From: alexhormozi
The decision of whether or not to attend college involves weighing potential benefits against significant costs, with an individual’s socioeconomic background playing a crucial role in the value proposition and overall outcome [00:00:00].
The Cost of College and Student Debt
The cost of college tuition has doubled in recent decades, while the median starting salary has remained relatively stagnant, meaning students pay twice as much for the same perceived value [00:00:44]. This has led to a national student loan debt of 1.76 trillion dollars, which is more GDP than nearly every country in the world outside the top 10 [00:01:04]. College students are taking on more debt than entire nations produce [00:01:17].
A significant concern with student loan debt is its high interest rates and the fact that it cannot be discharged through bankruptcy, meaning payments can be a lifelong burden [00:03:17]. Young adults, often 18 years old, make this decision without full comprehension of what a 400,000-$500,000 in post-tax money over a career [00:04:42]. This debt can significantly impact major life milestones like starting a family, marriage, or buying a first home, as earnings typically only begin to spike in the late 30s and early 40s [00:05:23].
Lifetime Earnings and the Value Proposition
While college incurs significant debt, it statistically correlates with higher lifetime earnings [00:03:31]. Median lifetime earnings increase with higher levels of education:
- Less than high school: Less than $1 million [00:03:46]
- High school diploma: $1.3 million [00:03:53]
- Some college: $1.5 million [00:03:59]
- Bachelor’s degree: $2.2 million [00:04:02]
- Master’s degree: $2.6 million [00:04:08]
- Doctoral degree: $3.2 million [00:04:09]
- Professional degree: $3.6 million [00:04:12]
However, these are median figures and not guarantees [00:08:50]. For example, 27% of people with a doctoral degree still do not make more than those with a bachelor’s degree [00:08:40]. The question remains: is the increased earning potential worth the cost? [00:07:37]
Socioeconomic Background and College Value
The value added by college varies significantly based on an individual’s background. A research study found nuanced results regarding the impact of college on median earnings when controlling for factors like SAT scores and socioeconomic status [00:10:20]:
- For white and Asian individuals, there is no significant value added from college when controlling for these factors [00:10:47].
- For Latino and Black individuals, college does show a significant 30% to 40% increase in median earnings [00:11:00].
The “Zip Code” Theory and Social Environment
One theory for this disparity suggests that college can figuratively “change your zip code” by changing your environment and the people you know, as well as the people you compare yourself to [00:11:49]. This shift in social circle can motivate behavioral changes [00:12:09].
This suggests that college may add more value to individuals who didn’t already have that value (e.g., from their upbringing) [00:12:17]. It can be a strong argument for being the first person in a family to go to college, as it can change the trajectory of future generations [00:12:24].
Elite Institutions and Financial Aid
Attending an Ivy League or top 20 school (e.g., Harvard, Princeton, Stanford, Yale) can be worth the cost, even with loans [00:16:29]. The “personal brand” impact of such a degree can significantly shift perception, accelerate career progression, and lead to higher-paying jobs [00:16:39]. Graduates from these schools often become part of the “ruling class,” earning millions per year [00:16:59].
Furthermore, these elite schools often have generous endowments that allow many students from less privileged backgrounds to receive significant financial aid, making the cost-benefit trade-off even more favorable for them [00:18:17].
Personal Advice Based on Socioeconomic Status
Personal Considerations for College
The decision to attend college is highly dependent on an individual’s existing socioeconomic status and career aspirations [00:19:11].
For Those From Less Fortunate Backgrounds
If you come from a lower-educated, lower-socioeconomic family and qualify for significant financial aid (50% or more of tuition), attending college makes strong financial sense [00:19:58]. You pay less for what you get, receive a greater benefit than others, and gain a new network that improves your “zip code” or environment [00:20:08]. This path can change the trajectory of your family tree [00:25:55]. If this applies, prioritize getting financial aid or grants, or merit-based scholarships [00:15:56].
When attending college under these circumstances, it’s crucial to maximize the experience:
- Prioritize learning: View college as a job where your objective is to learn, not just earn a degree [00:26:53]. Take more credits and finish faster if possible [00:27:19].
- Networking: Actively engage in social clubs, fraternities, sororities, and other activities to meet diverse people and expand your network [00:26:21]. This increases your “luck surface area” [00:26:26].
- Discipline: Avoid slacking off or excessive partying, remembering the significant financial investment you are making [00:26:44].
For Those From More Fortunate Backgrounds
If you come from a highly educated, higher-socioeconomic family and are unlikely to receive favorable financial aid, college makes less sense [00:20:14]. These families often have an expectation that their children will attend college, but the benefits might be minimal if the individual already possesses the characteristics (e.g., high SAT scores) that predict success [00:12:49]. In such cases, starting a career earlier without incurring debt and gaining real-world experience can be more advantageous [00:20:23].
Career Path Requirement
The primary caveat is if your desired career path requires a formal degree (e.g., doctor, lawyer, accountant, scientist) [00:20:52]. For careers in personal services, blue collar jobs, sales, office work, or marketing, a college degree may not make a significant difference to earning potential [00:09:15]. Businesses today often prioritize experience over where someone went to school, their major, or GPA [00:02:43].
Investing in Education, Regardless of Path
Whether choosing college or a direct career path, the ultimate goal should be learning and skill acquisition, not just earning [00:23:53]. The first few years of a career should be about getting smart and gaining relevant skills, with income being a bonus [00:23:58].
For those not attending college, informal education is key [00:22:24]:
- Prioritize spending time and money on learning [00:22:28].
- Seek out and pay people who already possess the skills you want to learn, or find courses, books, and videos [00:23:04].
- Be willing to accept minimum wage or lower pay initially to gain experience and learn on the job [00:24:11].
- Embrace a “slice of humble pie,” acknowledging what you don’t know and being willing to be doubted by family members who may not understand a non-traditional path [00:24:49].
Times have changed, and with equal access to information online, what was once required for success is no longer the sole path [00:25:11]. Ultimately, success depends on individual discipline and a commitment to continuous learning [00:28:49].