A College Degree is a Good Investment
Thinking if getting a college degree is worth it? Read on as Julie Jason explains to us why a college degree is a good investment.
A College Degree is a Good Investment
If you have a junior in high school in your family, you may be planning to visit some college campuses over spring break. As college education is still one of the best investments you can make, it's not too soon to think about paying for it.
College graduates earn almost twice as much as those who end their formal education at high school, and the gap between high school dropouts and those who earn advanced degrees is even greater.
Based on the most recent Bureau of Labor Statistics data (third quarter 2017), the median income was only $27,144 for those who did not graduate from high school. Contrast that with a median income of $76,440 for those who earned an advanced degree.
The median income of graduates with bachelor's degrees (but no advanced degree) was $60,528, compared with $37,128 for high school graduates.
Finding the money to make the investment in a college education can be a challenge, but that should not stop you for two reasons.
First, there are new ways to save for college that are completely tax-free. The 529 college savings plan offers tax-free savings opportunities to students and gifting opportunities for parents and grandparents.
Second, the true cost of college may be lower than you think. Before abandoning hope of a college education, look beyond the published “sticker” price.
If you are like many people, you may think that you need more than $200,000 to pay for a college education. You may be surprised to learn that this does not have to be the case.
Based on data from the National Center for Education Statistics, about 17.5 million students are enrolled in undergraduate college programs in the U.S. About seven out of 10 high school graduates went on to college (two- or four-year programs) after graduation, according to NCES's most recent data (2016).
Most pay less than $12,090 a year for a college education — that's the published price for tuition and fees for the 2017-18 school year at four-year colleges, according to the College Board's “Trends in College Pricing“.
If you carve out private colleges, the cost is even less: For the 2017-18 school year, the national average published cost of tuition and fees at four-year in-state public colleges was $9,970 a year, according to the College Board. For the same school year, room and board averaged $10,800 at public colleges.
There are regional differences. For example, in New England, four-year public college tuition and fees were higher, averaging $12,990.
It also is very important to understand that very few students actually pay the full cost of going to college. More than 90 percent of students are enrolled in private four-year colleges full time, and more than 84 percent of public college students receive some form of financial aid, according to the most recent NCES study (2014-2015 school year). While a new study is expected in early 2018, financial aid has been and continues to be a significant source of college funding.
Students enrolled in the 2016-2017 school year received $125.4 billion in grant aid (undergraduate and graduate), according to a study commissioned by the College Board titled “Trends in Student Aid.”
In addition, students took advantage of $106.5 billion that was made available to them through various types of loans, according to the College Board. Work-study programs accounted for an additional $803 million of the funding.
For further information on college costs and financial aid, you'll find College Board to be an excellent resource. You can call (212-713-8000) or visit the website (CollegeBoard.org).
Let me add that I've updated a series of columns that I wrote over the years on the subject of college funding. They will be published in my next book, “Retire Secure,” in a section on how important it is to start early with a child's financial literacy education. The book will be available this spring. In the meantime, if you are interested in the subject, I will be happy to send you a sample chapter if you email me at readers(at)juliejason.com.
One last point: If you are traveling through my home state of Connecticut, on Feb. 1, 2018, take advantage of the investor forum sponsored by the FINRA Foundation. For details, go online to www.finra.org/investorforum/stamford. The presentation will focus on “Smart Investing in Today's Environment,” and you are all invited. FINRA regulates the securities industry, and the foundation promotes “universal financial literacy.”
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Julie Jason, JD, LLM, a personal money manager (Jackson, Grant of Stamford, Conn.) and award-winning author, welcomes your questions/comments (readers(at)juliejason.com). To hear Julie speak, visit www.juliejason.com/events.
(c) 2018 Julie Jason.
Distributed by King Features Syndicate Inc.