Is An Expensive College A Good Investment? The Definitive Answer

The answer to this question is almost always “no”.  In fact, if you’re interested in making a good living, you can land plenty of fantastic jobs without a college degree. But before we get there, you have to understand a little bit about the misguided reports and studies that have been published that try to answer this question.

Many of the people who write articles on this subject are fancy-pants journalists who went to fancy-pants colleges.  They are still paying their student loans.  They are up to their eye balls in debt and they are puzzled as to why they don’t have a good credit score.  Regardless of how they come down on the subject, they usually miss some pretty core issues.

A recent study by found that public schools have a higher return than private schools for the most part. That part, they got right.

But they go on to say that the students at more selective schools do better than those who attend less selective schools. They assume that the school has something to do with the students’ ability to be successful. They didn’t even consider or test the idea that the students who attend these schools are the “success factor” well before they even apply for admission. A go-getter is obviously going to apply herself at a competitive school. What’s the surprise when graduates from these schools do well? They would have done well had they gone to any school.

These studies also point to the high-earnings of students from top-ranked schools like Harvard, Princeton and Yale. They don’t account for the fact that the kids who attend these schools are already from pretty well to do families. That just might have something to do with the fact they make some good money.  The studies you’ll see that try to answer this question look at the averages and of course, that’s meaningless. You don’t get a college degree in “averages”. You get one in physics, math, engineering, or surfing. Why waste time averaging the income of the scientists with the surfers? Stupid study.

I recently heard an HR expert being interviewed.  She said that after 5 years, the impact of where our degrees come from is completely neutralized.  So according to this woman’s experience, students might get a bump right out of the gate. But after a few years, your abilities is what counts – not what school you attended. (I wish I could have sourced this woman but I was driving at the time.  Safety first.)

Having said that, you might ask if college (any college) is worthwhile. The bottom line is that college is financially worth it as long as three conditions are met:

  1. You know what you want to do for a living.
  2. A degree is a requirement to advance in your career.
  3. You don’t spend more money than you have to achieve your goal.

You know what you want to do for a living

If you have limited resources you have to have financial priorities.  So if money is scarce, don’t waste time or money. Would you buy a yacht if you didn’t know you liked sailing?  Well that’s about what you’ll spend on a college career that will be dry-docked if you don’t have a plan to use that degree.  Maybe private career colleges are a better fit.

But let’s be clear.  If you know you want to be a business professional, you’re going to need a business degree.  It may not matter than much if you get a degree in Finance, Accounting or Marketing… but you will likely need a degree.

If you have no clue what you want, don’t go to college.  You may end up working on a fishing boat in Alaska (and make more money while having a lot of fun). Why waste the time and money going to college unless you have a pretty good idea that it’s going to be useful to you in your career?  And how can you know that unless you have at least a general idea about what you want to do for a living?

The degree is a requirement to advance in your career

Really, I think I’ve made my point above. I could never have become a financial planner without a business degree.  My accounting degree helps me understand investments of course even though I don’t do taxes or accounting.  Still, having this background is really helpful.

On the other hand, a man I know never went to college and owns 25 very popular restaurants throughout the United States.  He has more money than I’ll ever have and didn’t need college at all.  Sure, college probably would have been helpful to him along the way, but the four years he spent working behind the counter and doing dishes gave him a lot more opportunity.  In fact, had he gone to college, it’s possible that he would not have been as successful.  He would never had agreed to be a dishwasher and work his way up. He’d have demanded to have a middle management position—where he’d probably still be today.

You don’t spend more money than you have to

For a very select few, a prestigious undergraduate college degree is going to be a ticket to better law schools, medical schools and jobs. That’s undeniable. But for most of the people who attend these high-priced schools, it will be a waste of money. The experience my daughter is having right now convinces me that you can obtain an expensive college education for a fraction of the price.  For those of us for whom college does makes sense, that will be a good decision.  But our financial success in life is determined much more by our personality traits and work ethic than by the name of the school we attended.  Sorry…it takes a little more work than that.

Is that to say a liberal arts education is a waste? No… not really.  Getting a degree in Greek Mythology is probably very rewarding on a personal level for the right person. I’m just saying it’s not going to help you get out from behind the counter at Flippy Burger.  In summary, think about college as you would any other investment – because outside of your home, it’s likely to be one of the biggest investments of your life.

If you don’t know what you want to do, even generally, get a job and figure it out before you go to college. If you do know what you want to do and it requires a college education to demonstrate responsibility and to give you the background you need, go get it. Just don’t spend more than you absolutely have to.

What role has your degree played in your career? What would you do differently?

This article is from Neal Frankle, Certified Financial Planner. He is also the owner of Wealth Pilgrim, a personal finance blog.

Last Edited: May 8, 2014 @ 2:13 pm The content of is for general information purposes only and does not constitute professional advice. Visitors to should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.


  1. Statistically, college grads have a lower unemployment rate. That in itself is a very attractive reason to get a degree. To take the other side though, the trades particularly auto mechanic and repair trades seem to be recession proof. Finding the right career is more important that whether you should go to college or not.

  2. Krantcents, I completely agree. I think college for college’s sake is not a smart move. Finding the right career is the key.

  3. I sort-of agree and sort-of disagree. If your goal is to be an entrepreneur — like the man who owns 25 restaurants — then you don’t need a college degree at all; you need business savvy (which you can learn simply by reading books). Ditto if your goal is to be, say, a journalist.

    But if you want to be a medical researcher at a prestigious (read: well-funded) biomedical research lab, going to a fancy-pants school will help you for the rest of your life. Ditto if you want to be a hedge fund manager.

  4. Amanda Gates says:

    If you have the wherewithal to get into the elite schools or colleges, it does help. I agree that if you don’t have the resources to pay hefty fees for such elite educational institutes, it would be unwise to get trapped into debt if you haven’t planned out the repayment in advance. There are some niche subjects for which studying in reputable institutes will be a career-booster.

  5. Amanda and Charleen and Paula make a lot of sense. Certainly there are careers that college is important for. I hope that by reading this post folks will weigh the alternatives rather than simply writing big checks mindlessly.