Apr 11, 2024
When it comes to getting your money’s worth, a four-year college degree has long been considered a smart investment. But recent data shows some Americans looking to put themselves on the pathway to success are looking elsewhere to start their careers.
The National Student Clearinghouse Research Center reports that two-year community colleges with a focus on vocational education saw a 16% uptick in enrollment in fall 2023.
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TV personality Mike Rowe attributes this shift to people becoming more aware of the financial aspects of education.
“People are starting to pay attention,” the host of “Dirty Jobs” said in a recent interview with Fox Business’ Stuart Varney.
Rowe argues there needs to be a reevaluation of the notion that a four-year degree is the best choice for everyone, labeling it as "the most expensive path."
Meanwhile, he observes that people are increasingly recognizing the value of trade schools.
“Parents and kids alike are starting to get the message that trade school is an amazing opportunity with just a fraction of the debt — if any at all — and a clear path to something that looks a lot like prosperity,” he elaborated.
$95,000 a year?
In the interview, Varney highlighted that the cost of tuition, room and board at some colleges could reach $95,000.
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Rowe promptly pointed out that this figure does not cover four years.
“That's for a year or a semester. That's not for the diploma — do that times four,” he said.
Addressing the shockingly high costs of higher education, Mike Rowe offered a perspective on how society views this financial burden, stating, “It's so expensive, that for as long as I can remember we really haven't talked about it in terms of a purchase. We talked about it in terms of an investment, but people are starting to smell a rat there, too.”
Rowe emphasized the straightforward nature of affordability, asserting that an item is either within one's financial means or it is not. He further underscored that the true value of higher education hinges on whether a tangible return on investment (ROI) can be ascribed to it.
“I think more and more people are starting to look at that diploma on the wall and seeing it for what it actually is, which is a receipt,” he concluded.
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Return on investment
While most universities don’t charge $95,000 annually, the costs involved can nevertheless be significant.
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The average annual cost of college in the U.S. — inclusive of books, supplies and living expenses — stands at $36,436 per student, according to the Education Data Initiative. That number has more than doubled since the turn of the century.
Moreover, the ROI for higher education may not be as substantial as previously believed.
Rowe mentioned a Wall Street Journal article highlighting a shortage of skilled tradespeople and how that deficit is driving up the pay in those fields.
The article, referencing data from payroll services provider ADP, pointed out that the median salary for new hires in construction was $48,089 in 2023, compared to $39,520 for new hires in professional services.
“That’s the fourth year that median annual pay for new construction hires has eclipsed earnings for new hires in both the professional services and information sectors — such as accountants or IT maintenance workers — ADP says,” the article states.
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Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.
