Is Getting A College Degree Worth It?

by The Smarter Wallet on October 24, 2010

It has been the untouchable subject for the longest time. If your husband or wife required medical care, would you tell them that it costs too much and that you’ll both have to save up before visiting the doctor? Of course, that never happens. More often than not, you wouldn’t bother even shopping around when it comes to healthcare. Why? Because healthcare is considered a necessity and rightfully so.

Those who intend to go to college have largely adopted the same mindset. College has commanded the same requirements as healthcare. In order not to end up in the unemployment or public assistance line, many of us believe that everybody must go to college. Is that true? And another equally important question: are student loans and the student debt that most kids incur to get a higher level education worth it?

Is Getting A College Degree Worth It?

Let’s look at a few facts: According to the Associated Press, the average work life of an individual is 40 years and in that 40 years, the person without a college education will earn around 1.2 million dollars. That amounts to an average of $30,000 per year. A college graduate will earn 2.1 million over 40 years. Of course, $52,500 is much better.

Most would agree that a bachelor’s degree is nearly a necessity. Making $30,000 just isn’t enough, so the untouchable truth of going to college at all costs seems to have some statistical truth.

But let’s challenge this notion a little bit. While college is important, does the college you attend have a bearing on your salary? It depends on what career path you choose but on average, the difference is very little and the increased average debt load appears to show that paying $30,000 for a private college versus $10,000 for a public school doesn’t often pay dividends. As an example, I’m a public school teacher. My salary is non-negotiable. The school I attended has no bearing on my salary.

Some will disagree but here’s the bottom line. We have heard a lot about debt and how debt is bad. While college is important, if you do a search of bankruptcy facts you will see that the recent college grads are a large percentage of the annual filings. It’s important that we stick with the basic financial rules even with college:

  • If you can afford public school but not private school, then go to public school.
  • If you can’t afford to stay on campus, then commute.
  • If you cant afford to be a student full time, then take online classes, or explore an online accounting degree to improve your finances.
  • If you can’t afford your master’s degree, then wait until you can.
  • If you can’t afford school as an undergraduate, then you should get creative with grants, scholarships, military service, or work study.
  • If you can’t control your spending, then ease up on the use of your student credit cards.

You aren’t entitled to a college degree so don’t bankrupt yourself in the name of entitlement.

Don’t sign yourself up for a $400 per month student loan payment for the next 20 years when the expensive school isn’t going to make you any more money. Wealth building starts with being able to stay out of debt. Just because college is important doesn’t mean that you should have 5 or 6 figures in debt once you graduate. This is a bad financial idea!

Finally, don’t fall for the “student loan interest is a tax writeoff” argument. Sure it is, but not all of it can be written off. And you certainly won’t be receiving all of your money back through the government. Make sure you don’t bite more than you can chew on the financial front, as you contemplate going to college.

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{ 1 comment… read it below or add one }

1 Michelle | TransferAmerica November 1, 2010 at 12:51 pm

Very interesting that you bring up this topic that no one seems to confront. I just graduated with a bachelors degree about a year ago and i haven’t been able to find a career type job. However I hear of friends who found administrative type positions and in a year or two moved up in the company and pretty much already have the career I want. College may not be necessary for everyone. There are some who are quick enough and smart and can figure out what they need to do to get where they want to be. College for others is where they figure out their real interests and a career path to potentially follow. Going to college and being immersed in that enlightening environment is always beneficial for growing but whether you need to jump into it right after high school is up to each individual. If you can’t afford it right off the bat then find a job and save up so you won’t be stuck with a huge loan when you finish college.

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