Return on Investment of a College Education

Can you measure the value of a college education from the financial perspective of Return on Investment (ROI)? James Altucher, in his new book The Forever Portfolio, concludes that you cannot get a positive ROI on a $200,000 college education.

Altucher makes an analogy to the value of a college education to one strategy for winning the game of Scrabble.

“You have two choices. You can read every book you can find, build an enormous vocabulary, look up the definitions of words you don’t know (that will help you remember them better) and use your advanced knowledge, painstakingly constructed over years, to defeat all opponents.

Or you can remember the following five words: “xi,” “xu,” “za,” “qi,” and “qat.” “Ka” and “ki” are not so bad either. And every now and then “aa,” “ae,” and “ai” can prove incredibly useful. These are all legal words in the last edition of the official Scrabble dictionary. What do they mean? I have no idea. You don’t need to know… Once you are OK with the fact that “xu” is a legal word, then that means you can essentially slap that “X” down on a triple-letter score with much greater ease than any of your opponents really thought possible. While they are all stuck with their Qs and Zs, you’re racking up 50-point two-letter words and winning the game.”

Altucher states that college is too expensive, there is no value in a balanced education, and “there are far better uses of time”. Instead of college, he advocates working, getting good at one thing, taking ½ the fee of a semester to start a business, and getting involved with a charity.

All college students should do what he advocates while in college! A diverse college education will give young adults the skills and confidence they need to succeed in all of these endeavors. What’s the point of learning your multiplication tables if you don’t truly understand what 2×3=6 really means. Rote memorization and shortcuts are exactly the problem with our culture. There are no instant solutions. In order to make our world a better place to live, we need to think, feel, and understand why. We need to learn to question.

A college education provides motivated students the opportunity to live on their own without their parents’ constantly looking over their shoulder, develop their own group of friends from a larger community without family to pave the way, negotiate their own social relationships, not compete with their siblings on a daily basis, take responsibility for their successes and mistakes, take care of their own meals, home(dorm room), transportation, etc., try a variety of things to discover what they’re passionate about and what they’re not, learn to think on their own and to communicate, grow up and stand on their own two feet.

If our children can learn these skills while discovering what they’re passionate about, they will be happy in whatever they choose to do – and that, is priceless.