Being Smart About Investing In Education

Educational choices can be as complex and as important as investment choices however they are often not treated with the same attention to detail.

Education is an investment whether or not a student is personally paying for the cost of tuition. A student is investing their time in addition to the cost of tuition. This time is valuable not only because it can be spent productively in other pursuits but there is an opportunity cost to making an incorrect educational choice.

When a student does not get a return for their investment of time in education they may have lost the lifelong reward of making a good educational choice. All of us know people who have spent years in college and graduated with degrees that had no applicability to their future professional lives. These graduates often have had to go back to school and retrain in order to have productive careers.

When you measure the lifelong reward for students who majored in areas that provided both professional opportunity and were consistent with their skills and interest against those that have not, it is a gap that can never be made up.

Making the right educational choice today has lifelong implications on income and life satisfaction.

Educational Considerations for Military Families

While many of the factors governing educational decisions are the same for civilian life as they are for military families there are some very specific considerations for those who serve. Let’s look at the big picture first:

  • rising tuition and student loan debt,
  • a mismatch between workplace needs and the skills of college graduates resulting in a “skills gap”,
  • international competition driving down wages
  • increasing academic competitiveness
  • antiquated models in the United States’ higher education system.

These factors have contributed to low wages, underemployment, income inequality, and rising student loan debt crisis. Society has begun to appropriately question the return on investment for a four-year college degree. European models that focus on skills development, apprenticeships and efficiency of educational time spent are becoming more and more popular in the United States. There is an increasing value being placed on certifications, certificates, internships and apprenticeships by the business community.

Is Higher Education Worth The Investment?

Let’s look at this from an investment perspective. Graduation rates for adults attending two and four-year colleges in the United States have been consistently abysmal.

Many community college systems have graduation rates below 30%. The students that do graduate, and remember this is a minority, are taking 5 to 10 years to do so. A recent DOD study indicated that the average time to complete a two-year associate’s degree for a service member was seven years.

On the other hand, completion rates for certificate programs, which teach a variety of concentrated workplace skills are much higher. For example completion rates for 18 credit certificate programs Martinsburg College, an online college that specializes in workplace related certificate and certification programs, are between 85 and 90%.

So you could make an investment of your time and tuition dollars in a bachelor’s degree program, something that has a low probability of success, a very long time horizon (7 to 15 years before you begin receiving a return), and has a higher cost (tuition for two and four-year program is much higher than tuition for certificate programs) or you could invest in a certificate program, an investment that has a very high probability of return, a short time horizon, and has a small investment requirement (time and money).

In purely financial terms, it would seem ill advised for anyone except those entering a highly specialized college program to invest in anything other than a certificate program first. This does not shut off pursuing two and four-year degree programs later, it is simply a smarter first step. In some cases students can receive credit for the work that they did in their certificate program when they later enroll in associate’s and bachelor’s programs.

Challenges With Tuition Assistance

As mentioned earlier, military families have some unique considerations. Active duty service members have access to the voluntary education tuition assistance program which provides, with important restrictions, access to up to $4000 a year in tuition funding. The restrictions are important to understand, for example the Marine Corps and other branches will not permit tuition assistance during the first year of service.

They will also not approve tuition assistance during the last year of service. And will only approve one or two individual course enrollments at a time. Since 70% of Marines enlist for only one term of service they have a limited window of opportunity to utilize their benefit complicated by the need for repetitive applications for tuition assistance approvals.

This is also a factor for their spouses since DOD funds a tuition assistance program, MyCAA which provides up to $4000 to spouses of servicemembers E1 through E5. Time is a real factor for these families.

Only 25% of spouses eligible for this benefit utilize it. Unfortunately it is not uncommon for service members and their spouses to miss the opportunity to utilize their valuable tuition benefits even though this was one of the primary reasons for enlistment.

G.I. bill funds are also a wonderful benefit available to military families, however it is important that they understand their options in order to fully access this benefit. For example restrictions on transferring benefits to your spouse often make it impossible to do so unless you have planned in advance. This benefit cannot be transferred after you have exited the military or if you have less than four years remaining on your enlistment term (at least for Army).

This means that a soldier would need to transfer their benefits literally on the day that they reenlisted. One trick that savvy service members employ is that they transfer a small amount of their benefit to their spouse when they re-enlist. This acts as a sort of placeholder for future decision-making and options. If they don’t use the G.I. bill funds and would like to transfer it in the future they can increase this amount and the amount that they transferred will not be significant enough to affect their own future use of their G.I. bill funds.

FACTS on how to transfer:

  • 6 years of service may transfer to spouse
  • 10 years of service may transfer to spouse, children that are listed in Deers.
  • Upon transfer, the service member must commit 4 more years of service. If the current contract is less than 4 years then the service members commander may approve with the intent of extending the service contract.

Martinsburg college has been providing online distance learning programs for military students, veterans, active-duty service members, and military spouses since 2004. Our experience in providing high quality, workplace relevant, skills oriented programs dates back more than 30 years. The college specializes on short term distance education programs that focus on work place needs. Martinsburg College is accredited by the Distance Education Accrediting Council.

The Military Guide was founded by retired Navy Officer, Doug Nordman, author of the book, The Military Guide to Financial Independence and Retirement. The goal of this site is to help you to use your military and veterans benefits to make better informed financial decisions. Thank you for your service!

  1. Around year 11 of my career I used TA to obtain a Doctorate and licensure in my chosen field, Hampton Roads had a a number of military friendly colleagues and universities. And I did this while attached to USS Austin (LPD-4), a fine ship whose end came too soon.

    My kids were already out of college by the time they allowed GI bill transfers, so my Montgomery era version sort of hangs out there, still. As far the TA, yes I know in 2015, a bit different than the 1996 version I used, but as long you follow the rules, keep copies and file grades on time, I never had a problem with either TA or the FA office of the University (Regent).

    Bottom line is that even at sea, you have a certain amount of time on your hards, how do to plan to use it, once that time passes, there is no ‘do-overs”

    Comment? Question? What's on your mind?