What If Your Kids Decide Against College?
By Michael Jamison, Managing Partner & Portfolio Manager
Priority Shift
College has long been a staple of education. Many parents strongly encourage their children to attend university in hopes of securing a brighter future and a more promising career path. By and large, a college education still provides those advantages to graduates. Regardless, a growing number of teenagers are deciding against attendance, for a variety of reasons.
College remains a great option. But it’s not the only option.
If a child decides against attending college, this decision can be jarring for parents concerned about their child’s future, and it raises questions about tax-advantaged savings plans earmarked for a college education. But college savings plans like 529 accounts aren’t limited to four-year universities, and neither is financial success.
If your child is on the fence about college, it’s important to explore the leading alternatives, and to consider what the next generation truly needs to succeed in the evolving workforce.
But first, why is college falling out of favor?
Fading Confidence
Since its peak in 2010, college enrollment declined nearly 10% through 2020. American confidence in higher education also fell to 36% in 2023, a sharp decline from 48% in 2018. While there may be many factors contributing to this decline in confidence, cost is the primary one.
From 2010 to 2020, the average annual tuition inflation rate was a whopping 12%. In 2023, the average cost of attending college was more than $36,000 per year. This has created a notable barrier to entry for higher education. It has also dampened sentiment for prospective enrollees who are left weighing the benefits of a college degree with the burden of student loan debt levied on them or their families.
Conventional wisdom would say the better career opportunities and higher wages made available by a college degree would justify the high cost. But that isn’t a guarantee. A degree remains crucial to breaking into certain higher-paying fields, particularly science, technology, engineering, and mathematics (STEM). However, many other majors do not correlate directly with earnings. And as tuition rates rise seemingly every year, a six-figure price tag for a degree is no longer an obvious choice financially. Rather, it’s an obvious reason to explore all the available options.
If Not College, Then What?
Recognizing that tuition expenses may not be worth the potential benefits of a degree is one thing. But for many parents in this predicament, the question becomes, if not college, then what?
Fortunately, trade and vocational school is a familiar and practical alternative to college that is currently experiencing a renaissance.
In fall 2023, enrollment in vocational programs saw a nearly 16% increase, significantly outpacing enrollment for traditional college. These programs prepare enrollees for a variety of practical career paths, from electrician to construction worker to chef.
Compared to four-year universities, trade schools are considerably less expensive, ranging from $5,000 to $22,000 per year. And unlike typical four-year degree paths, trade school programs may last just one year, or less. Perhaps most importantly, trade school attendees exit their schooling with a clear career path — and one that is likely more resilient to displacement from emerging technologies like AI, to boot.
Vocational programs prepare students for respectable, high-demand careers and can generally be funded by college savings plans. If your child decides against college, it might be worth considering this time-tested alternative.
Sources:
College Enrollment & Student Demographic Statistics
College Tuition Inflation Rate
Americans’ Confidence in Higher Education Down Sharply
