The financial fallacy: “Investing in an expensive education for your children should be the utmost priority” is often misleading because it’s based on the assumption that a high-cost education will automatically result in success in life. However, this is not always the case. Many successful people didn’t attend prestigious, expensive schools, and many who did are not as successful in their careers as expected. Furthermore, undue pressure to finance an expensive education may lead to substantial financial stress.
Many people fall for this because they equate high cost with high value - a common assumption in many aspects of life. We live in a society where the prestige and cost of universities are often considered indicative of the quality of education. Additionally, societal pressure and the desire to offer your child the “best” can often overpower logical financial decision making.
An appropriate financial practice is to consider education as an investment and analyze it from a value perspective. It’s prudent to examine all the factors, like the success rate of graduates, the specialty of the institution, scholarship opportunities, among others before making a financial commitment of this magnitude. It’s also essential to find a balance between the quality of education and the amount of debt that either you or your child will have to bear.
Further readings on this fallacy:
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“The Case against Education: Why the Education System Is a Waste of Time and Money” by Bryan Caplan. Book Link. This book explores the real value of education, weighing the benefits against the hefty financial investments.
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“Is College Worth It? A Former United States Secretary of Education and a Liberal Arts Graduate Expose the Broken Promise of Higher Education” by Dr. William J. Bennett and David Wilezol. Book Link This book examines the true cost of a college education and its real returns.
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“Higher Education? How Colleges Are Wasting Our Money and Failing Our Kids - and What We Can Do About It” by Andrew Hacker and Claudia Dreifus. Book Link The authors dig into the state of higher education and examine its cost-efficiency.
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“Will College Pay Off?: A Guide to the Most Important Financial Decision You’ll Ever Make” by Peter Cappelli. Book Link. This book provides a framework for evaluating the financial implications of going to college.
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“The Price of Admission: How America’s Ruling Class Buys Its Way into Elite Colleges–and Who Gets Left Outside the Gates” by Daniel Golden. Book Link. This book explores how wealth can influence college admissions.
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“Higher education bubble in the United States”. Wiki Link. Discusses a speculated higher education bubble in the United States related to increasing tuition prices and a poor job market for graduates. The page has further readings and research about the value and cost of education.