help underwrite costs, such as the guy who realized he could make a profit buying back students’ used books for more than the bookstore paid for them and then reselling them for less than the bookstore charged. Find a need and fill it: this requires some ingenuity, but a microbusiness run out of a dorm room or an apartment can go a long way toward defraying the cost of education.
Speaking of dorm rooms and apartments, refrain from regular drinking, partying, or drug use. These cost a ton of money. You’re already spending enough to keep you in the traces for the rest of your life. Why make things harder on yourself?
Book publishers, seeing a captive audience, have turned textbook publishing into assembly-line fleecing of the sheep. Textbooks are so expensive that some colleges are seriously considering abandoning books altogether and having students use websites. This is a recipe for further dumbing-down of America’s already dumbed down educational system, but that’s another topic… Consider ways to keep at least some of the wool on your back.
First and foremost: buy books anywhere but at the campus bookstore. Amazon.com is almost invariably cheaper than college bookstores. Try to get your books used, and sell them back through Amazon, using the bookstore’s repurchasing program as your last resort. Look online for sellers and buyers; some online outfits offer a better deal than either Amazon or the bookstore.
A cheaper but less convenient alternative is to use the library. Many texts are put on reserve and so can be accessed during library hours; others are available for check-out and often can be re-checked for the better part of a semester. If a course’s texts are not on reserve, ask the professor if she or he will put them in reserve.
I don’t recommend asking the professor if you really need to buy the book. It’s extremely annoying. Faculty know about and dislike the cost of textbooks. If the professor didn’t think you needed the book for the course, he or she wouldn’t have put it on the syllabus! This strategy flags you in the professor’s mind as someone who’s in school for a rubber-stamp degree and who doesn’t care about the course, its content, or its value. It starts you off on the wrong foot: avoid!
Starting off on the right foot, though, is what adequate education or vocational training will do for you. Even if you have to go back to school later in life to obtain the training you need, a degree, a certificate, or an apprenticeship will help you to earn enough to position yourself for your future of financial independence.