Is College Still Worth it? That is a question that is increasingly coming up whether clients are discussing their own future or that other children. As with any financial decision, it's important to consider the cost and the benefits. The cost for colleges, many of you know can be quite large. And that cost has only been rising. But by how much? Varies depending on the type of institution. In fact, according to the National Center for Education Statistics, the cost of public college in the United States has gone up 31% in 10 years. The cost of private nonprofit college has gone up 23% during that same time period. So, what does that mean for you? How much does college actually cost? First off, the cost of college encompasses a variety of charges. From tuition fees to room and board. It's a good idea to consider all of it together when thinking about what you will pay to get a bachelor's degree. While the cost of college varies based on the type of institution that you choose the location of the school and various other factors. We can look at some average numbers to get a ballpark idea. The average cost of undergraduate tuition fees, room and board for the 2017 to 2018 academic year at a public institution it was $17,797. The number was more than double that for a private nonprofit institutions. The average cost of undergraduate tuition fees room and board. For the 2017 2018 academic year at a private nonprofit college was $46,014. In order to pay for this expense, many turn to student loans. According to the Federal Reserve, the student loan debt for the nation is nearly $1.7 trillion. That's a lot of zeros. And this was as a fall of 2020. This means that student loans are the second highest consumer debt category, surpassing both auto loans and credit cards. Only the total amount of mortgage debt for Americans is higher than the amount of student loan debt. But what does this mean for you? Well, according to the data released in 2019, 54% of young adults who went to college took on some debt for their education. The Federal Reserve Bank in New York reports that overall, nearly 45 million people have student loan debt. The average amount borrowed by those who graduated with a bachelor's degree in 2019 and took out loans to pay for college was $28,800. According to the College Board. The average debt payment after college is $393 per month. So, it's clear that the cost of college can be big. But so can the benefits. Let's try to quantify these benefits a little bit. The College Board releases data on specific benefits, such as career opportunities and ultimate earning power. First, we'll focus on career opportunities or in particular the impact of having a college degree and being unemployed. Between 2008 and 2018 the unemployment rate for those 25 and older with at least a bachelor's degree has been about half of the unemployment rate for high school graduates. Then, there's how much money you make it your job as well. In 2018, someone with a bachelor's degree made more on average than a high school graduate by nearly $25,000 per year. The median earnings of a bachelor's degree holder with no advanced degree working full time were $24,900 higher than those of high school graduates. So, that equated to $17,800 more in after tax income than high school graduates. So, what about the opportunity cost? This is the difference between taking four years or more to go to college plus paying for it. Versus entering the workforce and immediately earning money. It turns out that on average, in just over a decade that cost is erased. Research also shows that if you enroll in a 4-year college program at 18 and graduate in four years. You can expect to earn enough relative to high school graduate by the age of 33 to compensate for being on to the labor force for those four years. As well as borrowing the full tuition fees, books and supplies. Still, not all college majors, jobs and industries are created equal. It's a really good idea to research the specific requirements, opportunities and salaries for your or your child's desired career before going to college. And potentially taking on this amount of debt. For example, earning varies greatly by College Major. Let's compare early childhood development to computer science. First, consider those early in their career. Defined as those 22 to let's say 27. The following data from the College Board excludes anyone still in school. In 2016 and 2017 the median earning for someone early in their career who majored in early childhood development was $32,100 per year. Meanwhile, the median earning for someone earlier in their career who majored in computer science was almost double that at $62,000. For that was a bit older the gap widened even further. Let's consider those mid career graduates or those who are between 35 to maybe 45. The median earnings for someone mid career who majored in early childhood development was $41,000 per year. And the median earnings for someone mid career who majored in computer science was $95,000 per year. So, as you consider whether college is still worth it for you or your children, it's a good idea to weigh the costs and benefits of your specific situation. In general, the data supports college is a path that will lead to greater job opportunities. And greater earning potential. It's just imperative to factor in how you will pay for that schooling. And budget for any loan repayments as you begin your career. [MUSIC]
