From: alexhormozi
The decision to pursue college or not is a significant life choice, with both paths presenting distinct advantages and disadvantages regarding cost, earnings, and personal development [00:00:00]. The value of education, whether formal or informal, lies in its ability to increase an individual’s capacity to learn and earn [00:23:53].
Formal Education: The College Path
Formal education, typically through college or university, involves structured learning paths leading to degrees.
Costs and Debt
The cost of college tuition has doubled in recent decades, while median starting salaries have largely remained stagnant, meaning students pay twice as much for the same outcome [00:00:44]. This has led to a national student loan debt of 250,000 loan can result in 500,000 in post-tax repayment over a career [00:04:54]. This debt can significantly impact major life milestones like starting a family, marriage, or homeownership, especially as earnings typically spike in the late 30s and early 40s [00:05:28].
Earnings and Career Impact
While formal education incurs significant debt, it generally correlates with higher median lifetime earnings [00:03:33]:
- No high school diploma: Less than $1 million [00:03:46].
- High school diploma: $1.3 million (30% more) [00:03:53].
- Some college: $1.5 million [00:03:59].
- Bachelor’s degree: $2.2 million (more than double high school) [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].
The likelihood of earning more than someone with a bachelor’s degree increases with higher education:
- High school diploma: 1 in 6 [00:07:07].
- Some college: 1 in 4 [00:07:13].
- Associate’s degree: 1 in 4 [00:07:17].
- Master’s degree: 6 out of 10 [00:07:20].
- Doctoral degree: 7 out of 10 [00:07:24].
- Professional degree: 8 out of 10 [00:07:27].
However, these are not guarantees, and a significant portion of highly educated individuals may still earn less than those with bachelor’s degrees [00:08:40].
The value of a degree also depends on the industry. Higher education makes a greater difference in fields like science, technology, health professional roles (e.g., doctors), and managerial/professional positions [00:09:28]. It makes less of a difference in personal services, blue-collar jobs, health support, sales, or office roles [00:09:19].
Social and Networking Benefits
College offers unique social experiences, such as meeting many people of similar age and forming networks [00:14:53]. The alumni network can be beneficial for future job opportunities or deals [00:14:05]. Attending social clubs, sororities, and fraternities can increase one’s “luck surface area” and exposure to diverse opinions [00:26:21].
Nuance based on Socioeconomic Status and Institution
Socioeconomic background plays a significant role. Research suggests that for white and Asian individuals, there is no significant value added from college when controlling for factors like SAT scores and socioeconomic status [00:10:46]. However, for Latino and Black individuals, college can lead to a significant 30-40% increase in median earnings [00:11:00].
College can “change your ZIP code” by altering your environment and the people you compare yourself to [00:11:56]. This is especially true for first-generation college students, as it can change the trajectory of their family tree [00:12:22].
Attending a top-tier institution (e.g., Ivy League, top 20 school) can significantly impact one’s personal brand and career progression, as graduates from these schools often become the “ruling class” in high-paying jobs [00:16:29]. These institutions often offer generous financial aid, making the cost-benefit analysis even more favorable for those who qualify [00:18:17].
If financial aid covers 50% or more of tuition, college is often a wise investment, particularly for those from lower socioeconomic backgrounds, as they pay less and gain more benefits, including an improved network [00:20:01]. Conversely, if from a highly educated, higher socioeconomic family without favorable financial terms, college may be less beneficial, as the individual may already possess the advantages college offers and would incur significant debt while missing out on early career development [00:20:14].
It is crucial for students to view college as a job where their primary responsibility is to learn [00:26:53]. Maximizing credits and graduating quickly (e.g., in 2-3 years) can save money and accelerate career entry [00:27:12].
Informal Education: The Career Path
Informal education emphasizes learning through real-world experience and self-directed study, rather than formal degrees.
Focus on Experience and Skills
Businesses today prioritize experience and the likelihood of performing a job well over where one went to school, what they majored in, or their GPA [00:02:43]. Many current jobs lack formal school programs because the economy has changed rapidly [00:02:49].
For careers that do not require a formal degree (e.g., sales, marketing, blue-collar jobs, home services), pursuing a career directly may make more sense [00:09:51]. Choosing this path means prioritizing learning, taking time and money to study, and actively seeking to acquire knowledge [00:22:22]. This includes being paid to learn on the job and investing earnings back into further learning [00:22:48].
The speaker’s personal experience illustrates this: he quit a white-collar job to start at minimum wage in a gym, eventually scaling businesses to over $200 million annually and owning companies with over a thousand employees, without a formal degree [00:02:11]. He learned by paying people who already possessed the skills he desired, buying courses, or studying their content [00:23:04]. Entrepreneurs are often willing to help those who show initiative [00:23:26].
Financial Advantages
Choosing an informal path can mean avoiding student loan debt and starting a career four years earlier, potentially earning income and gaining valuable experience sooner [00:20:44]. The early years of a career should be focused on learning and acquiring skills, not just maximizing earnings [00:23:58]. This requires humility, accepting that there is much to learn, and being willing to be doubted by family members who may not understand the changing landscape of careers [00:24:19].
Conclusion
Both formal and informal education paths can lead to success, with the core objective being to learn rather than solely to earn [00:27:43]. The key is to be a “professional student” — either in a formal institution or in the professional world, always prioritizing learning and skill acquisition [00:27:53]. Modern access to free online information means that traditional college is no longer the sole pathway to success [00:25:20]. The decision ultimately depends on an individual’s specific circumstances, career aspirations, and financial situation [00:11:11].