January 21, 2016

College: Necessary, but too Expensive?

According to a report by the Center on Higher Education Reform titled “High Costs, Uncertain Benefits”, author Andrew Kelly finds that although most adults feel secondary education is necessary, the number one reason people choose not to attend is the cost. However, in a follow-up question, Mr. Kelly finds that most adults can’t accurately estimate tuition costs.

So is the reason most people think college is too expensive is they have no idea what it really costs?

A Clear Payoff in Earnings Potential

When talking about lifetime earnings for high school versus bachelor’s degree graduates, there is a large difference. In a report by the Georgetown University Center on Education and the Workforce, the median entry-level wage for a high school graduate is $22,000 per year. Even the lowest paid majors such as those in the education field still have an average starting salary of $29,000 with significantly more earning potential over a high school graduate.

More specialized majors offer even greater earnings potential. For example, majors within the Science, Technology, Engineering and Mathematics (aka STEM) have an average early career salary of $43,000.

What about mid-career salary? Using the Georgetown report again, we know that the median salary for workers aged 25-59 with only a high school degree will earn $36,000 per year. Majors in the education field will have a median salary of $46,000 and majors in the STEM field will be at $76,000.

A difference of $10,000 per year may not sound like much, but over the course of someone’s career, it adds up. Using these numbers we can estimate a high school graduate will earn about $1.4 million dollars over their career (40 years). A teacher will be closer to $1.8 million and a STEM graduate will be over $3 million.

Enough with the numbers – it should be easy to see that when it comes to earnings potential, a college degree will open many more doors and pathways than a high school degree will.

How Expensive is Higher Education, Really?

What about the statement that college is too expensive? Let’s get this out of the way. For most people, college is not cheap.

However, looking solely at the sticker price will probably drive you away from ever considering a secondary education for your child. Between scholarships, grants, and financial aid programs, most colleges become much more affordable.

Let’s take San Diego State University as an example. The sticker price for San Diego State University for an in-state student is over $26,000. However, based on the family income level, you could pay as little as $6,000.

By visiting the Value page on College Factual, you can also see how this college compares to the average school in terms of price (San Diego offers a good value for the money).

Is There Any Wiggle Room on that Price?

Note that colleges are in some respects like a car dealership. The college would be happy if you paid sticker price, but in many cases, you can negotiate finances. Does your family have a special circumstance that would keep your child from attending due to cost? Talk to the school about it to see if something can be worked out.

Be sure to look into the available scholarships and grants as well. If your student was or is an active member of the military, they may be eligible for the GI Bill. Be sure to check with the school’s veteran’s affairs office to see what assistance may be able to receive.

Beware of debt. Students that combine a low-paying degree with a large amount of debt may have actually been better off financially speaking not going to college at all!

Don’t Ignore Alternative Options

Don’t forget about technical or trade colleges either. Although future earnings potential isn’t as large as with a bachelor’s degree, in many cases a trade or technical degree can get you off to a good start at a lower cost. In fact, some technical degrees will open the door to a career that earns more up front than some bachelor’s degrees do.

I tend to agree with the subjects of Kelly’s study – I feel that college or some sort of additional training after high school is necessary, but it is expensive. Luckily there are many ways to bring down the cost of an education into a more reasonable realm.

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