There's no avoiding the truth: higher education is expensive.
As of 2019, two-thirds of college graduates from the class of 2018 have student loan debt;
the average amount is $29,200, and tuition keeps rising.
Those expenses beg the question: is college worth the cost?
Education is about more than money, but we're only going to focus on the actual financials
of college.
It can be one of the most valuable investments you can make, but you've got to do a cost-benefit
analysis.
This means comparing the costs of higher education (things like tuition, fees, living expenses,
and the cost of borrowing) to your potential future earning power.
Here are three major factors to consider when you're determining the value of education:
the type of degree, the school, and the career path.
The type of degree you receive can have a profound effect on your future earning potential.
According to one major study, the median earnings over a 40-year career of someone with a bachelor's
degree was around a million dollars more than someone with just a high school diploma.
But traditional four-year degrees aren't the only form of higher education.
Even a two-year degree could lead to an extra $400,000 in earnings over a 40-year career.
There's another path you might've forgotten about: trade school.
Trade schools prepare students for careers like plumbing or flying an airplane, and they
tend to be much cheaper than college.
They often skip the general education classes and focus instead on job- and skills-based
training.
And employment prospects are bright.
As of 2019, more than half of all skilled trade workers are older than 45, which means
we might face a shortage of skilled workers in the years ahead.*
*Beat
If you've already got a bachelor's degree, you've got several opportunities for further
education.
Some graduate programs may be more expensive, but if they'll vastly improve your earning
potential like law school or medical school consider the long-term benefits versus
the cost.
But you may want to be a little more critical in a cost-benefit analysis for graduate school,
because it's not required for most professions.
In addition to the cost of the degree itself,
consider the earnings lost during the years you may spend studying instead of working.
Law and medical schools might require expensive student loans, but the JD and MD have the
highest earning power improvement of any degree.
Over the course of a 40-year career, a medical or law degree could lead to an extra $1.4
million over just a bachelor's degree.
But be careful about taking out loans at this level, because graduate loans can carry higher
interest rates than subsidized undergraduate loans.
In addition to the degree type, consider the school and its value.
For example, state schools and community colleges are often less expensive than private or for-profit
schools.
If you're looking at an undergraduate degree, you may want to consider a no-loan college.
These schools will meet 100% of the student's demonstrated financial need.
No-loan schools are becoming more popular, and a lot of the schools are prestigious.
Take extra care if you're considering a for-profit college.
They enroll just 9% of students but account for almost half of all student loan defaults.
While graduates of for-profit institutions typically see a bump in earnings, it's not
as strong as those who attend other types of higher education, like community college.
That's not to say for-profit schools are all bad; many offer certificate programs,
rolling admissions, or other things that may make them a good fit for you.
Finally, consider your field of study and intended career.
Going into significant debt for a degree with little earning power could lead to years of
financial struggle.
It can impact how good of a value your degree is at a particular school.
You should also look at things like where past students have landed after graduating
and what their earnings have looked like.
Many colleges have this information available to prospective students.
Ultimately, education is a very personal decision.
College debt can be worth it, but it all depends on your unique situation.
Take a good look at what you want to study and where you'll be able to get the best
education for that field; then determine your tolerance for debt.