Have you ever looked at the cost for a college degree and wondered when it’s worth the money? From a financial perspective, a college degree still offers its payoffs. On average, a university graduate earns just over $47, 000 per year. On the other hand, individuals who possess just a high school diploma earn average annual wages of around $26, 300. Whenever we assume that an individual will work for 40 years associated with his or her life, a college graduate student will out earn a high college graduate, on average, by more than $800, 000 in a lifetime.
So it seems that college is a no-brainer when it comes to income, right? Not necessarily. The income figures listed above fail to take into consideration not only the amount of debt that many college students incur but the opportunity costs and the time value of money that comes into play when a college graduate is usually making loan payments instead of trading his hard earned dollars into the stock or bond market. This is furthermore as good a place as any to point out which includes irony that Bill Gates, the sometimes (depending on stock market fluctuations) wealthiest man in the world, did not graduate from college. So , is college worthwhile? How do you maximize the value of your education and learning to get the most out of the debt you incurred?
Choose a Practical Major
Let’s assume that you’re not Bill Gates, and, for the sake of argument, that you’re not in your dorm room creating the next Microsoft or Facebook. You are probably going to have to get a job. It is really an area in which a college degree will really help. While a degree is no guarantee associated with employment, today, and historically, the unemployment rates for college graduates are considerably lower than they are for individuals who only have a high school diploma. Current statistics, in fact , show that a high school graduate is almost twice as likely to be unemployed as a college graduate.
All education has real worth. Period. But not all education includes a practical or monetary value. So , considering that we are a financially oriented blog and, notwithstanding the inherent interpersonal value of a college education, this article is going to focus on more crassly economic side of things.
Without necessarily making major to major evaluations, if you simply determine that you’re doing a job that does not require a college degree, although you have one, you are not obtaining a very good return on the investment you spent on your college education. Neither your return on degree (the additional income you’re earning because you possess a college degree, compared to the cost of getting that degree from a particular school) neither your return on major (the amount that you’re earning due to choosing one major over another) is paying off for you. If you want to maximize the return on your college expense, get a computer science, nursing or engineering degree from an inside of state public school. If these aren’t exactly your dream careers, your level will still open doors to suit your needs; and regardless of your degree or your major, college is no ensure of a financial payoff. If you’re interested in an up-to-date estimate of how well your chosen career will reward you economically, check out Payscale. com.
Keep Student Loans in Check
Another way to maximize the value of your education is to not borrow greater than you absolutely need to. Savings, scholarships, grants, credit by examination, revenue from a job – all of these things should be used toward college before you borrow money to attend school. Specifically for an undergraduate student just starting his or her career. Those first few years out of school will likely be the lowest revenue earning years of your career. They will also provide the unpleasant distinction of being the years during which the largest percentage of the salary is going toward the payment of your student loan interest.
This can be a particularly crippling opportunity cost, because those early post-graduation years are most important for maximizing the return on the dollars you’re preserving. So , the more dollars you can commit and save instead of paying towards student loan interest, the better off you will be in the long run. You may live somewhat a lot more meagerly than you like during your four or so years of college, but neither having that debt follow you around for another ten or even 20 years down the road will allow you to enjoy far more stress free years than your peers.
So , after all is said plus done, is it worth it to go to university and to borrow money to do so? The answer, ultimately, is up to you. If you feel satisfied and happy and don’t mind the loan payments, then who may be anyone else to judge? But , if scratching by for 10 years after scratching by for four years of college doesn’t sound like the self-actualization you were looking for, then choose a degree that you can earn a good living from and keep your school borrowing as low as feasible.