Economic Benefits of Graduating College in Four Years
Hi my name is John Tush, I’m an executive-in-residencehere at the Cal Poly Business School.
I want to talk to you a little bit today aboutthe financial case for a college education and why a student would want to graduate fromcollege in four years.
First, let’s talk about the value of a collegeeducation.
A college graduate earns about $59,000 a yearversus an individual that doesn’t have a college education only earning in the $30,000’s.
So there’s an obvious value to having acollege education.
Also, college graduates are very rarely unemployed.
You can see the unemployment rate for collegegraduates is only about 3.
Far lower than if you don’t have that levelof education.
But as students, one of the issues that you’refaced with is how you get through college, how you finance your college.
So today what we want to teach you a littlebit is the smart path to go with and that is to try to get through school in four years.
Students who graduate from college in fouryears have a much broader range of opportunities than students who take five, six, seven, eight,ten years to get through college.
And the reason is that there is perceptionon the part of the business community that students who graduate on a timely basis arealso going to make better employees.
In fact, years ago, Fortune 500 companieswouldn’t even interview candidates who had not graduated from college at the appropriatetime.
This really becomes a financial issue thatwe have to look at.
Many students cannot afford the money to graduatein four years, unless they borrow.
And that’s what we are encouraging you todo as odd as it may sound and here’s the reason why.
If you graduate from college in four yearsand you borrow the money to get through, on average, Cal Poly graduates are going to goout of our business school and earn an income of anywhere from $45,000 to $65,000 a year.
If you’re earning $50,000 a year, you’reearning $25 to $30 an hour at the work that you’re performing.
But if you decide that you’re going to payfor your college education while you’re in college, you’re going to be paying forthat college education with menial labor jobs where you’re going to make anywhere from$9 to $12 an hour.
So it’s much more financially efficientto borrow the money you need to get through college at a low interest rate and then topay it back in the first couple of years after you graduate from college.
Now, only about one out of five students graduatefrom college, actually 19% and on our campus it’s 17%, graduate from college in fouryears.
You should endeavor to be one of those studentsthat graduate in four years.
Those students are more successful and there’sanother reason that you might want to think about doing that.
If you’ll take the money that you earnedin those first two years that you would’ve been in college you had not graduated on time,you invest that money, it’s going to be worth 40 to 50 times the amount of what youinvest, but if you wait to invest that money until you’re 60 years old, it might onlybe worth 10 or 20 percent more than what you put into it.
It’s a simple matter of multipliers.
If you figure a rate of 9% and you invest,say, 25% of what you earn the first two years out of college, it’s going to be worth overa million dollars.
You’re going to invest $12,500 each yearbased on a $50,000 salary, that’s $25,000 and with multipliers of 40 and 45, that’sover a million dollars that you’ll have when it comes time to retire.
It makes a lot more sense to do that thanit does to stay around college those two years and not have any money invested.
So thank you for listening today.
If you have any further questions I’m oncampus you can come by and visit with me.
Talk to your counselors and try to scheduleout your classes and your time where you are able to graduate from college in four years.
And if you do this, we guarantee you, youwon’t regret it, you’ll move ahead quicker.