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"I had no idea it was going to cost $200k for my kid to go to college. He knows what he wants to pursue, and even though this is an insane amount of money, I feel like if we don't get loans we'll be cheating him out of his best chance for success. But this seems like so much. How can I know if it's worth it?" --or--
"I have the money, but what's the ROI on this transaction?"
If you're a parent, this has probably run through your mind. So I set out to create some sort of tool that would help my family make a proper financial decision. I created a very simple spreadsheet that calculates student loan payments, compares that with the projected salary for your child's major when they graduate, and then gives you an ROI figure. If the number is over 15%, then it's likely a bad return on your investment. Also, I put in a line item for mandatory allocation of 10% towards investments, with a calculator showing future worth.
I'm not selling anything, there is no pitch, no catch. I'm just a dad who wants to see his son succeed without going broke.
My son is 19. He took a gap year and then applied to several colleges. He was accepted to several, and two out of the three he was interested in gave him scholarships. The thing is, they were $250k total for tuition and expenses. I started to look at entry level and average salaries for his chosen occupation. I realized that something just didn't add up. We have the money, but to me this was really dumb money to spend. I don't mind forking over 80k if he were pursuing a STEM degree at the state university [he'd be on the hook for a good portion of it and if he did well we'd pay the balance upon graduation, think of it as a performance-based endowment], but 250k for an arts degree was off the table.
My spouse was arguing with me, my son was upset, emotions were high. I needed to create something that set down some facts and could illustrate what the likely future scenarios were, and then have a frank discussion on this thorny problem and how we could tackle this together. I made this spreadsheet to help frame the discussion so we could make principled decisions and avoid the panic and FOMO.
Turns out, we found several accredited, well-regarded schools that had 18 month associates as well as some that offered an 11-month intensive certificate program that would give him the experience and skills necessary to pursue his passion. They were a tenth of the cost of the colleges he was applying to. And he doesn't have to delay his career by 4 years and doesn't start off life with big debt.
As a parent it's my duty to exhibit smart fiscal responsibility and guide my kids into life with as much skill, confidence, and knowledge as possible. I hope this might benefit someone else out there who was shocked at the price of school and is looking for a way to make sense of these big decisions.
The spreadsheet is here, and instructions are on the sheet: Education ROI Worksheet-Beta
Take it, make a copy of it, and use it however you'd like. It's not perfect, it's a work in progress, but I think it's a good start to help make sense of the issues.
I know this is an entrepreneur forum. I know many of us feel like college is a waste of time, and that skill acquisition is the name of the game, and that entrepreneurship is available to anyone willing to work hard, serve others, learn, and develop good habits.
But the majority of people work as employees. As entrepreneurs, this is great because it means we have access to an educated labor pool and it's in our best interest to help people acquire the necessary knowledge without going broke because it means we get to pick the best. AND if you have a significant other who had their mind set on paying for their kids education, this tool helps frame the conversation in a sensible way.
"I have the money, but what's the ROI on this transaction?"
If you're a parent, this has probably run through your mind. So I set out to create some sort of tool that would help my family make a proper financial decision. I created a very simple spreadsheet that calculates student loan payments, compares that with the projected salary for your child's major when they graduate, and then gives you an ROI figure. If the number is over 15%, then it's likely a bad return on your investment. Also, I put in a line item for mandatory allocation of 10% towards investments, with a calculator showing future worth.
I'm not selling anything, there is no pitch, no catch. I'm just a dad who wants to see his son succeed without going broke.
My son is 19. He took a gap year and then applied to several colleges. He was accepted to several, and two out of the three he was interested in gave him scholarships. The thing is, they were $250k total for tuition and expenses. I started to look at entry level and average salaries for his chosen occupation. I realized that something just didn't add up. We have the money, but to me this was really dumb money to spend. I don't mind forking over 80k if he were pursuing a STEM degree at the state university [he'd be on the hook for a good portion of it and if he did well we'd pay the balance upon graduation, think of it as a performance-based endowment], but 250k for an arts degree was off the table.
My spouse was arguing with me, my son was upset, emotions were high. I needed to create something that set down some facts and could illustrate what the likely future scenarios were, and then have a frank discussion on this thorny problem and how we could tackle this together. I made this spreadsheet to help frame the discussion so we could make principled decisions and avoid the panic and FOMO.
Turns out, we found several accredited, well-regarded schools that had 18 month associates as well as some that offered an 11-month intensive certificate program that would give him the experience and skills necessary to pursue his passion. They were a tenth of the cost of the colleges he was applying to. And he doesn't have to delay his career by 4 years and doesn't start off life with big debt.
As a parent it's my duty to exhibit smart fiscal responsibility and guide my kids into life with as much skill, confidence, and knowledge as possible. I hope this might benefit someone else out there who was shocked at the price of school and is looking for a way to make sense of these big decisions.
The spreadsheet is here, and instructions are on the sheet: Education ROI Worksheet-Beta
Take it, make a copy of it, and use it however you'd like. It's not perfect, it's a work in progress, but I think it's a good start to help make sense of the issues.
I know this is an entrepreneur forum. I know many of us feel like college is a waste of time, and that skill acquisition is the name of the game, and that entrepreneurship is available to anyone willing to work hard, serve others, learn, and develop good habits.
But the majority of people work as employees. As entrepreneurs, this is great because it means we have access to an educated labor pool and it's in our best interest to help people acquire the necessary knowledge without going broke because it means we get to pick the best. AND if you have a significant other who had their mind set on paying for their kids education, this tool helps frame the conversation in a sensible way.
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