Understanding A Little Bit More About College Tuition – Episode 304

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[00:01] Welcome to the Prosperity Podcast. Welcome to another episode of the Prosperity Podcast. Today, we’re going to be talking about college tuition. And is it really a game that we should be playing? And if it is, let’s understand what the rules are so we can play it the way that’s going to help us and our families. So Kim, let’s dive into this topic. Oh, this is such a toughie because our society is so focused on what we think the value of a four-year degree is. So backing up a little bit, as people start to finish their high school educational time, the focus is on college for most people. And I do not believe that it should be. Not everybody is really set out and with the God-given talents, frankly, to do a four-year degree.

[00:59] There are people that would be so much better with a service degree like being a plumber or a electrician. I mean, there’s amazing skill in those capabilities. And I think you can be one in six to 24 months. Or there are so many people that can learn via gamification on the web and do coding of computers and programming with, again, in sometimes three to six months. And so this overly emphasized focus of the four-year degree. And today, it’s not even that, right? People have to get master’s degrees for what used to be totally fine with just a four-year degree. So now we’re talking maybe five or six years. And so clearly, there are some people that that is the best path. That’s a path I took. Both of our children

[01:53] have on the one side and two of our children haven’t on the other side. And there’s still such good that’s going on. And I am so looking forward to a time in our society where there will be more emphasis on online education and ways to get educated. And I definitely have some samples that I’m going to share here today that are already available today. And yet, still, our society is overly focused on this four-year degree. And I just frankly, first of all, don’t think it’s for everybody. Second of all, it is a cost, no matter how you do it. Whether it’s part scholarship, part loans, part grants, part cash flow, part money the kids saved, part money you’ve saved as a parent, it doesn’t matter how you do it. It is a very big cost. And it comes with a corresponding

[02:51] opportunity cost that is off the charts. Absolutely. There’s one other cost in there that you didn’t explain, and it can fit into opportunity cost, but it’s time and timing. So that’s a big one. Yes. Let’s cover that so that people are clear. Yeah. So for example, timing, you get out of high school, you’re 18 years old, and you now have this opportunity to dedicate the next, could be four, six, who knows how many years to your schooling with the occasional breaks. You now have this opportunity cost that because you’re dedicated to school, you might not be able to jump into a profession that you could explore to see if you want to dive in deeper or work in a startup or be in some other environment. But the other time cost involved, it really limits what you can do

[03:52] and what you can’t do. And so later on, we can get into my college the way that I did it, and I did it a very non-conventional way. And we’ll dive into that, but it’s interesting that you’re talking about time as well. How do you see that as a cost? Well, it is the actual dollars spent times an interest rate times, and this is the tough part, an amazing amount of years. And it comes on both generations. So let’s play this out briefly. You have parents, let’s say that spend $50,000 to educate a child over four years. That $50,000 is now gone from the parent’s life for, oh, let’s say the parents are 50 when the child goes to school. It is gone from the parent’s life for probably another 50 years,

[04:52] assuming they live to 100. So you have $50,000 times, let’s say, 5% times 50 years. That’s an insanely huge number. That is technically the opportunity cost of you spending that $50,000 to educate your child. Furthermore, whatever that number is, not having a Truth Concepts calculator open at the moment, I don’t know what the total number is, yet we could use that number to work backwards and figure out what the income is that that parent is missing from their life from, let’s say, age 70 to age 100. And because we know cash flow puts food on the table and vacations on a calendar, cash flow, the income is so much more meaningful and important and valuable than whatever that net worth number is. Yet that is truly what opportunity cost is.

[05:48] That’s how it’s measured. Now that same calculation can be done for the child. So now we have, let’s just say the person is 25 years old when they get out of school. Now we have $50,000 times 75 years times 5%. And that’s how you measure the opportunity cost of college for a child. And the unfortunate thing that’s happening now with college is the costs are going up every single year. I saw an article recently of the universities in the state that were going up at least 5%. And that doesn’t include the textbook from the professor that he wrote last year, but it comes out with a new version that costs $500 because he wants some extra money. And that is infuriating and all the other costs involved.

[06:42] That’s a difficult pill to swallow. Well, the whole college experience has really just become really potentially unnecessary expense because you can get educated so well in so many other ways. I think also for a lot of children, really a license to cause and get themselves into an awful lot of trouble, because there are a lot of 18 year olds that have been under the care and guidance of a parent at 100% level now at basically a 0% level. And it just causes a lot of trouble no matter how you look at it. And that’s not true for all kids, obviously, but it really can be extremely problematic. So Spencer, let’s talk about some solutions you guys and your family are approaching things a little differently. And you said you had your own experience.

[07:32] Tell us about it. So here is my personal experience. I went to college for approximately a year and a half. And then I ended up getting a real estate license. And that was something that I wanted to pursue. So I did that during the summer time off in college while I was still working, got a real estate license. And this is years and years and years ago. I was 21. And here it was, I started doing real estate and it was something I loved. And I made the decision to pause college for a semester and I paused, I worked, I started doing very well. But I said, okay, I’m going to come back. I took some classes in college. And I realized that one, I had a knack for real estate. And that’s what I enjoyed.

[08:20] And I also at that time did not enjoy school. I didn’t enjoy learning those items that weren’t applicable. And so I decided that I was going to put school on hold longer. And then I ended up even starting and having other businesses. And so school became one of those things where I just didn’t want to continue on. And I’ll confess, being young and doing well, I was a bit arrogant of myself of saying, hey, I’m making more than my college professor. There’s no reason for me to go. That’s dumb. I shouldn’t have thought that way. But that’s how I did think. And the world of me just getting into business helped open up so many other doors. And so it was good for me. Now with my kids, what we’re doing is

[09:06] we’re focusing on online learning opportunities. And so there are places that you can go online and learn from Lynda.com. My son can learn how to code from Code Canyon. We can take other courses from Udemy. And there’s a Khan Academy. And there’s another place that you’ve spoke about several times on the podcast that I think is just the top. It is so amazing. Would you explain one of your favorite learning platforms? Yes, it’s called Udacity. And so like the term audacity without the A, U-D-A-C-I-T-Y, Udacity. And they have what are known as nano degrees where anybody can pop on, find an area of interest, spend four to six to maybe eight weeks getting some very specific education, and then turn right around and have an amazingly

[10:03] high percentage of getting a job using that very area of education. So if I were younger and looking for the next step, that is absolutely the place that I would go. And then I also want to add a couple books that I’ve just found to be so helpful in this area. And one is called The Education of Millionaires by Michael Ellsberg. And then actually the other one that I’ll bring up now since I’m already talking about Michael is his newer one called The Last Safe Investment, the bottom line of which is you investing in you as a person. So incredibly high of a return you can get in the investing of you. So both of those by Michael Ellsberg. Those are both great books. Now, as far as listeners, another thing that I would suggest, and you’ve mentioned many a time before,

[11:02] is find a way to start a business or be involved with a business. And if it happens to be something with network marketing, or if it happens to be a business that you actually do, but getting your hands dirty and learning all of those steps is worth so much to your education. And it is so incredibly valuable because you’re forced to learn leadership, you’re forced to learn finances, you’re forced to learn technology. I mean, we could go on the list of so many different things. And it’s a built in forced education versus something that’s passive. The other thing I think that’s so important is to make sure that you’re learning every day, no matter what your age or position in life is. So whether you’re in school or out of school,

[11:49] older, younger, what have you, learning is a part of growth. And I believe that we are either growing or dying. And so make a choice and turn your brain on and look for things that you can learn. Even if it’s sometimes down to the simplest little thing. If we turn our brain on and are open minded to learning, then we will get the good impact of that in our lives every single day. Absolutely. So here’s what I would love to happen right now in this episode. So if you are in this path of learning, which hint you’re listening to the podcast, so you are. So you’re already doing something good. And hopefully you heard that I’m whispering because I’m telling you something that is critically important.

[12:43] Learning every day is going to help you grow. And so by you hitting that subscribe button on this podcast, we’re going to be giving you a weekly education that will help you out to live a more prosperous life. Now, one thing that would help us and other people around you, because one of the best forms of learning is teaching when you teach someone else. So go into the show notes, click the button where it says, leave a review, and then let us know what you’ve learned from this podcast. And we would love, absolutely love to hear from you. Any parting words before we take off, Kim? Well, I love your pay it forward message. And also the, you learn better when you’re seeking an effort to teach or seeking the learning that you need in order to teach.

[13:33] And that is something that we can all remember because we all learn better when we do. So thank you. Wonderful. Well, thank you listeners for taking your time to listen to the podcast and to learn and feel free to share this with your friends and absolutely leave a review so that we know what you’re learning. And we’re happy to help others so that they can become more prosperous. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit us at partnersforprosperity.com. If you liked this episode, make sure you subscribe and leave a review.