Working World

March 2017

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8 March, 2017 l Working World l F or a lot of people, going to a four- year college seems like an auto- matic choice when they graduate from high school. The reason is obvious – higher income. According to the Na- tional Center for Educational Statistics, a bachelor's degree accounted for an aver- age of $16,900 in additional income per year compared to a high school diploma ($30,000 versus $46,900). Over a 30-year career in the workforce, that's more than a $500,000 difference in earnings. These numbers may not paint the whole picture, however. Due to the increasingly high costs associated with a college education, as well as other draw- backs, more and more people have been considering trade school as an education alternative. DRAWBACKS TO COLLEGE EDUCATION Length: Four (or More) Years vs. Two Years For starters, a bachelor's degree typical- ly takes four years of study, which means that people who enter the workforce after receiving their bachelor's degree aren't doing so until age 22. That shaves some years off of a person's career and can be considered an opportunity cost for experiencing the 'real world' hands on instead of being in a classroom. Plus, a four-year program usually makes you take classes outside of your major to ful- fill credit requirements. Unless you enjoy spending time in a classroom, it may seem unnecessary to pay for extraneous credits and courses. High Cost of a Bachelor's Degree Another drawback is the cost. Research conducted by the Idaho Department of Labor found that the average bache- lor's degree in the United States costs $127,000! Not only that, but nearly 70% of students take out loans to help pay for school. According to the study, over 20% of students with loans owe more than $50,000, and 5.6% owe more than $100,000 at the end. Although some student loans are certainly better than others, the added cost of accruing in- terest makes the overall expense of receiving an education in the U.S. sig- nificantly higher for the average student than the already steep price tag suggests. Dropout Rate + Late Grads A third drawback: Some people simply aren't prepared for the rigors of a four- year college. For many students, college is their first experience away from home and, without an adequate plan, it's easy to stray off course. In fact, the Institute of Education Statistics estimates that 40% of attendees at a four-year college drop out before completing their degree. For the 60% that do complete their degree, a whopping 64% take longer than four years to graduate, costing themselves nearly $70,000 in lost wages and educational ex- penses per year, according to U.S. News. Most colleges don't even require students to pick a major until the end of their soph- omore year, creating a class of undecided students who may have wasted their time and credits on courses that they chose not to pursue. Poor Economic Conditions Finally: Job prospects for new graduates may not be as bright as they had expect- ed. Although some college majors are faring better than others when it comes to labor market outcomes, a recent report released by the Economic Policy Institute states that overall, the unemployment (8.5%) and underemployment (16.8%) rates for college graduates under the age of 25 are nearly double what they were in 2007. Over the past five years, graduates have faced sluggish labor markets Young graduates are faced with limited job op- portunities and difficulty paying off their student loans. ADVANTAGES TO TRADE SCHOOLS For starters, salaries for trade school graduates aren't that much of a drop-off compared to a four-year degree. Accord- ing to the National Center for Educational Statistics, technical and trade school jobs have a median annual salary of $35,720, though this figure varies heavily based on the particular industry and the experience level of the worker. The BLS predicted earnings for bachelor's degree holders to be roughly $46,900, amounting to an annual difference of $11,180. This stat, of course, doesn't factor in long term earn- ings growth. However, because trade school only takes an average of two years to complete versus four, that amounts to an additional two years of income for the trade school graduate, or $71,440. Factor in another $70,000 in costs for the many students who take an extra year to graduate from college, and trade school grads can be over $140,000 ahead at the get-go, making up for over 12 years of difference in income. Price of Education The average trade school degree costs $33,000, which, compared to a $127,000 bachelor's degree, means a savings of $94,000. But that's not all! If you assume that students are fully financing their education with loans at 4% over 10 years, the bachelor's degree will cost $154,000, while the trade school degree will cost only $40,000. That's a savings of $114,000 just on the degree. Of course, most students in both cases won't fully finance their education. They'll work and find other sources of income to help with the process, meaning the gap will be smaller in the average case. Research gathered in 2012 suggests that the average college student debt load is $29,900, and that number rises to $36,327 when factoring in interest. Conversely, the average debt load for stu- dents graduating from a two-year tech- nical school is $10,000, roughly 70% less than the four-year graduate. Job Security Yet another advantage of technical trade school is that most of the jobs you'll get are extremely difficult to export to an- other country. More and more jobs are being outsourced to places where labor is cheaper, making domestic employment in certain sectors difficult to get. It is much easier to export, say, computer program- ming work or other information economy work than it is to export carpentry or electrical work, as that requires a physical presence. Not only that, but there's a growing domestic demand for high-precision skills. According to Forbes, skilled trade workers are a disproportionately older population, and will only continue to get older, cre- ating increased opportunities for young workers to fill their shoes.. FEATURE ARTICLE by Trent Hamm Trade School Instead of College?

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