Why College May Not Be the Best Choice for Your Education Dollar

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The traditional route to career success follows a pretty straight academic line: hard work in elementary school, followed by hard work in high school, followed by hard work at the best college you can afford. Vocational education, on the other hand, is often treated as a consolation prize -- the second-best option for the second-best kids. But for a new generation facing rising college tuitions and high post-graduate unemployment, old-fashioned vocational studies might offer the best chance at a solid career and a lifetime free of debt.

According to a recent survey, 50% of recent college graduates are unemployed or underemployed; many, in fact, are resorting to the kinds of entry-level jobs that they went to college to avoid. In a recent Chronicle of Higher Education article, economist Richard Vedder tried to explain why: He sees America as facing a glut of college graduates, as the supply of people with high priced degrees exceeds the demand for them. Noting the large number of college grads occupying manual labor positions, he argued that their average wages -- which dropped by 4.17% between 2008 and 2010 -- were likely to continue to fall.

A Better Option

Meanwhile, things are looking up for skilled workers, demand for whom remains strong. As a recent CareerBuilder survey reported, 40% of employers complained that they were unable to find sufficient skilled workers to fill their available positions. This is particularly striking in manufacturing, where employers are heavily targeting foreign workers and military veterans to fill open positions. For students who can get into the programs that prepare them for such jobs, the employment future could be promising.

Not surprisingly, the demand for skilled workers has driven up their wages. According to a 2012 study by Georgetown University's Center for Education and the Workforce, 39% of men with an educational certificate earn more than men with an associate's degree, and 24% earn more than men with a bachelor's degree. For people in a STEM field -- science, technology, engineering or mathematics -- things are even better. According to another study by the Center, 63% of STEM workers with associate's degrees make more money than the average person with a bachelor's degree in the humanities or social sciences. Similar discrepancies exist across all levels of educational attainment, suggesting that what a student studies may ultimately matter a lot more than how long he or she studies it.

Finding a Good Vocational School

As demand for skilled workers has risen, so has enrollment at vocational schools ... and the tuition of many programs. Even so, trade schools and community colleges can be a bargain when compared to traditional four-year colleges. According to the Department of Education, the average cost of a year's tuition, room and board at a four-year college is $20,986; at a two-year school, it's only $8,451. Added to this, it takes a lot less time to complete a program at a trade school or community college, so the full cost of a program of study, on average, is $67,482 less at a two-year school.

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But the value of a vocational program varies greatly. Many private companies have jumped into the market, hoping to tap into the rich river of federal student aid money flowing into the trade school market. Unfortunately, many of their programs are overpriced, unaccredited, or lack strong placement programs, which means that students who enroll in these for-profit schools' programs can easily find themselves graduating with a lot of debt and few job prospects.

Luckily, there are several ways vocational students can protect themselves from choosing a bad program. The first step is ensuring that the program they're considering is accredited: The Department of Education has an easy-to-use accreditation database.

Having checked to see that the program carries a U.S. government seal of approval, the next step is ensuring that its benefits are worth its cost. Companies like Glassdoor and Salary.com can give a good idea of the likely salaries that graduates of a particular program will garner. Depending on this, students can calculate the amount of money that they can reasonably expect to borrow. A general rule of thumb is that your loans shouldn't exceed one year's post-graduation salary.

Another great resource is Department of Education's default rate database, which reports on the percentage of students who default on their loans. Schools with high default rates may be charging too much for a particular certification.


Aspiring utility workers train at Oakland's Cypress Mandela Center and Workforce Institute. (Getty)

Bumps on the Road to a Vocation

One of the problems facing vocational students is a lack of government leadership when it comes to funding. Despite President Obama's outspoken support of post-secondary vocational training, there has been a distinct gap between the his rhetoric and his administration's policies. In its 2012 budget request, the Department of Education cut funding for career and technical education by $263.8 million, more than 20%.

On the other hand, the Obama administration was far more generous toward traditional college education. In the same year that it slashed spending on vocational training, it increased financial aid to college students by 29% and added a 35% increase to its tax breaks for college students.

Put another way, the federal government spends over $166 billion on student aid and over $14 billion on tax benefits for college students, but only $1 billion on vocational education.

Yet, government lassitude aside, the demand for skilled workers is continuing to rise, bringing higher salaries in its wake. In other words, for students who are willing to do the necessary research and planning, community college and trade school, once the neglected children of the American educational system, are starting to look like really good bets.

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Why College May Not Be the Best Choice for Your Education Dollar

Many school districts are desperate for teachers to work in low-income schools or to teach in high-demand programs. In return for teaching for five years, college graduates may be able to get large portions of their loans forgiven. The exact payoff depends on the type of loan, but the benefits can be huge: Stafford loans may qualify for up to $17,500 in repayment, while Perkins loans may qualify for full forgiveness.

Facing huge amounts of student loan debt? Eager to see the world? Desperate to fill out your resume? Look no further! The Peace Corps will cancel up to 70% of Perkins student loan debt. When it comes to Stafford and consolidated loans, the deal is not quite as good -- the Peace Corps will allow full deferment for up to 27 months, but won't pay off loans. Right now, though, spending a couple of years filling out a resume and waiting to enter the job market could be a very attractive option!

For new grads who are interested in volunteering, but aren't interested in traveling halfway around the world, Americorps and VISTA could be attractive options. VISTA places volunteers with nonprofit groups, while Americorps places them in a variety of jobs, from teaching school to environmental cleanup. In return for a one-year stint, workers in both programs get stipends of up to $7,400, plus $4,725 to pay off loans.

The military offers some outstanding education resources, including the Montgomery GI Bill, which can cover more than half of the cost of a college education. For graduates facing heavy loan debts, the Army National Guard has some particularly nice options, including the Student Loan Repayment Program, which will pay up to $50,000 worth of student loans, depending upon the student's area of study.

Love working with animals, but hate being in debt? The Department of Agriculture's Veterinary Medicine Loan Repayment Program may have the answer: Qualified applicants may receive up to $75,000 in loan forgiveness -- $25,000 per year for up to three years. The only catch is that you'll probably have to get used to living in the boonies -- participants are placed in areas that have insufficient veterinary coverage.

Veterinarians aren't the only ones who can benefit from loan forgiveness -- the government also offers some great loan forgiveness options for human doctors. Health care professionals looking to have the Northern Exposure experience might consider working with the National Health Service Corps and the Nursing Education Loan Repayment Program, both of which place medical workers in underserved regions.

Nor are small towns the only place where doctors can get their loans paid off. The National Institutes of Health will repay up to $35,000 per year in loans for qualified clinical researchers, and many hospitals will help repay loans for doctors who agree to work in physical therapy, among other career tracks.

As many young law school grads have been discovering, a Juris Doctor degree is not the moneymaker it once was. Luckily, some states, including Maryland, offer loan repayment aid for state employees who have studied law. For that matter, there are several programs that will help pay off loans for lawyers who work with nonprofits or public interest groups.

If worst comes to worst, you could always try escaping from your loans by literally escaping. The French Foreign Legion, for example, not only offers the opportunity to go to foreign lands, but encourages new members choose a new identity. Enlistment is for five years, and new enlistees receive roughly $1,400 per month. After serving one stint, legionnaires may apply for French citizenship, an option that may give you legal protection from your creditors, in addition to a pretty sweet state-run universal health care system.

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Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.
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