The benefits of education vs. the cost of education

It’s hard to believe that school starts up again in a matter of weeks. While I can’t overemphasize the importance of education, I believe today’s young adults face quite a juggling act in the years ahead.

Statistics demonstrate just how important education is to one’s lifetime earnings. On the other hand, graduating from college with large student loans can be devastating to one’s finances.

The juggling act of getting an education and minimizing debt is a major challenge. Nonetheless, I was astonished at the Washington Center for Equitable Growth’s report that there are 5.8 million young people that are either not enrolled in school or not working. I don’t know how they will ever become financially self sustaining.

For those aged 16 to 24, the unemployment rate is roughly double the national average. Narrowing the category to ages 16 to 19, unemployment is approaching 25 percent.

One ticket out of unemployment is education. According to the Bureau of Labor Statistics, if you have less than a high school education, unemployment is nearly 20 percent.

With a high school diploma the rate falls to fifteen percent. With some college, it goes down to roughly 12 percent, and with a Bachelors degree or higher, it drops dramatically to just over 5 percent.

Clearly, education reduces the likelihood of unemployment, but college debt still remains an obstacle. Without education there’s little work, but without work, how can you pay for an education? It’s indeed a major problem.

As a financial adviser, I believe it’s extremely important that people understand the mathematics of life. A borrower should understand how much it really costs to pay back a debt. A saver and investor should take the time to understand how much they need to save and invest to reach their financial goals.

Likewise, young adults need to understand that, if they want to get ahead in this competitive world, that they truly need to educate themselves. They need to learn to manage both money and debt, and develop a strong work ethic.

Over the years, I’ve found statistics can be misleading. People, especially politicians, tend to twist numbers to fit their agendas. I recently came across a statistic regarding young people living in their parents’ homes that I consider misleading.

The official census states that half of those under 25 live with their parents. That sounds like doom and gloom for young people.

But then the Census Bureau states, “It is important to note that the Census Population Survey counts students living in dormitories as living in their parents’ home.”

I think this is extremely important because the number of young adults in college has actually been increasing at a steady rate since the 1980s. In other words, what statistics show on the surface appears to be doom and gloom, but in reality, is good news.

Many young adults are not rotting away in their parents’ basement, but rather are crammed into dorm rooms trying to improve their lot in life. True, they might be in the dorms on mom and dad’s money, but they’re not in basements, as the statistics would lead you to believe.

The bottom line is to get a good, practical education and try to minimize debt. And enjoy your college years; the real world comes soon enough.