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Why College Could Be a Bad Investment


There are cheaper, more productive alternatives.

In this environment, opportunity cost trumps tradition. For many undergraduates and parents, the cost of going to college is now far greater than the supposed benefits.

"College costs -- along with living and medical costs -- are rising, and salaries are going down right now," Managing Director of Formula Capital and Wall Street Journal columnist James Altucher said. "College graduates don't have the same benefits as they did 30 years ago."

Parents should beware of their child's intentions. Many students want to spend their parents' money -- it's their last chance to go all out.

Now is the time to reflect on prospects.

When potential students think about college, they should ask themselves what they're hoping to get out of it. Analyze their life. Assess their majors. This is a major investment decision. Discuss possible returns, separating anticipation from reality.

"If a student wants to go back to school in their 20s, when they've made some money, traveled, and matured a bit, then go ahead," Altucher said. "But a parent shouldn't have to spend $50,000 a year for their kid to go to frat parties all day long."

An alternative to college is becoming an expert at one area and offering your services. The best university in the world is called Google (GOOG). You can learn anything you want on the Internet, free of charge.

Why don't parents give a quarter of the amount they would have spent on an education to their kid to invest? The cost of starting a business is next to zero. Not everyone is an entrepreneur, but there's no harm in trying to be one.

"Critical thinking shouldn't cost $200,000," Altucher said. "There are other ways to learn that while kids can make money and get experience. Lay your own track. Become an artist, entrepreneur, investor."

One of the real benefits of a college education is developing a good network.

College students: Imagine where and how you see yourself in 20 years. Then, look at your current friends and picture their futures. If you have trouble doing this, or see something you don't want to see, chances are you need to start taking your education more seriously.

Michael Jordan once said, "I have failed over and over again in my life, and that is why I succeed." The sooner you start a business (and fail), the more you learn about the world and even more importantly, yourself.

In the process, you'll be making more connections in a year than you would have made by being a full-time student for more than four years of your life. By doing this, you're forced to grow as a human, and you'll be better prepared for what the world throws at you.

The ambitious kids who know what they want to do and where they want to be, the ones who diligently participate in extracurricular activity, connect with their professors and friends, go to special events and presentations around campus and the city, and find time to have fun: Those ones need to be nurtured and invested in.

"College isn't for everyone," Trends Research Institute founder Gerald Celente said. "It's is a place where I began to learn how to learn. People look at it as the end."

It matters what and where you get your degree in, but only to open the door. After that, your name and your word will carry you or bring you down. Your GPA and everything else related to education won't matter.

If you treat college as a luxury item, then don't be upset after graduation when you're living in your parents' home jobless and thousands of dollars in debt.

(For more on the topic of re-examining college costs, see Get Real About Paying for College.)
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