Navigating College vs. General Education Courses: An Economic Analysis

When deciding on your educational path, it's crucial to understand the financial implications of each choice. This article delves into the economic advantages and disadvantages of pursuing a degree in general education and completing general education courses as an alternative. We will use a hypothetical example to compare the financial trajectories of a high school graduate (HS GRAD) and a student enrolling in college (COLLEGE), focusing on their earnings, living expenses, and savings over a period of four years.

Economic Analysis: HS GRAD vs. COLLEGE

For this analysis, we will consider the following assumptions:

The HS GRAD will live in a hovel (equivalent to a college dorm room) for four years. The COLLEGE will rely on loans to finance their education. The HS GRAD will work a part-time job, earning an average of $10 per hour, with half of their income going towards savings. The COLLEGE student will pay for full-time tuition and living expenses through loans, with no immediate income during the four-year period. Both will experience substantial opportunities for investment over the course of ten years.

HS GRAD: A Thorough Financial Breakdown

Year 1: If the HS GRAD works 20 hours per week, their annual income will be around $10,400. Of this, 50% ($5,200) will be saved, providing a substantial savings account in a hovel.

Year 2: Assuming the same income and savings rate, the total savings after two years will be $10,400 (year 1) $10,400 (year 2) $20,800.

Year 3: Continuing the savings pattern, the total savings will increase to $31,200.

Year 4: By the end of the fourth year, the total savings for the HS GRAD will be a substantial $41,600.

COLLEGE: A Different Path with Loans

The COLLEGE student will have significantly different financial challenges and benefits.

Tuition and Living Expenses: Assuming tuition and living expenses total $20,000 per year for four years, the total cost will be $80,000. If loans cover this, there is no immediate financial burden during the college years.

Investment Potential: After four years, once they have graduated, the COLLEGE student can begin investing. Assuming an average annual return of 7%, here's how the investment would grow over ten years:

Year 5: Investing the $80,000 in a savings account, at 7% interest, the investment would grow to $139,197 after five years.

Total Savings by Year 10: By the end of ten years, the investment would grow to approximately $244,465, assuming the same 7% annual return.

Comparing the Two Paths

HS GRAD: After ten years, the HS GRAD would have accumulated $102,416 in savings, starting from $0. This significant amount of savings is a testament to the power of consistent saving, even on a modest income.

COLLEGE: By the end of ten years, the COLLEGE student would have a net worth of approximately $244,465, after accounting for the initial investment. This sum would enable them to live comfortably without debt, despite the initial cost of education.

Conclusion

The analysis clearly demonstrates that while the HS GRAD may have a quick accumulation of savings, the COLLEGE student, investing the funds wisely, will end up with a significantly larger net worth in the long run. This financial model assumes average income and investment returns, and real-world results may vary.

Potential Savings: Consider taking general education courses at the local community college, which can be less expensive than full university tuition and can provide the flexibility to work part-time while studying.

Recommended Steps:

Calculate your projected earnings and living expenses to determine the feasibility of a full-time education. Explore community college options that offer the same quality education at a lower cost. Consider side jobs or part-time work to supplement your income and accelerate savings. Evaluate investment strategies to maximize your return on any savings or loans.

Ultimately, the decision between HS GRAD and COLLEGE depends on your specific circumstances, goals, and financial planning. Both paths can be successful, depending on how you navigate the economic challenges and opportunities in front of you.