Costs of college
The cost of college has been increasing for years and according to reports from College Board, the average private four-year college costs over $39,000 per year, while the average public university costs over $30,000 out-of-state or $19,000 in-state.
Students have a few choices when deciding where to go to college: They can go to a school that costs on average from $19,388-$39,028 per year, they can have their parents pay for school, or they can take out student loans.
Since most parents don’t have tens (or hundreds) of thousands of dollars saved up for their children’s education, two-thirds of 4-year undergraduate students graduated with some debt in 2007-2009 with the average balance for those who had student loans being over $23,186 (finaid.org). That doesn’t sound so terrible: the average amount of student loans for a graduating student is slightly than one year’s worth of expenses.
It’s fairly apparent that student loans are necessary for most students who want to pursue higher education, but for the extremely high cost, is it worth the investment?
Benefits of college
A 2007 College Board report shows that median lifetime earnings for individuals with bachelor’s degrees are 61% higher than median lifetime earnings for high school graduates with no college experience. For those with even higher degrees, the lifetime earnings are are 93% to 187% greater than a high school graduate’s (collegboard).
Taking into account loan payments, the typical student who borrows to cover all tuition and fees* begins to exceed the total earnings of a high school graduate at age 33 and has total lifetime net earnings of over 35% more.
*That is a big assumption, as we saw earlier that the average student has less than $24,000 in student loan debt upon graduating while the average cost of attending an in-state public college for one year is over $19,000. The average student would exceed the total earnings much earlier and have greater lifetime net earnings.
On average, the total net earnings of those with college degrees greatly outweigh those with just high school diplomas, so the choice of going to college seems very much worth it.
Now that we’ve determined that higher education is worth the cost, and since the costs are high, student loans are likely the way to go, we’ll investigate the different types of student loans in part 2 tomorrow. Sign up for the RSS feed or get email updates and make sure you don’t miss it!