“There is always a better way – find it.” – The Hacker Ethos
All education – even college education – is fundamentally self-education. The purpose of the Personal MBA has always been to direct you to resources you can use to improve your business skills on your own time, without quitting your job and mortgaging your life.
In the five years I’ve been running the Personal MBA, I’ve seen far too many people give away their power and responsibility to a simple piece of paper by saying something like the following:
- “You need a good (read: prestigious/expensive) degree to get a good job.”
- “No one cares about what you know, they just care about where you went to school.”
- “No one will interview me without a credential.”
Having a credential is not (and has never been) equivalent to being an educated person – education is about what happens in your head, not in a classroom. It is true, however, that many employers use credentials as a screen to weed out candidates for available positions. If you’re committed to self-education but find yourself uncertain about whether or not hiring managers will give you a second look without a degree, this post is for you.
For the moment, let’s ignore the fact that you don’t need a credential to provide value to other people – starting your own business is a much better way to achieve material success than getting a job, and you don’t need a degree to get started. (For proof, read The Millionaire Next Door.) Let’s assume that you’re resigned to going through your career the “traditional way”: by earning a high school diploma/GED, getting a college degree, and interviewing for a job. How should you go about getting your degree?
I have nothing against college education per se – I went to college, and it was a good experience. (I was able to finance my degree completely via scholarships.) What really irks me is that so many people mindlessly assume that sitting in a classroom for 4+ years and racking up tens (or hundreds) of thousands of dollars of debt = getting a useful education, and that it’s always a good investment. It isn’t, and it’s not.
The return on every investment is always directly related to how much the investment costs. The more you spend (in terms of both money and time), the lower your return. College education is one of the most expensive things you’ll ever purchase, so finding ways to get the benefits of a credential without breaking the bank pays off handsomely in both the short and long term.
My goal is not to dissuade you from attending college if that’s what you decide to do. My purpose in writing this is to help you get the best possible educational return on investment by maximizing the value of your credential and minimizing the cost. Never forget that higher education is itself a business, and has a vested interest in maximizing the amount you pay for a credential. The more classes cost and the longer the program takes to complete, the more you’ll pay, particularly if you finance your degree with debt. The more you pay, the more limited your options and the lower your return.
What Does the Optimal Undergraduate Degree Look Like?
Let’s assume you want to maximize the value of getting an undergraduate degree, and that you’re open to options regarding how you actually obtain that degree. Here’s a list of criteria the optimal solution must satisfy:
- Highest possible signaling value – since the purpose is to get a job, the more the option makes you stand out as a motivated, intelligent, and reliable employee, the more valuable it is. (Diploma mills are not an option.)
- Lowest possible cost – lower costs result in higher ROI.
- Least possible time investment – less time decreases the opportunity cost of getting the credential and increases the time and energy you can spend doing something else.
- Least potential barriers – approval processes like admissions and bureaucracy are a significant risk: they can increase both time and monetary costs with little notice or recompense.
These criteria very quickly eliminate traditional college programs as the best option. Most undergraduate collegiate-level programs take a minimum of 4 years of full-time effort to complete, which is a huge opportunity cost. Programs with low signaling value (community colleges, etc.) tend to cost less, but the perceived lack of distinction undermines the reason you’re getting the degree in the first place. Programs with high signaling value (Ivy League private universities, etc.) cost a huge amount – several hundred thousand dollars, in some cases, which often requires you to mortgage the next 20-30 years of your life by taking on massive amounts of student loan debt. All programs have huge potential barriers as well: admissions, strict curricula, and bureaucracy, which essentially require you to get someone else’s permission before getting started and increases the risk you’ll have to stay enrolled longer and pay more.
Fortunately, I’ve discovered an option that’s the polar opposite – a low-bureaucracy way to graduate with an accredited undergraduate college degree in 1 year for about $4,000, in a way that will make any potential employer interested in interviewing you.
The DIY College Degree: Testing Out Via CLEP Examination
The College-Level Examination Program (CLEP) is a series of examinations created by the College Board, the same organization that administers the SAT college entrance examinations. There are 34 different CLEP examinations offered, each of which is the equivalent of 3 to 12 college credits. Most accredited universities fully recognize passing scores on CLEP tests as full credit in their program. To graduate with an undergraduate degree, you’ll need to accumulate a minimum of 120 credits.
Official CLEP examination study guides are available for about $20, which includes the material you need to know and sample tests to judge your proficiency before you take the real test. To save money, you can borrow these texts from most public libraries. Each exam is approximately 90 minutes long, and costs $72 dollars to take. If you pass, you get full credit for the equivalent college requirements. If you don’t pass, you can take the exam again – there’s no limit on how many times you can take any given test.
CLEP itself does not offer degrees – once you get to 120 credits, you’ll have to transfer them to an accredited college or university to be awarded a degree. Excelsior College is an accredited institution that does not have a residency requirement, which means that 100% of your credits can be taken via CLEP examination. In order to graduate, you’ll have to pay ~$1,500 ($75 to apply, $895 to enroll, and $495 to graduate) to become an Excelsior student and have your credits transferred. Once the transfer is complete, you’ll be awarded an accredited undergraduate degree.
Evaluating the CLEP Approach
The total cost of pursing an undergraduate degree in this fashion is ~$4,000. The cost of examinations is approximately $2,500 for 120 credits, plus the $1,500 for transfer to Excelsior. Even if you plan to purchase the CLEP exam books and add some padding if you need to re-take a test, you should spend no more than $5,000 total.
It’s possible to complete this process in less than a year. Assuming you studied full-time, it’s possible to study for and pass a CLEP examination once every two weeks. If you focus on tests that award higher amounts of credit (6/12 vs. 3), you can accumulate 120 credits in less than a year.
Bureaucracy and barriers to entry are extremely low. You don’t have to worry about an admissions process, student affairs offices, course offering schedules, or other bureaucratic issues. All you need to do to get started is to pick up a CLEP prep book at the library, start studying, and schedule the test.
Getting your degree in this way will almost certainly impress most hiring managers. Completing your undergraduate studies in less than a year for $4,000 is a very real achievement that proves your intelligence, ingenuity, drive, and persistence. I don’t know about you, but I would much rather hire a person who got their degree this way than someone who spent a lot of money and time attending a traditional college program, assuming both candidates had the skills to do the job. Graduating in this way also gives you more time to develop economically valuable skills outside of college, giving you a huge edge.
If you’re considering getting an undergraduate degree, it appears that the CLEP option is well worth considering. If you already have an undergraduate degree, this is an excellent case study in the value of doing things differently: there’s always a better way, and it pays to find it.
I have more to say about hacking higher education, which will have to wait until the next post. Up next, we’ll discuss a little-known way to obtain a bachelors or masters degree from a world-renowned university for less than the cost of attending a 4-year program at a mediocre state school – without suffering through the dreaded over-the-top admissions process.
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Thoughts? Leave them in the comments!
(Photo credit: ignacioleo on sxc.hu)
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Awesome post, Josh. I very much agree with the last bit about hiring someone who completed their degree in such a manner. The ultimate self-starter.
It’s also a matter of opportunity cost. Dealing with the stress and hassle of admissions is easily compensated by just preparing for the exams.
I work with the Rotary Youth Exchange program. This is very good information for my students who are studying aboard and looking to translate those experiences into college credit.
When I got back from my year in Germany I passed both the exams and received 12 credits for German. At $150 it was the cheapest credits of my college career.
I adore this idea. I think it’s especially keen for anyone who started an undergrad program and never finished it. But what about the social value in four years of undergraduate education? My friends who didn’t get undergraduate degrees (including two of the smartest people I know) say that it’s the social experience of college that they most regret missing out on. I’m not saying it’s necessarily worth spending $100K on, but there is definitely a lot of social learning that happens at an undergraduate school (not all of it good) that’s not included with the self-study approach. A young person who has all the knowledge but never learned how to play well with others might find a better value trade-off in a traditional four-year program — or commit to working hard on the social arena next.
Fiona – great point. If a person went this route, it would probably be easier to spend more time/money/energy socializing and having new experiences via travel or local social activities. Classes take up a *huge* amount of time, most of which is relatively low-quality from an interaction standpoint – skip the classes, and you free up more time to meet cool people!
Josh, I did exactly what you suggest last year. I researched the least expensive and simplest choice to acquire the credential from a regionally accredited institution. I attended Thomas Edison State College instead of Excelsior, which has similar accreditation, because they offered a shorter path to degree for my situation.
I used a combination of CLEPs, Microsoft certifications, DSST tests, portfolio credit, and two online classes to finish a four year degree in about 9 months while working full time. I had zero credits when I started.
I am glad to share my roadmap or offer advice from my experience. Would you be interested in a guest post?
Mike – absolutely! I’ll send you an e-mail.
Hmmm…sounds like I got the best of all worlds with Stanford – only $9,500 in debt for the 4 years, high signaling value, and I spent the vast majority of the time socializing rather than studying. At age 17 when I started, I not have had the emotional wherewithal to go cold out into the world and supply myself with the kinds of social experiences I got there. Ironically I probably could have supplied myself with better educational experiences.
Great post, Josh!
Are you familiar with Western Governor’s University? http://www.wgu.edu http://en.wikipedia.org/wiki/WGU
It was created (literally by the governors of western states) to give credit for competency rather than coursework. I can’t attest to their program, as I haven’t done anything with them, but I wanted to share in case it’s helpful for someone.
- Jon
Awesome post, Josh, and definitely worth considering if you choose to take the corporate route to success. I agree with you, though, that forging out on your own and starting a business is a much more satisfying path to acheiving your goals, if you do it right. Thanks for the great tip!
Jerry
Another way to get an accredited degree (including some master’s degrees) quickly and inexpensively is through the Western Governors College. It’s a self-paced, all online university with entirely reasonable costs. People with knowledge and experience in their field of study can move quickly through the program.
http://www.wgu.edu/
I love this suggestion. I know plenty of people who are highly intelligent, but need to work on their own terms or work better outside of a classroom, and these kind of ideas can help them get that degree that might be evading them, subsequently breaking down the “degree” barrier to getting hired. Also, food for thought for anyone who might be looking to diversify their background without going through the expense they did when they initially earned a degree.
Other’s have said “Ultimate self starter”, I’m thinking “Ultimate crammer”.
Having read your article and the comments, then thought about it for a bit, I’m thinking, “Inventive, but I’m probably not going hire someone who went that route. Well, maybe someone mature (say, over 30) who built up the credits over several years whilst working.” The method reads to me like those crammer courses people go on to get their MCSE/OCP/CCNA &c in the IT field or PRINCE2/PMP/CBAP &c in the projects field. Or ‘Cram, regurgitate and forget’ as I like to call them. The fact that you mention study guides, rather than real text books, re-enforces that view.
Not attending university would also make me question their socialisation and ability to play with others. There are very few jobs that don’t involve collaborating and working with people as Mark and Mike over on Manager Tools joke: “So you want to work with people? That’s good cos all our jobs with dogs and tress are filled.”
Unless I have a compelling reason to believe otherwise I’m going to figure that someone went that route to get the piece of paper and hasn’t actually earned a real degree, they’ve gamed the system. I’m not saying I’d write them off but if I’ve got 5 interview slots and slot number 5 is between them and someone who actually attended a university it’s going to go to the other person. Processing job applications is, as anyone who has done it knows, a process of rejection. I’m looking for a reason to interview someone, I’m looking for reason to get them out of the pile of 500 possibles into the pile of 495 rejects.
What I like about Personal MBA is that it’s about reading and learning, not getting a piece of paper that says you read someone else’s condensed version of the real text and remembered it long enough to regurgitate it the next week.
Stephen
PS In case anyone’s interested I studied a 1 year general studies course followed by 2 years joint honours and 1 year single honours at Keele University. Not exactly a traditional degree but one that has helped me advance and given me great advantages over the years.
Josh – Thank you for this. My son is an unconventional 20 year old trying to figure his way through school. Bright but not cut from the normal cloth. This may save his life and his sanity. Bless you for your excellent work.
CFK
Josh,
Looking forward to part II as an MBA is out of my pocketbook at this point but something I’ve long thought about.
Stephen – excellent points. A few counter-points to consider:
(1) This approach *does* meet the need of reducing the number of filtering factors that could disqualify them outright for a position, assuming you’re filtering by degree status.
(2) Passing these exams is not “gaming the system” in any way, shape, or form. The exams were created specifically for the purpose of aligning curriculum standards that allow the transfer of credits between accredited universities. If a student passes the test, they’ve learned everything students in traditional universities have been expected to learn to pass the same course. The retention issue is universal, and a strong case could be made that the CLEP approach would result in *better* retention, since the material was learned in a focused, concentrated manner.
(3) The “teamwork” aspect of most traditional 4-year degrees is low-grade and artificial – real-life leadership and management experience is *very* different and much more valuable. Socialization depends on what you’re looking for – a traditional university student may be decent at following orders without questioning, but a non-traditional student may be better at self-direction and problem solving.
(4) An applicant that minimizes the opportunity costs associated with traditional collegiate classroom work may have more real-world leadership / teamwork experience to highlight, since they’ll have had more time and opportunities to develop those skills.
Assuming the credential is not the only thing in a candidate’s favor, it’s much better than either not having a degree (which will get them filtered out) or potentially putting themselves in a precarious financial situation by pursing a traditional degree. Food for thought!
Obtaining a degree in this manner could make sense if you just want something to stick on your resume. It would only work if you had some real experience to go along with it. Then you might bypass a recruiters smell test and knock the hiring manager out with the rest of your resume. You should already be otherwise qualified for the job based off your technical skills and past work experience.
But I have to say that for the average college aged student, this would be a horrible idea. At the end of the day, the college degree is only worth the abilities and knowlege you’ve obtained from it. Can you really teach yourself anything in depth about all of the general topics, and your chosen major in less than a year? The reason college takes four years it takes a while for a person to learn and complete all of the material. Surely colleges are not so ineffecient that it takes them four years to teach you what you can learn in a year. If anything, self study usually takes longer because you are teaching yourself rather than learning from someone with experience.
I would also like to add my personal philosophy on the financial aspect of traditional education: Anyone who has studied accounting or finance knows the concept of leverage. Companies frequently borrow money in order to expand their capacity (think new plant or expensive equipment) and thus future earnings potential. Some investments don’t have much immediate benefit, other invesments may not have any immediate benefit, but companies that make smart investments tend to have much more earning power in the long run than companies who grow just by reinvesting their own earnings. Not all debt is bad.
Now the other thing to know about taking on debt for an investment is that it has a cost. The cost of debt is based off risk. Most lenders aren’t willing to offer the credit needed to a person in his early 20s that the person would need to make any other investment. Houses require down payments and steady income, most business ideas are out of reach without a couple hundred grand at least. Young people simply don’t have the resources. So one of the best investment ideas a person can make IS a college degree. For most people in their early 20’s, a college degree has an incredibly high ROI versus anything else they might consider investing in at that point. This is one of the few places where a person can leverage themselves in a fairly efficient manner, and also a place where creditors are willing to offer support (thank you USA!).
Is there a way to increase the signaling value of Excelsior college? Could you use this method to earn 100 credits, transfer into Excelsior, and then transfer from Excelsior to a top 50 or top 100 school?
I’m making an assumption that “distance learning school” is not something that contains high-signaling value if anyone looks up excelsior and reads the first line on their about page.
This is definitely something worth looking into, as the time saved from 4 years to potentially 1 year for a degree is totally mind blowing! I agree that that some employers will filter out people who graduate this way, but then again I’m sure there are some savvy employers out there who would recognize the intelligence and qualities of a candidate going through the CLPE route. After all, you don’t need to land 1000 interviews to get the career you’ve always wanted, you only need a few select hiring managers who would appreciate you for what you can achieve in your career, not which university you came from. Great post, Josh! I need to spread the words =D
Wonderful idea, wish I had known younger. I would also recommend keeping a portfolio of the projects and work you do if you will be seeking employment. You can show employers this way instead of telling them.
One of my favorite quotes is “formal education makes a living, self education makes a fortune.”
I’ve been burned enough times by giving chances to people with no degree, or ‘alternate’ degrees. I’m sure there are rockstars who took a path similar to what you describe, and there are certainly bozos who have traditional ‘high-cost’ degrees.
Its just a much safer bet to filter out anyone without a nationally accredited degree. Maybe I’m not being fair, but its what I do. I think many hiring managers would agree.
As a respected mentor of mine told me, “If they don’t have a degree, they aren’t smart enough to realize that they need one.” I think the ‘nationally accredited’ phrase can be assumed.
Tyler- if you’re interested in maximizing signaling value, you’ll find Part 2 very interesting…
Chris – “Surely colleges are not so ineffecient that it takes them four years to teach you what you can learn in a year.” I think in many cases, they are. My research suggests that most people make a living doing something completely different than what they majored in during college, and the people who are in the same field indicate that they use almost nothing they learned in college on a day-to-day basis. (Unless, of course, they’re in academia.) Most of the practical training in every field happens on the job, even in the case of new hires with advanced or graduate degrees like the MBA.
Re: leverage – leverage only makes sense as a strategy to either (1) purchase a necessary capability you otherwise wouldn’t have without taking on debt, or (2) diversifying capital investments to spread out risk. If you’re borrowing a million dollars to purchase a piece of equipment you have to have, or if you’re investing in 10 companies with your capital instead of one, leverage can be a smart move, assuming you protect for downside risk. Leverage is never a good idea to obtain a resource you could get another way for a lower price.
A few decades ago, an undergraduate college degree had a very good ROI due to higher expected earnings. Today, the cost of getting the degree has been increasing so fast that it’s soaking up any earnings advantage it once had, and the debt required to obtain the degree presents a significant liability if jobs aren’t available. (As is the case now.)
Undergraduate degrees are now purely a filtering heuristic for hiring managers, so it makes sense to get it as quickly and as cheaply as possible, then focus on building skills with real value.
Brian – sorry you’ve had bad experiences with a few people in the past; making good hires is never easy. I’d recommend taking a look at Hiring Smart for some tips to improve your hiring process.
This particular process is nationally accredited, so it would probably meet your needs if you’re looking at it as a filtering mechanism, so you could focus on evaluating the candidate’s actual skills vs. the position you’re hiring for. Regarding your mentor’s advice, I think smart people do realize that it’s important if they want to get certain types of jobs, primarily because it’s used as a filter. The really smart ones also recognize that the cost of obtaining a credential is rising at an astronomical rate that’s far outpacing what the credential is worth, so they look for intelligent ways to get it more quickly and less expensively.
I’m a big fan of your ideas, however as I’m only finding out this stuff now its a few years too late for the degree, so I wait in eager anticipation for your article on Master degrees….
Josh,
Do you know if such programs exist for masters (at least to some degree)? If it is possible to finish an undergrad degree in less (or about) a year. why not for master programs?
Josh
How can international student take advantage of this opportunity. I live in Africa and i’m currently exploring options available for distant learning.
Dear Josh,
Please release part two before I die of anticipation.
This is what PMBA is all about – accessibility. If we can decrease the barriers to obtaining a high-quality education, more people will be able to have to tools to change their own lives – if you teach a man to fish…
Where were you 15 years ago!
Good question Tyler.
Josh you dah man!!!
Hello Josh, great post! I’m currently looking into the ‘CLEP’ exams as a way to acheive my degree. I had one question regarding accumulation of credits to get there. I have some very valuable ‘real world’ work experience, and I was hoping to obtain college credits for this. Is this an option w/ an accredited 4 year school? If so, who would be the best contact at the institution.
Any help you can provide would be extremely helpful.
Thank You,
Casey
Great Post! I’m researching the ‘CLEP’ exams as a way to achieve my 4 year degree. I had one question regarding the accumulation of college credits to get there. How can I maximize my ‘real world’ work experience in order to obtain college credits? I was told that some institutions will accept relevant work experience and parlay that into credits toward a degree.
Any help you can provide would be extremely helpful.
Thank You,
Casey
Very interesting site! I’ve actually dedicated a series of posts to getting an MBA.
I actually have a $1,000 giveaway this coming Monday, Oct 26 for anybody aspiring to get their MBA. Come over to FS and have a read then. I think it’s a unique offering that will help 3 lucky people.
Financial Samurai