Is College Worth The Cost? Unpacking The True Value Of A Degree
As of March 2023, outstanding student loan debt in the United States was nearly $1.8 trillion, according to the Federal Reserve Economic Database (FRED). As a result of the enormous mounting debt, the value of a college education has come into question. High tuition fees, student loan debt, lack of job opportunities after graduation, inadequate financial aid, and quality of education have led many young people to question whether the degree is worth the price.
A Degree Makes A Difference
It may not surprise you to learn that those who graduate college with a bachelor's degree or higher are more likely to appreciate the value of their education. However, it may surprise you that the vast majority (76%) of college graduates with four-year degrees or more AND previous student loan debt were the most likely to perceive that the benefits were greater than the cost. Only 12% of those college graduates felt that the price exceeded the benefits. The remaining 14% felt that costs and benefits were about the same. The chart below depicts the self-assessed value of higher education based on debt and degree completion status.
Determining The Value of A Degree
While a college degree can lead to higher earning potential and better job opportunities, the type of degree makes a difference. Before taking on significant debt, students should weigh the earning prospects of that degree against the expected cost, as the earning potential varies greatly.
On average, having a college degree results in a $1 million increase in earning potential over a career compared to only having a high school diploma. However, college graduates who choose the highest-paying majors can expect to make a staggering $3.4 million more than those with the lowest-paying majors.
The degree choice is not the only difference in earnings potential. Where you live also makes a considerable distinction for those with the same major. A good example of this is the most popular undergraduate major, business management and administration, which accounts for 19.5% of college graduates. The average annual salary for business majors in California is $69,000; in New York, they make an average of $63,000. In Indiana, the median salary is $56,000, and in Florida, it is $53,000.
Prospective college students might benefit from exploring career and earnings potential. One tool is Georgetown University's interactive website, The Economic Value Of College Majors allows users to see the average earnings of college graduates by 15 major groups and 137 subgroups.
The Non-Financial Benefits of College
Beyond financial benefits, the college experience allows students time for personal growth and development. While attending college, students explore new ideas, meet new people, and gain new experiences. College professors challenge young minds to think critically, improve their communication abilities, and expand their knowledge in various subjects.
If you've ever attended a Big Ten football or basketball game, you are well aware of the sense of community and belonging that comes with attending college. Many students form lifelong friendships and connections with classmates, professors, and alums. This network can be valuable in both personal and professional settings.
Overall, a college degree is a valuable investment in the future. It can provide financial benefits, personal growth, and a sense of community. While it may require a significant investment of time and money, the long-term benefits can be well worth it.
For over two decades, the financial advisors at Hurlow Wealth Management Group have helped clients plan for their children's college education. Before selecting a college, high school students are welcome to attend a complimentary meeting with their parents to understand the impact of the choice on their own financial future. If you would like to learn more about the services offered by Hurlow Wealth Management Group, schedule your complementary consultation today.