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Forget Harvard and a 4-Year Degree, You Can Make More as a Plumber in the Long Run, Says Prof. Kotlikoff

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The value of a college education has been a hot topic of discussion here at Tech Ticker.  Now there's more fodder for debate.

A new study from Princeton University shows that expensive college degrees are not necessarily worth the lofty price tags in the long run when you take into account one's natural ability.

Laurence Kotlikoff, professor of economics at Boston University agrees that an expensive education just isn't worth it -- much to his chagrin of course because tuition and fees at Boston University totalled $39,314 for 2010-11.

With unemployment still about 9 percent, on average, for college graduates under the age of 25, and total student-loan debt now topping that of credit card debt in this country, he tells Aaron in the accompanying clip, "If you think of education as solely a monetary investment, if we are not thinking about all the other benefits from education like learning things, and getting to hang out with me, and also just becoming a more cultured person, then we have to look at this very carefully."

So, what does college tuition and room and board cost today?

Well, tuition is the most expensive it has have ever been, rising roughly 5.6 percent per year beyond the rate of inflation, reports the College Board.

In-state tuition and fees at a public four-year university were on average $7,605 for the 2010-11 term. When you tack on room and board, the total average cost jumps to $16,140.

Tuition and fees at a private four-year college were on average $27,293 for the same term. And, the total average cost with room and board amounted to $36,993.

That's a lot of dough -- especially when you multiply it by four years.  It's for that same reason James Altucher, founder of Formula Capital, made his case to Tech Ticker last year that kids should forget the degree altogether.  (See: Rethinking College as Student-Loan Burdens Rise)

Kotlikoff has been doing a bit of his own research on the matter as president of Economic Security Planning Inc. He's developed software that according to the website can "tell you if a job change, a housing move, a retirement account contribution, and a host of other financial decisions will raise or lower your living standard."

Kotlikoff's research aligns with Altucher's credo.  He has found that more often than not, people can have a better lifetime standard of living by choosing NOT to get an advanced degree. And, he says that people can be better off financially by not obtaining an undergraduate degree at all.

Professor Kotlikoff makes his case by comparing the livelihoods of plumbers and doctors.  Yes, doctors have a bigger salary.  But, doctors have to endure nearly a decade of expensive education before making any real salary, after which the doctor is hit by a very high progressive tax rate.  Because of all the costs the doctor incurs, the taxes and the lost wages, he says, "plumbers make more, and have almost the same spending power over their lifetime as general practitioners."

The high cost of tuition — and in turn high burden of student debt — is a key part to Kotlikoff's findings.

"[This] is a debt a kid cannot discharge through bankruptcy," he explains. "We have a lot of kids who are borrowing a lot of money that they can't discharge through bankruptcy who are ending up basically in debtors prison for the rest of their life because they potentially made the wrong choice when it came to education."

If parents are paying, Kotlikoff says, all bets are off.  But, for those considering college, who have to pay for all the costs alone, his advice is to think not once, not twice, but three times over about the financial burden of future student-loan debt.

For another reason college may not be worth the cost, see: Brain Drain: Most College Students Learn Next to Nothing, New Study Says

And, for some alternatives to earning a degree, see: Jame's Altucher's 8 Alternatives to College

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