A Degree Is Well Worth the Time, Cost, and Effort
Tuition and student debt have not grown "unmanageable"
November 17, 2011
If you listen to the pundits these days, a college degree is just not worth it. It costs too much and the payback is too little. All you will end up with is debt, frustration, and--if you manage to stick it out, which many don't--a worthless degree.
But they are wrong; for most students, the benefits will outweigh the costs. First, when considering the direct costs, tuition and student debt have not grown "unmanageable." The "sticker price"--the published tuition and fees--is actually much higher than what students pay. According to the College Board, the average in-state "sticker price" at a public four-year college is $8,240, but the amount that students actually pay on average is $2,490. This is because one has to account for grant aid and federal education tax credits. In fact, given these sources of financial aid, students attending public two-year colleges on average didn't pay anything and in some cases actually made money.
Similarly, claims of skyrocketing student debt have been exaggerated. Yes, more students are borrowing to pay for their studies; approximately 66 percent of four-year college graduates borrow money to pay for school, and among those, the average debt is just under $20,000; fewer than 10 percent of those who borrow owe more than $30,000. While this is not insignificant, it does mean that a full 34 percent do not borrow to pay for their four-year college degree, so the overall debt owed is less than pundits would have you believe.
The biggest cost of attending college is the foregone income not earned from working full time. And yet one of the best documented relationships in economics is that between education and labor market outcomes. Those with a college degree are more likely to find a job in the first place and earn more; the median annual income of a college graduate (with no further schooling) is about $46,000--nearly $21,000 more than the median high school graduate earns. This advantage adds up significantly over a lifetime. Some argue that these gains are not due to colleges themselves but merely reflect the talents that students bring to their studies, but years of research in economics finds that more education does cause much of the increase in earnings. And not only do those with more education enjoy higher incomes, they are also healthier and there is good evidence that their children will be better off as well.
That said, as with any investment there is some risk. This is why it is important that students fully understand the terms of their loans and obtain as much information as they can about the earnings they are likely to receive in their chosen careers. This is also why the Department of Education has designed alternative repayment options for federal student loans, such as Income-based Repayment, that help those who are finding repayment a financial hardship.
In general, if you compare the costs to the lifetime benefits of a college degree, it is clear that for most students the degree is well worth the time, cost, and effort.
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Corrected on 11/17/11: An earlier version of this article misstated the percentage of students who do not borrow to pay for their four-year college degree. Thirty-four percent of students do not borrow to pay for their four-year college degree.