Is the Cost of College Worth It?

Is the Cost of College Worth It - picture of college graduates in cap and gown with diplomas

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Over the last few years, many experts have weighed in whether they think a college degree is still a good investment. In most cases, they focus in on the return on investment for each dollar spent, or ROI. In other words, they compare the cost of college with the higher earnings those with college degrees usually bring in and measure the difference.

For the most part, experts agree that yes, college is worth it. For example, an analysis of Labor Department statistics by the Economic Policy Institute in Washington recently showed that college graduates made 98% more an hour compared to those without a college degree. 

Meanwhile, Georgetown University’s Center on Education and the Workforce found even greater benefits for those who earn advanced degrees. According to their research, adults who earn an advanced degree can reasonably expect to earn as much as $2 million dollars more than someone with a high school diploma. That’s a lot.

Is the Cost of College Worth It? Usually.

Personally, I believe that a college degree can be a bad investment under certain conditions. For example, paying $90,000 to earn a four-year degree in a low-paying field may leave you worse off than learning a trade and heading straight into the workforce.

But those type of cases are rare. Like it or not, study after study shows that earning a college degree is almost always the ticket to higher earnings. And it leads to something that I think is even more important – choices. When you have a degree, you usually encounter a larger number of opportunities and career options.

How I Plan to Save on College

Since research shows that college is a good investment the vast majority of the time, I have been saving for my kid’s college education since they were babies. I believe that my children will be much better off if they graduate from college, which is why I have chosen to put my money where my mouth is. If the money I save up to get my kids through college is enough to put them on that path, then it will be money well spent.

With that being said, there are plenty of strategies I hope to use to cut down on the costs of my children’s education, including these:

  • Letting my kids live at home – We live near plenty of colleges, universities, and community colleges. I would love to let my kids live at home while they study and pocket the money we will save on campus housing.
  • Starting with community college – I would love it if my kids went to community college for a year or two before transferring to a four-year school. The savings for doing so can be huge.
  • Experimenting with online colleges – Online education has garnered a lot more credibility over the past few years, and I can only assume that it will become more prevalent over time. Thirteen years from now, when my daughter is ready to enter college, it might even be the norm! Either way, I’m up for it if it saves money and leads to a similar outcome to an on-campus degree.
  • Paying as we go – Since our state offers an extremely generous tax credit on the first $5,000 we contribute to a 529 plan each year, we have saved since our kids were babies. Hopefully that means we can pay for college as we go and avoid the expense of student loans or student loan interest altogether.

Another way we plan to make sure our kid’s college educations are “worth it” is to (hopefully) talk them into earning a degree that can lead to an actual job. A Master’s degree in Pop Culture may sound like a boatload of fun, but that doesn’t mean it is a good investment. I am actually hoping that my kids will get into a vocational career with low start-up costs and huge potential. And hopefully, they will want to get part-time jobs during school to help cover their expenses. I could see either of them working in the restaurant business like I did, babysitting, or even freelancing. Any extra money they earn can help pay for school, transportation, or living expenses.

Is a college degree worth it? According to most of the experts, the answer is a resounding “yes.” And for my children’s sake, I hope they’re right. If not, the money I worked so hard to save will go straight down the drain.

But hey, at least I can say I tried.

Do you think a college education is worth the money spent? Are you saving for your children’s education?

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  1. My answer to your question is… that it depends on the net cost.

    The first time I went to college, I went on a fully paid package combining scholarship, grant and college-campus work.

    The second time I went to college, I did as much as I could at the community college, transferred as many credits as I could from my first college career, and finished up at the local campus of the state university so I could get lower resident tuition rates.

    The third time I went to college — after transferring in all the credits I could– I did practically all of the work I still needed to do under a life-experience credit program that made my costs for a diploma (identical to those given to folks actually attending classes) minimal.

    So… there’s quite a few ways to skin that cat! And, yes, the way I did it it was worth it.

  2. While I do not like my loans or past decisions on choice of college and major,I would not have the job I love today without having going back to school for my medical assisting certificate. Unfortunately, the first time I went for fashion when I was 19. Waste of money that I am still paying for.
    A big comment to add is not only the expense of the college but how useful the degree will be in getting a job that pays enough to cover any debt incurred. I currently have worked with several young women who earned bachelor’s in biology. They graduated and then realized they had needed a more specialty subject such as Lab Technology or Masters in Education to make the degree useful.
    I think you are super awesome parents to be savings to help your children!!

  3. I think it depends on the person. For me, college was well worth it!

  4. My husband got an undergrad degree by borrowing over $100k for it. It starts off paying maybe 20k if you are lucky, but 20 years later, you can expect I make 200k. It’s worth it… But… He’s not working in that field. So that’s the other side of the tale – you hear this all the time, too. People who go off to college and change majors, sometimes late in their college career. Gotta be careful with the loans, so you can afford to do what you really love.

  5. I think it is, as long as you just don’t go in blindly spending money to achieve it. Make sure you understand the ROI on our degree, obtain he degree from a school with cheaper tuition cost, etc. There are many ways to be smart about earning your degree.

  6. Definitely saving for our children\’s education. Have been doing the research the last several weeks and will be writing up a series on the college savings plan options soon. Personally, will be doing a 529 account due to the flexibility and tax-friendly nature.

    As for college being worth it, it depends on the child, the college, and the cost. Despite the outrageous increase in cost the last decade, there are still good values in undergraduate education, and the benefits from a career and personal growth perspective are compelling. That said, our children will still be working while they\’re in school. Nothing drives the cost/value point home in a teenage mind more clearly than having to work to earn your degree.

  7. I think about that sometimes. If I had chosen to become a carpenter or electrician at 18, I would have easily made at least $40k a year in the Northeast, and by 22 I had foregone over $160k in pay. Instead I paid for 4 years of college. I would have been way ahead of the curve if I had known about saving and investing at 18 while making a decent income. But I 100% agree that my knowledge today is because of the accounting/business/finance path I have chosen today. I think I would have blown through that $160k without giving it a thought at that time.

  8. My college is a private church-owned university heavily subsidized by the church. I plan to push my kids that same direction and will pay for them to do so. For anything above that, they may be on their own.

  9. I wonder of some of those analyses account for opportunity costs. The college student getting a B.A. misses out on four years of wages, and likely invests less when paying back the big student loans, too. These opportunity costs compound for the person who’s going the PhD route, for example. The much higher wages give the college educated an advantage, but there’s no doubt they ‘start’ a little behind.

    My gut says that the college degree is still a very good financial decision. But would be curious to see data on how, presuming a kid right out of high school invested a good chuck of his paycheck (and that’s probably a dubious assumption) might perform if he got an extra 4-12 years of compounding in his favor.

  10. Maybe it´s old fashioned of me, but I say, yes, a degree is absolutely necessary for higher earning potential. But you´re right, starting with a community college is a smart way to go. Also, a lot of states have programs like TOPS in Louisiana, where kids can very easily get full scholarships if they´re willing to stay in state.

  11. I think there are a lot of jobs that require at least a bachelors degree, so the results of the study don’t surprise me! We just opened a 529 for our daughter last week actually, so we should have a good 17 years to build that. I shudder to think what college might cost in 17 years though!

  12. Yea, it depends. I think generally college is worth it but not at any price and not for everybody. Like you said, it’s not worth it to overpay for a degree, especially when it’s in a low paying field. And college is not the right choice for everyone…some go because they figure that’s just the next step and don’t know what else to do.

  13. I agree that college is still worth it, but if college costs continue to rise it will be hard to justify the cost. My oldest will be ready in 11 years, but if his school costs 250k where is the value in that? I can give him 100k to start a business and invest the rest. 20 years he should be set. I save for college but sometimes I wonder that there has to be a better way….

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