Is a Bachelor’s Degree Necessary in Today’s Economy?

In light of today’s emphasis on the importance of a baccalaureate degree from an excellent college or university, it’s fascinating to read through the 1990’s bestseller “The Millionaire Next Door.” A large proportion of these millionaires do not have degrees. In addition, many are immigrants. They might say their businesses are dull-normal, such as pest exterminator, paving contractor, rice farmer, mobile-home park owner, coin or stamp dealer. But one thing they agree on is the importance of being frugal. They avoid debt.

In contrast are the college students and graduates described in Ron Lieber’s recent New York Times’ article, “Placing the Blame as Students Are Buried in Debt.” When they themselves or their families are unable to pay all of their college costs, many of today’s students accumulate a huge student loan debt by their graduation date. Lieber points out that many of these loans are essentially “paperless,” given to students who could not qualify for an auto loan for the same amount of money!

Such students appear to be violating two of the millionaires’ rules: be frugal and avoid debt. Lieber’s example is Cortney Munna who has accumulated nearly $100,000 in debt in order to graduate from NYU. Working in a field outside her major, Ms. Munna now earns $22 an hour, or a little over $2000 per month. Her loan payment is around $700. She now questions the advisability of her loans. At no time did her college counselors or financial institution counselors question her decision to run up so much debt. In fact, Citibank did just the opposite, giving her another $40,000 when she already owed an amount well into five figures.

With corporations paring their staffs, there are many experienced, degreed workers today applying for the same jobs as the recent college graduates. Perhaps the four-degree is not a ticket to abundance in this economy.

Is there an alternative to this predicament? If we look at the businesses of many of the self-made millionaires, we see that a certificate or a two-year degree opens the door to this kind of expertise. Today it may be a better decision (and much less expensive) to get into the job market with a trade or a certificate. Capable students can then turn their creativity and brainpower into excelling in that field and perhaps finding better ways to perform the tasks. A capable, inventive person in a trade is very likely to excel and become a business owner, without a lifetime of debt to pay down.

Take the time to investigate career-oriented schools. From the basic two-year degree or certification, there is plenty of time to move up. A paralegal, for example, can work towards a law degree. A diesel mechanic can study business and work toward ownership of a chain of shops.

When investigating a trade school or career-oriented school, ask these questions:

1. What are the total time and cost required to finish the course of study?
2.  Can some of the classes be taken online?
3. Does the school offer a job-placement service? Is it free at time of graduation?
4. What training / expertise do the instructors have?
5. Are there graduate courses or certificates available?
6. And, if necessary, are scholarships or loans available? If a loan, what is the total amount necessary, what is the interest rate,  and what would be the monthly payment upon graduation? For how many years?

Going to school using loans, whether to a trade school or four-year college, can be challenging. It may be tempting to buy that iPhone or iPad using loan money, to take that trip during a break, but learn to think like one of those self-made millionaires: Avoid getting into any more debt than absolutely essential. And get into the job market quickly and wisely. You can always go back to school later in life once you have established your economic foundation.