If you spend much time hanging out around the guidance counselor’s office, you are likely to see a poster that exclaims, “Invest in Yourself.”

I can’t say I’ve ever heard a guidance counselor even utter the phrase, “Going to College is a Risky Business,” much less put up a poster, but your post-secondary education choice is also an exercise in “risk management.”

Investopedia defines risk management as,

“…the process of identification, analysis and acceptance or mitigation of uncertainty in investment decisions.” There was a time when college was a slam-dunk, no-brainer path to middle-class, or better, prosperity in the US.

For example, a half century ago my tuition (for a year!) was $360. I could pay for that by working seven weeks at minimum wage. Tuition has gone up 200% in just the last twenty years. Today tuition at a state university would require you to work SIX MONTHS.

I graduated with a BA in Philosophy, answered a newspaper ad on a whim, and, lo and behold, was launched into a successful career in Information Technology. (I had never seen a computer.)

My starting salary was more than twice what I paid for my entire college education.

College in America doesn’t work that way anymore.

The simple explanation is that it comes down to “supply” (graduates) and “demand” (suitable jobs).

A half century ago only seven percent of high school graduates went on to college. In post-WW II America our economy was booming while the economies of many European and Asian countries were–only slowly–being rebuilt. The “Law of Supply and Demand” strongly favored the freshly minted college graduate.

Today, when forty percent go on to college, grads are “a dime a dozen.” In the last nine years we haven’t seen one year of 3% GDP growth. Post-Great Recession of 2008—we are slogging through the longest and slowest recovery since the Great Depression.

There just aren’t anywhere near enough suitable jobs for the army of high school graduates choosing to go to four-year colleges. College is a competition for a few good jobs, and many are going to lose.

Two decades ago in his book, Another Way To Win, Dr. Kenneth Gray coined the term “one way to win.” He described the OWTW strategy widely followed in the US as:

• Graduate from high school.
• Matriculate at a four-year college.
• Graduate with a degree in anything.
• Become employed in a professional job.

Dr. Gray’s message to the then “academic middle” was that this was unlikely to be a successful strategy in the future. The succeeding twenty years have proven him inordinately prescient and not just for the “academic middle.”

In addition to weighing factors involved in the investment, you need to consider the risks.

• Half of all graduate end up under employed or unemployed.
• Forty-four percent drop out and are stigmatized in the job market. (Drexel University study)
• There is little or no return on investment for many degrees. (We are headed into territory where going to college to become a high school teacher (starting salary of $40,000) doesn’t make economic sense.)
• Many students take out excessive student loans and end up financially crippled. (Twenty-five percent of student loans are in default or delinquency.)
• Many parents end up in default or delinquency with PLUS loans.
• Parents destroy their retirement plans in order to provide their students a four-year college education.

Making post-secondary education choices for children is the second biggest financial decision many families make. What was relatively simple fifty years ago, is very complex and risky today—too complex and risky to be left solely to teenagers.

Parents need to step up and do their homework.