Is Education a Good investment or Good Debts?
There is a hot discussion over the topic of Is Education Always a good Investment at the Get Rich Slowly Blog. J. Droth, the blogger for Get Rich Slowly, started this discussion because he has 2 readers asking him whether education is a good investment and should they go for it.
I think there are no clear answers and right or wrong for this question. By having more education and getting extra degrees, we can have a hope to get high paying job. However, education is not free and cost you money. Besides that education fees are not cheap at all. For me, education is just like an investment where we must think about the its returns before we make our decisions.
Is Education Always a Good Investment?
Let me show you some of the points that we must considered before determining that an education is a good investment for us:
- The returns of the investment. I think this is the basic for us to analysis whether an investment is good or bad. The biggest return of our education investment is salary. So we must think whether the increased salary can support our expenses, such as education loan payment and tuition fees. You must use the after-tax salary to do the calculation here. For me, if the increased salary is barely or can’t afford the expenses, then I will give up this education investment. Don’t you think it is not worth it if you pay $1000 extra each month to exchange for a $500 increase of salary?
- The risks and returns ratio. Since we treated education as our investment, then there are some risks with it as all investments have risks. The first and also most important risks that we must consider is do you 100% sure that you can get what you want? You predict that your salary will be increased with a certain percentage after getting the addiction degree; however, you still need to analysis whether you really can get it. I think this is the biggest risks that we have to face.
- Present is more important than future. Now you have to cool down your mind and stop thinking that how many benefits you will get if you get the extra degree in future. Before making any decisions, please consider your current financial status and commitments. Will the extra expenses on education will affect your budget, family or even finance. This is an important issue if you have some commitments such as you have children to take care and etc.
- Consider how long you can pay off the education debt. This is another important question if you intend to get a loan for your further study. You must calculate everything properly and find out how long it takes to pay off the education debt. For me, education debt is just a high risk debt and we must pay this off quickly. All of us know that salary from a job is highly depending on our stamina and body. If you feel that you can’t pay off the debt in before you retire, then you have to give up the education debt.
My suggestions : There are always extra choice
If you are looking for high paying job or extra money through your degree, then I would suggest that you should do more research. There are a lot of ways to make extra money besides getting more degree. For example, you can use the same amount of loan to start a business or even invest it which might bring more returns to you. Of course, you must do some research first. There are no such things that 100% workable for you including the education. But there are always extra choices for you and all you have to do is open your mind and look more.
Good Luck!