The Risks of Investing in a College Education Research Paper

Jonathan Foster the author of the article, “The risks of investing in a college education”, has more than 30 years’ experience with high-quality financial service firms and has a unique perspective as an investment banker; has a BBA in Accounting and MSc in Accounting and Finance. In fact, he states in his article. “Education is good for society: it strengthens our democracy and creates jobs. We should, however, make sure that the cost does not inappropriately or unduly fall on individuals or their families” (Foster 4). He shares his experiences on college debt and argues that the clear take-away is that college education is a risky investment. Foster knows that for some students, attending college is an important education investment, but for some who can’t afford it, there are options available that could help you get the degree that you want but also be financially stable in the long-term.  A college education is part of the American dream, but in today’s economy it is important to rethink that idea.

Jonathan Foster seems like he’s a well-informed writer on the issue he’s presenting to his audience. Foster claims, “The cost of a college education has grown dramatically, in many cases consistently above inflation. The approximate total cost per year for a student at the State University of New York is approximately $25,000, while the total annual cost of private college averages about $40,000 and that for the top schools is some $70,000. In private institutions, more than 80% of students are incurring some debt to finance their education; in public universities, that number is over 50%” (Foster 10). From his personal experience, he states that students who attend college without knowing all the options, pay a lot more than people who know their options. Therefore, if students attend universities that have staggering price tags, they get themselves into a lot of student debt; given the fact that the total amount of student debt in this country has reached a staggering $1.2 trillion. He’s effective by showing his concern on the issue by providing his own facts and ideas into the issue he is trying to show to his audience. Foster not only shows concerns to his readers who can relate to his ideas, that getting into student debt could be a terrible investment, but he also understands the other side of the issue and incudes some ideas to combat or try to eliminate this issue. He shows his connection with his audience by connecting the problems among students and parents that he had experienced to some simple solutions such as the process of not having too much student loan debt, as well as some guidelines that students may follow to get the best investment that they could have which could affect their future. To demonstrate this issue, he mentions multiple examples in the article one such as, “Before deciding to send their kids to an expensive private college, a family would do well to calculate the “payback” for such a degree, which simply means the number of years it will take to recoup tuition, room and board. In general, companies expect approximately a five-to-seven-year payback on most capital projects. This is a difficult standard to meet for a college education. My calculations show that a college graduate who earns $40,000 a year and gets raises equal to the inflation rate faces a 10-year payback for a state university degree and a 16- year payback for one from a private institution” (Foster 24). This is ultimately effective because this means that after the student graduates, he/she would know if they would be earning enough money to pay back the debt in the given amount of time and have enough to get the basic life-necessities. This method results in students and parents knowing for sure that the debt would be paid off, because a college education is a risky investment. While it is an investment with broader consequences and more subtle considerations, the simple calculation above highlights how important it is to consider the financial implications of a college education. Foster’s values personal connection the most, but when students don’t know all the options, he wants to help by mentioning in the article that they would be better prepared by knowing these options before they start college or taking on any debt, rather than knowing about this after they graduate. This message is valid because of the financial implications that come from attending a college with a higher price tag. Some students may really want to attend that one school with the higher tuition but may not know what this may cause in their lives in the future, even after they graduate. This may be some restrictions that students and parents need to rule off before committing to one school, this will cause some students to have emotions that will or may affect their decision at some point or the other. “The author wants to make the audience, the students, feel surprised and feel like something that they are taking part of are wrong. While on the other hand, he’s trying to evoke fear and concern for students and their parents. In his article, he decides to stir things up amongst the audience when he talks about the benefits of attending community college and/or state universities. The author’s only concern is that students from this generation will have more student debt that the previous generation. A private college tuition will be higher than the tuition of a state college. Foster mentions in his article that, “…despite this risk, many parents and students still see a college education as just another expected step and consider a state university inferior to private college” (Foster 34). Sometimes a family can afford a private college tuition, but some families cannot afford this expensive tuition, and this may cause some students to feel anger, fear and many other of emotions that will make them make an incorrect decision that would change their lives forever. But there are some options in place that could reduce the student loan debt. Education and financial stability play a considerable role by enhancing which college a student should attend by enhancing their overall satisfaction; they try to get scholarships or attend community college, to make college more financially feasible for them. To prove this, Foster explains, “Despite this risk, many parents and students still see a college education as just another expected step and consider a state university inferior to private college. They will not even contemplate a community college, technical program, or similar post high school option even though it might make more financial sense. This shortsighted perspective needs to change if the next generation hopes to avoid the crippling student debt that plagues many Millennials today” (Foster 40). This evidence shows that if students’ family cannot afford the tuition for a private university, public or any university attending community college or anything that is cheaper may financially better for some families rather than incurring too much debt. This may cause emotions such as irritation, anger, fear and many more while attending college or in the future after a student graduate from the university. Attending a college with a higher price tag is not always a good idea for many, which may cause you to regret the choice after graduation. A more feasible idea, if you have financial constraints would be to attend a good community college like COD and then transfer to the college of your choice. During your time in community college, I would suggest getting a part time job and safe as much as you can.  This will in turn make you save a lot of money during the two years; making you be more well-prepared when you transfer to your dream college. 

Foster wants students and their families to have a better life including but not limited to your individual financial well-being, personal well-being, and education, not only for a year or two but also after graduation and beyond. Therefore, it is important for students to decide which college they want to attend; after deciding look at the financial aid award letter and decide, discuss with family and friends.  This may help you pick up something from the college that you may have missed. The so-called American Dream has been traced to our country’s founding and the idea that every person has the dream, freedom, and opportunity to pursue and lead a better life. A college education is usually thought to be or not be a critical step on the way to the American Dream. What is often left unsaid is that the pursuit of any significant good without a careful evaluation of its affordability and paycheck can result in damaging financial consequences. The purchase of college education is no exception. Hence, it is important to weigh in all the advantages or disadvantages of attending a college with a higher tuition that you as a student can’t afford; this may cause a disruption in your quality of life after you graduate from that college because of the highly incurred student loan debt. So, weigh in all your choices: think, know, decide then attend and commit. This will help you avoid the risky college investment; helping you and other make a positive impact in society by decreasing or limiting the consequences.