Cash The Checks

Does investing in a four year college education make sense? For many students, the increased earning power may not make up for the debt incurred along the way.

First of all, let us establish certain realities. A public four year college charges, on average, more than $12,000 annually in tuition and fees. Private four year colleges charge over $29,000 on average for tuition and fees. Lets compare that to past decades. A degree from a public four year college costs only $5,200 in 1990 as compared to today’s figure of approximately $12,000. The same four year degree costs only $2,550 in 1980.

At private schools the difference is even more dramatic. While a degree from a private university costs $29,000 per year on average today, in 1990 it was only roughly $13,000. And, in 1980, you could get a degree from a private university for an average of just over $5,500 per year. At Carnegie Mellon University, students will pay more than $41,000 per year in 2011 for tuition alone, never mind the additional fees!

Let us consider the average lifetime earning power of say, a biologist. I chose this profession because CNN listed it as one of the most commonly sought after degrees. Coming out of college, a biologist can expect to make around $38,000 per year. The median salary for a biologist is around $45,000 according to salary.com. On average, a graduate will leave college with a student loan debt of about $21,000. At a rate of 7%, said student will pay almost $30,000 on a ten year term when all is said and done. Also bear in mind that many degrees are financed at discounted student loan rates. Other forms of student loans and financing are available such as payday loans, but interest rates tend to be no better than government student loan rates, so there is no savings there.

By contrast, a plumber typically starts at about 28,000 annually with a median salary of around $41,000 (again, according to salary.com). There are no student loan expenses and the individual becomes a wage earner four years earlier (and presumably earns four years more slurry over a lifetime) then the college graduate.

It’s not hard to see how, strictly from a financial standpoint, a college degree may not be the best investment. If you’re heading off to college to “broaden your horizons”, it may be a good investment in your personal growth, but think carefully before you take that leap for financial reasons.