Investing in the Future

The cost of college tuition across the country rose five percent last year, making college education inaccessible for many bright students. Some high school graduates are now relying solely on their intellectual faculties and ingenuity to build successful local businesses that don’t require degrees to manage.

From owners of the smallest mom and pop shops to executives of the mightiest corporations, not going to college these days is becoming increasingly trendy in some circles. But because the place of the modern university education is so essential for the political, economic, and social development of most individuals, it would be optimal for one to invest in their education through such accessible plans as a 529 college savings plan.

The 529 college savings plan is designed to be a tax-deferred investment tool for higher education. The beauty and simplicity of the plan is that the government has a very limited ability to obstruct or intervene when it comes to who can donate to or benefit from the plan. Money for school and basic expenses are met using a simplified investment vehicle not perishable to the vagaries of market forces and unscrupulous human behavior.

However, there are some disadvantages to this plan. The investment vehicle is strictly limited to college expenses. One cannot have a 529 plan to take spring break trips to Cancun or purchase expensive shopping items in order to be as trendy as their peers. The fund is strictly there to provide access to higher education for those who would not necessarily be able to afford it.

And herein lay the problem of most scholarships. A grant and scholarship exists to provide an education using a fixed amount of money. An education is an investment and so is a high school graduate. If we take a high school graduate, the money we put into his education, and the school he attends all as investment vehicles, then scholarships should be turned into college savings plans that pump an initial volume of funds into a portfolio that is guaranteed to bring a positive return.

Assessing which portfolios are guaranteed to bring returns is a tricky task. The way the local and global economy works is such that market forces allow prices to fluctuate. The value of anything is subject to market forces, even a college education. In some countries’ economies, going to college is actually a disadvantageous thing to do. But because we value a university education so much in America, it is a premium. The more prestigious the school and the more degrees one racks up, the higher the probability that they are going to land that cushion job that they worked so hard to get.

Thus, if we choose to define our economy and our lifestyles such that a modern university education is at the core of one’s financial security and social stability, then the government, individuals and the private sector should work in collaboration to make investing in 529 college savings plans or variants of the plan a priority. Students should be encouraged to get good grades, involve themselves in activities, and be model citizens to garner the endorsement of nonprofit organizations like the Bill and Melinda Gates Foundation. By 2016, the Gates Foundation will have sent 27,000 low-income high school graduates to colleges and universities across the country.

Investing in a modern university education bears little risk in today’s difficult financial times. Five hundred twenty-nine college savings plans and variants of it are the best way to start. The impact on our economy will be an increase in education across the spectrum, which will cause businesses to grow as the skills and goals of business owners will align and synergize in equilibrium.

Patrick Jean Baptiste ’10, a Crimson editorial writer, is a biochemical sciences concentrator in Cabot House.

Patrick Jean Baptiste ’10, a Crimson editorial writer, is a biochemical sciences concentrator in Cabot House.