With the rising cost of education, some may question whether pursuing a bachelor's degree is worth the time, energy and financial investment. According to a 2012 report prepared by the Department of the Treasury in collaboration with the Department of Education, the answer is absolutely. On average, college graduates earn about 65 percent more per week than those who have a high school diploma. In fact, according to an analysis conducted by the Pew Research Center, college graduates earn on average about $20,000 more per year than non-graduates. Over a 40-year span, that equates to more than $550,000.
Cost Versus Value of Higher Education
It can be challenging to fully understand all the costs involved in pursuing higher education because of the vast number of factors that have to be taken into consideration, some of which are relevant only in very specific situations. However, there are some basic differences in costs between public and private institutions that may help parents and students make more informed choices.
Public Colleges and Universities
Public colleges have the advantage of offering higher education at significantly lower overall cost than private institutions according to Peterson's. They can do so because they receive funding from their state government, and as a result, the spending is overseen to some degree by the granting entity. These funds allow state colleges and universities to offer significantly reduced tuition as compared to private institutions. The trade off is that state universities are often much larger, sometimes having as many as 200 or more students enrolled in lower-division classes. They may also offer a greater diversity of academic majors than private institutions and many have earned a reputation for excellence in a vast array of academic disciplines.
Private Colleges and Universities
While private colleges generally have a much heftier price tag, they also generally offer far more in the way of both need-based and merit scholarships. According to The College Solution, private colleges offer significantly more financial aid than do state colleges. In some instances, private schools can end up costing the student even less out-of-pocket than their local state college, even if when the tuition is $40,000 or $50,000 per year. Also, schools seeking a diverse body of students, or those wishing to increase their rankings can make qualified applicants very attractive offers that make their high dollar schools quite affordable, even for lower-income families. In general, class size is much smaller, and there is greater access and interaction with instructors, although the availability of majors may be much more limited.
College Majors and Costs Versus Benefits
A report compiled by Georgetown University's Center on Education and the Workforce provides a comprehensive overview of the top earners in a huge variety of academic fields. They found that STEM degrees (Science, Technology, Engineering and Math) are the top-earning degrees, followed closely by bachelor's degrees in health sciences. On average, STEM graduates start at $43,000 per year and health majors earn about $41,000 per year starting out. Comparatively, liberal arts majors earn approximately $29,000 annually starting out. Clearly, choice of major can have a huge impact on the overall cost of higher education in the long-run.
For those who are not interested in STEM degrees, or in earning a bachelor's degree, there are a number of two-year associate degrees that can offer low-cost tuition, job satisfaction and a reasonable income. Many of these are in health fields, but there are some surprising majors that students may want to consider if getting through school quickly is a goal for them. For example, according to CollegeQuest.com, air traffic controllers, geological and petroleum technicians and aircraft mechanics and technicians have significant earning potential with minimal time or financial investment. Keep in mind as well that two-year graduates, once employed in a field of their choice, will often have the opportunity to pursue additional education at their employer's expense. This is particularly true in health fields, where hospitals and other employers not only pay for furthering their employees' educations, they flex their schedules to allow them the time to do so.
Reducing the Cost of Higher Education
If a two or four-year degree is a must for the student, there are other avenues to help offset the cost of paying for college and increase your return-on-investment. During his administration, President Obama has placed great value on the advantages of a college degree both for the individual and for the country saying, "we can't allow higher education to be a luxury in this country. It's an economic imperative that every family in America has to be able to afford." This attitude has led to several policy changes with regard to funding education:
- Pell Grant amounts were increased from $4,731 to $5,500 in 2010
- The Stafford Loan Program continues to keep interest rates very low with flexible repayment options
- The American Opportunity Tax Credit was introduced to replace the Hope Credit, which can be taken for four years instead of the initial two years and offers an increased credit
- Income-based repayment options have been implemented and modified since 2009 that allow students to pay their student loans off at a rate consistent with their earnings
Even with the incentives that the government provides, education is still a significant investment. However, a look at some of the obvious, and not-so-obvious, benefits may help families make an informed choice about the overall benefits of their children's education.
Non-Monetary Value of Higher Education
While many parents and students tend to view the pursuit of higher education solely in terms of what it can mean to their financial futures, there are a number of other benefits to attending college that do not directly involve the amount of money graduates will ultimately make. Although earning a better income is still a primary motivating factor for those desiring to earn a college degree, the social and personal benefits that college graduates obtain are just as important.
Higher earnings are still one of the most important factors in determining whether a college degree is a sound investment for many families. Not only does earning a degree mean higher income over the course of their lives, students and families also benefit in other ways economically according to the Pew Research Center:
- Graduates experience lower rates of unemployment
- They also have lower rates of poverty
- They are less likely to live in their parent's home after graduation
- College graduates have an increased ability to continue to climb the economic ladder (independent of their parent's socioeconomic status)
Personal benefits are typically those that can't be measured in dollars and cents but are often equally or even more important than economic advantages enjoyed by those with a college degree. When factoring in the cost of education, it is important to remember these advantages as well:
- College graduates generally have a greater sense of self-worth.
- They have a greater opportunity to continue to learn while they are earning.
- Graduates generally find more satisfaction in their jobs.
- They make healthier lifestyle choices.
- They are more likely to marry and less likely to divorce.
- Have greater access to health care, retirement investment and travel opportunities.
Many of the personal advantages that college grads enjoy also benefit their communities and society as well. These contributions may not obvious, but are very important for the health and wealth of the country as a whole:
- Healthier lifestyle choices translate into less demand on the healthcare system and fewer dollars spent on healthcare
- Living longer allows graduates to continue to contribute to their communities and jobs for longer periods of time
- College graduates are less likely to commit crimes
- They make more informed political choices and are more likely to vote
- They are more likely to volunteer their time to support those in need
Clearly, there are a number of benefits to earning an advanced degree; however, electing to attend college is still a highly personal choice that should meet the needs of both the students and their families. In addition to the many advantages, those deciding whether attending college will want to consider any other factors such as participating in a family business or marriage plans. Utilizing all the available resources to make an informed choice will help keep students and families on the best path to success and satisfaction.