Can you do without ... a college education?

Making frugal, smart choices isn't just about the little things. Major life decisions should be approached with the same care and thought, if not more, as a monthly grocery budgeting plan.

For many, especially those of us who grew up lower-middle class, a college education will be the most expensive purchase of our lifetimes.

Do you really need it? The answer is, as always, depends on what you value.

College opens up the opportunity to work jobs that would not otherwise be accessible. College opens up the opportunity to make money. College can saddle a person with a debt equal to many years of their yearly income. College is asking a person to commit their personal and financial futures to what they think they want to do for the rest of their lives at that exact moment. All of these statements are true.

As mentioned in the post about debt earlier this week, the average college graduate will make about $1.5 million more than their high-school graduate counterparts during the course of their lifetime. But that's a good example of a bad statistic.

Not all college degrees are alike.

Advanced, professional degrees in the fields of medicine, law and engineering make up the vast majority of those extra wages. Take them out, and the college vs. no college numbers even up considerably. Some degrees actually have less earnings potential than your average HS grad.

Three Amigos

Three friends are graduating high school and have to decide what they want to do with their lives: Tom, Dick, and Harry. None of them are the high achievers who are going off to big-time schools in prestigious fields on scholarships.

Tom is enamored with the college experience. He's got good grades and has been able to get into his state's flagship public university, but has no scholarships. He's not sure what he wants in a career.

Dick wants to be a teacher. In order to save some money, he's going to start at a small community college for two years and then decide where he wants to transfer.

Harry isn't particularly interested in school, but he likes working and he's good with money. He goes to work for a landscaping business.

A few years later....

Tom switched majors once and graduated with a degree in sociology after five years. He got some basic state aid grants and borrowed on student loans to make up the rest, including his living expenses on-campus. He has $80,000 in student-loan debt and will be making $30,000/year as a social worker. He has no assets or savings. He will be making the minimum payments on his student loans for 25 years, and with interest he will end up paying $150,000 for his college education. He's started saving for retirement five years later, and he will already have to work five extra years to pay off those student loans.

Dick worked part-time to off-set the price of community college, and then went to a small state school with a reputation for its decent education program and an affordable tuition rate (huzzah Eastern Illinois University!). Dick finished in four years and had only $6,000 in student loan debt, and will be making $30,000/year as a teacher now, living his dream.

Harry worked hard lived frugally and saved 30% of his income for four years in a bank account with a two-percent interest rate (not much, but he's pretty cautious). He's been promoted to field supervisor at work, making $30,000 year. He has $25,000 in savings already and no debt at all. He doesn't love his job, but he has money and time to pursue some fun hobbies. With his savings, he's looking at putting the down payment on a modest house and starting a small side business that he hopes could grow. He's at least five years, probably more, closer to retirement than either Tom or Dick.

Yes, these are contrived examples, but it shows how much our college choices can affect our future down here in the ordinary bachelor degrees.

So what factors should you consider?

How much help will you be getting to pay for college?

If you have scholarships or your parents can help pay for it, college begins to make a lot more financial sense.

Where do you want to go to school?

If you would be happy living at home and going to a community college for two years, college will be significantly more affordable than it will be for someone who wants to get away from it all and go to school across the country.

Do you want to work to live, or live to work?

Having a dream job, doing what you love, is very important to some people. For many others, they just want to punch a clock from 9 to 5 and live their lives on evenings and weekends.

Are you entrepreneurial?

Are you willing and able to put time, effort and risk into your own business, or do you just want to cash a paycheck working for someone else?

Do you know what you want to major in, and can you trust yourself to be a good student?

Prolonging college by switching majors (or just not being focused enough) is just throwing money away, and in most cases it's throwing a lot of money away.

Have you crunched the numbers?

Make a spreadsheet. Calculate the cost of college and the increased salary you might be getting vs. the money you could be saving and the interest it would be compounding. But this is important: Be realistic with your numbers. Don't just assume the best-case scenario. The same is true for deciding how in-demand your major will be when you graduate.

In the end, like all simplicity decisions, it's about understanding what's best for you after you've thought the decision through. Only you know what is really best for you and your life.