Tuition

The Value of Higher Education

The cost of college is rising, faster than housing, energy, and health care costs and even the overall rate of inflation. That means student debt load and the risk of student loan delinquency or failure is increasing, as well. According to a recent report issued by Pew Research Center, only 19% of college presidents say that the U.S. higher education system is currently the best in world and only 7% believe that it will be the best in the world in ten years. So, how do we figure out if college delivers good value for the money?

When we budget for college, we consider costs such as tuition, books, and room and board. However, faced with budgetary concerns of their own, colleges are increasingly looking for ways to collect additional money from students, from collecting fees for freshman orientation, campus gym memberships, and extracurricular activities to adjusting the cost per credit depending on major and charging for printing, use of the computer lab, or the opportunity to study abroad. These hidden fees quickly add up, and once you’re enrolled, there’s not much you can do avoid them.

More than 85% of college graduates say that, for them, college was a good investment. Data from the U.S. Census Bureau in 2010 show that the median gap in annual earnings between high school and college graduates is $19,550, but this disparity varies by type of degree and field of study. Interestingly, this difference in earnings may not be the reason college graduates feel college was a good investment. In fact, college graduates seem to place more emphasis on intellectual growth than job or career preparation as the primary purpose of higher education.*

Is Grad School the Right Choice for You?

Applications to graduate school always rise in a poor economy, but tuition is still a concern. According to the Department of Education, the average yearly cost for postgraduate study towards a master’s degree is $21,900 for a public school and $34,100 for a private one. These numbers are 60% higher than they were ten years ago. And, as of July 1, 2012, graduate students will no longer be able to get federally subsidized loans and the interest clock starts ticking right away. According to the Congressional Budget Office, this change will increase costs for grad students by about $18.1 billion over the next decade. So, when considering the cost-benefit analysis for graduate school, we need to take into account whether the pay increases we expect to earn with an advanced degree balance out the additional debt we’ll incur from even more student loans.

*Data from the Pew Research Center Social & Demographic Trends Report, ’Is College Worth It?’