Advocates for college embrace the philosophy that the fastest way to improve your economic future and financial stability, regardless of the cost, is to further your education. For decades, it has held true thatif you earned a degree,you were virtually guaranteed improved financial success. In the last decade, college costs rose rapidly while unemployment rates among recent graduates remained high. Graduates faced stagnant wagesand high student loan debt, leading to financial struggles immediately following graduation. High percentages of Millennials continue to live with family members whilethey struggle to find solid financial footing. Some now say the rising cost of college combined with high student loan debt can offset the economic advantages .
Today, the number of students with college degreesis outpacing those with only a high school diploma. Of the total workforce, 36% hold the minimum of a bachelor’s degree, with only 34% of workers has a high school diploma or less. Employment opportunities are changing as well. Many jobs, which previously did not require a degree, are now filled by those with higher levels of education. As college becomes standard, it increases employer expectations for all levels of employment, which lowers the wage premium enjoyed by graduates, while increasing its necessity.
From 1994 to 2004 collegeenrollment rose by 21%. During the last decade ending in 2014, despite the recession, enrollment figures rose another 17% for full time and 16% for part-time students. The cost of attending school rose 296% for in-state colleges and universities, and 179% overall from 1995 to 2015. Despite the student loan debt crisis taking shape around the country,the higher costs of attendance have not curbed enrollment numbers..
Lifetime employment continues to support educational pursuits. Those with a bachelor’s degree tend to earn nearly double the lifetime wages of those who fell short. However, not all degrees hold the same value, and you can take proactive steps to ensure you get the best value for the educational degree you obtain.
There are 5 crucial factors to consider which will help maximize the ROI on your college education.
What is the cost of attendance: Calculate the total cost of schooling, which will include yearly increases in tuition and fees, along with other school expenses such as books and room and board. Consider the living costs in the University city as it compares to the cost of living in your current hometown. Each of these factors will impact how much you must spend to complete your education.
The other major factor regarding the cost of school is where you choose to go. Private schools typically cost the most but can provide attractive financial aid packages to lower out of pocket expenses. Private colleges and universitiesalso tend to have higher graduation rates, which can greatly impact earnings. In-state public schools are the least expensive of four-year schools.However, enrolling as an out of state student at public universities can cost as much as a private school.
How much will you borrow to complete your degree: Financial aid packages help evaluate the out of pocket cost of attending. Compare free versus borrowed assistance across schools, but understand that freshman packages may not reflect the aid you mayreceive in future years. Seeking private scholarships and winning multiyear grants or endowments can help you compare figures in subsequent years.
To reduce borrowing needs you might choose to live at home, take on additional roommates in off-campus housing, use summer earnings to lower loan needs and work part-time each semester.
How many years do you need to graduate: Graduating “ontime” can be misleading because schools have extended their definition of what constitutes on-time graduation. Formerly four year stints were acceptable but now colleges and universities have extended time up to six years.While 59% of students finish their degree within six years, the numbers fall to less than 20% of those finishing within four.More time adds to thousands of dollars in costs. The average tuition in 2016 was over $33,000, with room and board potentially doubling the price tag.
Common factors which directly impact the time to graduation include changing majorsor adding a second major or minor to curriculum requirements. Prerequisites and class schedules can also delay graduation as not all classes are available every semester. Planning your four-year schedule from the start can reduce or eliminate class scheduling delays. You also have the option of picking up prerequisites during a summer term to stay on track.
Another effective way to finish in four years is to earn course credit while in high school, through community college courses, or advanced placement testing.
Estimate lifetime wages: Majors come with different wage potential. Choose your course of study based on the job you want after graduation. Then choose the most cost effective school for that degree. For example, if you want to work in public service, a public university will likely provide the best value when comparing the cost of school with graduation pay rates. However, a highly-specialized major might benefit more from a school specializing in that major, even though there is a higher initial cost for the school. A good rule of thumb is only to borrow as much as your graduating salary will support. Keeping balances under your starting salary will help you meet the ten-year traditional payoff schedule.
What are the opportunity cost: How much do you give up by attending school in terms of current salary, promotions, and work advancement? High schoolers working minimum wage jobs lose little by taking four or even five years to complete school.Mid-career students face higher opportunity costs associated with a full-time course load and fewer years at the higher wage to reap the reward.
View your degree as an investment in your future and maximize your ROI by using these guidelines. Seeking free financial assistance and shortening the time to graduation will minimize loan balances and increase lifetime earnings.