Do you know exactly what you want to do in life? The ideal situation is that you do and you follow the education path that will take you there. Sounds easy enough, right?!
If you want to be a plumber, you can apprentice with a reputable company or attend a vo-tech or trade school. If you want to be a lawyer, you need to set your sights on a successful undergrad that will allow you to enter your preferred law school.
However, many times higher education is selected out of desperation. This may not always be a bad thing, but you have to weigh the opportunity costs of this selection.
I’m definitely not in the ‘has it all figured out’ camp. It seems I’ve studied for every ‘next level of education’ admittance test and have followed through on some of them. The two most notable are the GMAT (MBA) and the LSAT (Law School).
Some of these decisions came out of desperation because I felt stuck in my path and the additional qualifications seemed like a good way out. I also thought I could be more successful and make more money by pursuing these paths.
Ever since we were young, we were taught to dream big. No one gasps and cheers for the kid who says he wants to be a truck driver. It must be something major like the President, a sports star, or a celebrity.
Once real life hits and most people aren’t astronauts or CEOs, it always festers in the back of our minds that we’re not quite good enough. The only clear answer most of us can see is more education.
If you’re happy with where you’re at, ignore all of that other stuff and enjoy your life! Find ways to improve your current situation by pursuing what you want and taking control of your money.
However, if you are considering higher education, make sure you think it through and consider all possible ramifications.
The first possible downside is the opportunity cost of further education.
If your company reimburses the expense of continued education, it very well might be a great opportunity. There are intangible benefits to furthering your education, one of them being the network you build.
However, if you’re going to quit your job and pay for school yourself, you’re hit with a double whammy. Not only will you be in debt if you can’t cover the expense with cash, but you will also have lost 1-4 years of income.
Let’s say you’re going back to school for a full time MBA (two years) and you’re leaving a salary of $45,000. I’ll assume you’ll pay $20,000 a year for tuition. Add up the tuition plus room and board and we’ll say you’re at $60,000 in student loan debt for the two years. Now, add lost wages for two years, and all of the sudden you’re talking $150,000 for the total cost of your MBA.
If you get a great job and make $65,000 out of graduate school, it will take you 7.5 years to break even on the deal (not assuming taxes, chances for increased salary, etc.). To get this number, take the total debt + lost salary ($150k) and divide it by the increased income ($20k).
This is also assuming you’re living the same standard of living as before and all of your extra income can go towards the debt. Many people higher their standards and expectations when they make more money.
There are other programs you can pursue part time that can provide a great alternative to quitting your job and going full time. I discuss the ‘investment’ piece further in “Is a college education worth it?“.
The second possible downside is you might not like or even find a new job.
You could spend 1-4 years on furthering your education, and graduate to find no jobs in the field or that you don’t want to even be in that field! If you make the decision for further education, it better be something you really, really want.
Instead of viewing further education as a ‘way out’, you should have clear goals you’d like to use it for. For example, I have a friend who’s an engineer and wants to get more into the business management side of things. It made great sense for him to get his MBA so he could move into his desired field.
However, I didn’t have any clear objectives of what I’d use my further education for. I just figured I would magically find my way once I started. For me, it just sounded like a way out and in all reality it was probably the easy way out short term.
So, if not further education, what are the other paths?
I have a close friend in higher education and he says that most business graduate schools are rip offs. Anything you learn there can be learned on your own without the huge expense and loss of income. It just takes a little courage, initiative, and creativity.
The first step is to find what you really want to do. Then, you need to find a way to educate yourself. You can find a mentor in the field, read some books about it, and you should definitely start researching companies that are in that field. Networking is absolutely essential to succeeding in any business.
For me, the answer is not further education. I don’t want to be a lawyer, and I don’t want to continue down a path where an MBA is required to move up the ladder.
I started my quest by finding strong mentors and continued with reading many books on various subjects I’m interested in. I’m now taking the first major step with my blog and will continue from there to build a business helping others take control of their lives. All much cheaper than going $150,000 in debt without an income!
Higher education might definitely be right for some, but I don’t currently believe it is for me. What is your experience with higher education? Was it worth it?