NEW YORK — Experts have developed projection models comparing passive income in a high capital investment against going to college and trying to get a job after, determining it’s actually far more lucrative to simply invest the money one would have spent on college in low risk growth funds.
A single semester of college can range anywhere from $20,000 to upwards of $60,000 these days, and when you add in ancillary expenses like books, housing, food, etc., you’re inching towards half a million in total… and that’s not even accounting for student loan interest yet.
Now, let’s say hypothetically instead of putting that 500 grand into an antiquated institution, you dropped it into a Vanguard growth fund. That fund tends to average around 10% annual growth, sometimes even more, but conservatively for arguments sake let’s say it’s 10. You’re looking at $50,000 a year, which of course will increase if you re-invest.
Let’s not forget, you’re not in college, so you have time to get a job if you want. Now you have a regular income like anyone else, don’t have to start paying your loans for 4 years, and will be accumulating gains from the initial investment. Basically, at 22 years old, you will be able to pay back your student loans in full immediately, and enter the workforce with about $250,000 just idling in the bank… which you will then of course re-invest and begin compounding again.
Now let’s look at your average college grad at 22 years old. You have a piece of paper that costed half a mill that says you’re a Bachelor, but jobs want you to have a different piece of paper, so you spend 2 more years to get one that says you’re a Master. Now you’re 25 and unemployed because your industry was automated, outsourced, or past generations are living longer and in turn working into their 70’s… you have 2 college degrees worth of loans to pay back but no money to pay em with, so they just sit there at like 900% interest rate.
So, wanna retire when you’re 30? Put all your college tuition money into an index fund and go work at Starbucks for a few years.