Investment in Education (Part 2)

As a follow-up of a previous post, I would differentiate education into two kinds, formal and informal. Formal education comes from going to school, college and university whereas informal education comes from learning on the job and self-learning.

To prove that investing in formal education will no longer be beneficial, here's the computation based on the following situation:

Estimate of total cost to complete a Business degree (in Monash University): RM100,000
Monthly salary upon graduation: RM2,500
Monthly expenditure: RM1,300
Monthly savings: RM1,200
Annual increment: 6%
Annual Bonus: 3 months
QUESTION: How long will it take to attain payback?

Then answer is definitely more than 5 years. That is only for payback before taking into account any kind of inflation. With inflation and the time-value of money, the payback period would be so much longer than 5 years

Having said that the cost of education is increasingly difficult to bear for normal middle-class families, all is not lost. The main reason that I'm saying this is because of the increasing amount of information available on the Internet. You can literally learn how to repair a car online if you know where to find. Information is so vast on the Internet so much so that the only problem is for you to find the right sort of information online

However, to think that formal education is entirely not important will only be understating the importance of formal education. An accountant, lawyer and doctor cannot practise their profession if they do not have the right sort of formal education. This effectively makes formal education equally as important as an informal education

One simple example is programming. I have a friend of mine who studied Engineering in his university days. He went for internship for 2-4 months in an IT company, doing programming in PHP. After doing internship, he was already doing free-lancing in programming of websites. All the knowledge came from the exposure, the interest and the online sources of information. And all this came from only a little investment in time, effort, electricity and broadband connection.

On the flip side, another friend of mine who aspires to be a medical doctor cannot practise as a medical doctor if he does not go to university.

My thought
However, to think that formal education is entirely not important will only be understating the importance of formal education. An accountant, lawyer and doctor cannot practise their profession if they do not have the right sort of formal education. However, to think that formal education is entirely not important will only be understating the importance of formal education. An accountant, lawyer and doctor cannot practise their profession if they do not have the right sort of formal education.

Read: http://lexlex-truthseeker.blogspot.com/2010/08/investment-in-education-part-1.html for Investment in Education (Part 1)