What’s the Value of a College Education Today? | College Made Simple
How much of a difference dollar-wise is that diploma really worth?
Here are the hard numbers and a few reasons behind them…
As tens of thousands of new college graduates cross across the stage this month, shake hands with the dean and receive the diploma they’ve spent the past four (or more) years of their lives working towards, it may be a good time to ask the question…
Was this all worth it?
I’m not talking about the experience. The friends, the memories, the growth and development into adulthood…
No, what I’m referring to is the actual cost of this college education versus the financial payoff your student will see during their lifetime because of it.
Simply put – how good of an investment is a college education these days?
There’s good news and bad news when it comes to the answer.
The bad news first – the $1 million figure that’s often quoted as the “value” of a college degree – isn’t very accurate. According to U.S. News and World Report, the best estimate for what your child’s college education is actually worth is around $300,000.
Here’s how they get to that number: the average college graduate earns about $20k more per year than a non-college graduate. Average that out over a 40-year career and you’re looking at an $800,000 difference in lifetime earnings.
However, factor in that 40 years from now, inflation will have taken a big chunk of that money’s spending power away and you’re probably looking at a “future dollars” amount of only around $450,000 a year.
Now subtract the cost of the college education itself (around $120,000 without any financial aid factored in) and you’re down around $300k in bottom line value for your child’s degree.
Now the good news… sure, that’s a big drop off from a $1 million, but an extra $300k throughout your lifetime is absolutely nothing to scoff at.
Also consider the quality of job a college graduate receives as opposed to a non-graduate. We’re talking jobs that most likely offer health and life insurance, and may feature matching retirement plans and offer annual bonuses.
All of those things can add up to much more than just a difference in salary.
Of course those good jobs are becoming harder and harder to find for graduates. So it’s important for your student to choose a course of study with a career goal in mind.
The New Yorker reported last May that math and business related graduates were having the best success at finding work right out of school. 46% of accounting majors in the class of 2010 had been offered jobs before graduation and 44% of business majors also fared as well.
Engineering offered the best starting salaries with aerospace engineers starting off at just under $60k upon graduation.
And finally, when working towards capturing the best value for your students’ college education, take a look at what schools are spending their money on and subsequently raising tuition costs to cover.
Things like a new fitness center, state of the art stadium or gourmet food courts are appealing to new students and no doubt boost the number of applications a school will receive, but when the price of these things get passed onto you… are they really worth it?
Schools that instead invest in more academic pursuits, new class or lab spaces, computer equipment, library upgrades or resource centers could actually be helping increase your student’s return on investment come later in life.
After all, if you’re going to pay a higher tuition, wouldn’t you rather it be for something that’ll enable your child to fare better financially once they enter the working world?
There are many different ways to look at the value of college. Undoubtedly it’s still very much worth it to go and to graduate. But where you go and what you study are crucial in maximizing that value you’re looking for.
Choose the right school and the right course of study and that $300k value could very well go much higher.
As always, examine all aspects and be smart with your decisions. College lasts only a few years… It’s what happens after that really matters.
To your successful college search,
Publisher & Founder,