College is Certainly Worth the Cost

Here's a piece from Yahoo that asks if college is worth the cost. Their bottomline:

On average, the answer is yes.

While the earnings of people with bachelor's degrees dropped about 5 percent between 2000 and 2004, they'll still earn an average of about $1.2 million more than high school graduates over a 40-year career. Borrowing for college, as most students do, cuts into the return on education, but not by much.

At the extreme end, say you paid for a private college with private loans -- $133,204 at 9 percent. Over 20 years, you'd pay back almost $300,000 -- still leaving a $900,000 average lifetime earnings premium.

In other words, it's a good investment. You pay in money and time, but you reap a financial windfall.

However, there are some things you can do to maximize your overall college investment. If you take these steps, it's likely that your investment of time and money will pay off big. This is what happened for me and if done correctly, the same opportunity is still out there today.

Comments

[Mike]

College expenses (tuition, room & board and related fees), invested in the stock market will be worth much more than $1.2 million after 40 years.

I agree education is extremely important, but college is overpriced.

[FMF]

Mike --

Yeah, but take that extra $1.2 million you earn in your career and save and invest it -- THEN you'll see how much more college is worth.

[FinanceAndFat]

I hate that I have so much student loan debt to pay back, but I wouldn't go back and do it any differently now. Getting my degree opened the door for me to move directly from a job I hated to a job I enjoy in a new career field. That happiness alone is worth the cost. And in my situation, I instantly doubled my salary so I expect to see a much greater overall return anyway.

[Anitra]

It's a good investment IF you go into a career that requires or benefits from a college education.

Entrepreneurs and blue-collar laborers are not necessarily helped by a bachelor's degree. I've even known some people in customer-facing positions whose incomes came up to parity with their college-educated peers within 5 years.

College was a great investment for me and for my husband, but it's not for everyone.

[jc]

may not be as much of a difference as you think. let's say the guy who gets a job right out of HS. He saves a bunch of money for the 4-5 years that he is working while the college ppl, and leaves it there for 40 years. If he saves $800/month, then that's almost 10k a year. 40 years later at a 7.5% return every year, he's got around $650,000 more in the bank. bump up the return to 8.5% and he's got nearly a million in the bank. The college grad will be catching up real quick, but it isn't $1.2 million difference, I'd say it's a bit smaller than that.

[FMF]

JC --

There are a lot of assumptions (many of them not that realistic IMO) in that analysis, plus you don't give the college guy the benefit of investing his extra $1.2 million throughout the years.

I agree that college isn't the payoff it once was, but it's still a pretty good deal. In addition, a college degree can move someone from a job they hate (like many requiring only a HS education) to one they enjoy.

All this said, if you can find a job right out of high school that pays $75,000 a year and you love it, by all means, hop on it.

[xshanex]

College does increase earning income potential for the overwhelming majority but what I would love to see would be a comparison with colleges to 2 year degrees to technical schools to high school to maybe even some examples of people with military training. Just an idea for an article or posting as next to noone ever gets much more in depth than comparing high school and college grads which is only part of the picture.

I know I'm defintely not the norm with a trailer park to military to high-paying high school diploma job or with my friends that went to technical school while working full-time or the others who made great military to civilian transitions. I'm also a little biased after looking at many college plus 5 years of experience positions in a new area that pay less than I would make as enlisted in the military or what my friends make with tech-school educations.

Maybe even something else about the value of a degree in comparison to the amount of degreed people in the local area which I am finding to have a lot more correlation than I thought it would while researching different areas to live and work.