What’s the Value ($) of a College Education?

Posted on November 22, 2011 by


What’s up with student life?  The bills!  Grocery prices through the roof, astronomically high gas prices, 1 Trillion dollars worth of student debt and now nationwide tuition hikes.

“Published in-state tuition and fees at public four-year institutions average $8,244 in 2011-12, $631 (8.3 percent) higher than in 2010-11.”

“Published out-of-state tuition and fees at public four-year colleges and universities average $20,770, $1,122 (5.7 percent) higher than in 2010-11.”

“Published in-state tuition and fees at public two-year colleges average $2,963, $236 (8.7 percent) higher than in 2010-11.

With the rising cost of bills, loans and student debts, how is the average college student supposed to survive in the post collegiate world?  The Project on Student Debt noted that the average college graduate in 2010 faced $25,250 dollars worth of debt upon graduation.  With a shortage of jobs nationwide, new college graduates are fighting/competing with full-time workers, part-time workers, the elderly, college drop-outs, high school graduates, and high school drop-outs even for minimum wage jobs like McDonald’s.  As the bills and tuition cost continuously rise, many college students are forced to place a price tag on their education.  Pick one: Harvard at $52,652 dollars a year, Notre Dame at $32,706 dollars a year, Bethel College at $30,400 dollars a year, Indiana University South Bend at roughly $6,400 dollars a year or Ivy Tech at roughly $3,100 dollars a year.  Which one is more important, the education or the added cost?  Unfortunately, financing the cost of a college education is often more important the underlying educational value that a college degree brings.  Due to the fact that many students want the least amount of debt possible, quitting or dropping out before graduation for a “high” paying or even a “low” paying job with good benefits is quite common in today’s society.  Just like registering for classes, students often learn that everything is on a first come first serve basis.  Because of this, when an opportunity knocks, sometimes you can’t afford to wait to answer.

Many college grads are saddled with debt and unable to buy a home or obtain other credit. That can leave them in some cases unable to pursue the careers they studied for because they must take low-paying jobs just to try to keep up.

In turn, the assumed default rate on student’s loans has moved from 25% to 30% upward to between 30% and 40%. Failure to graduate is the most important factor in whether a graduate pays back a loan. Over 20% of Americans between the ages of 20 and 24 without a college degree are unemployed. The rate is 8% for those of the same age with degrees.

Living life is a job all in itself, but now the job is getting even more expensive and stressful as the days go by.  College is no longer just centered around papers, exams, midterms and/or finals.  Nowadays, the typical college student has to be an accountant, a bookkeeper and a finance major whether or not they ever take a business class in college.  Tracking and saving money has become part of the daily agenda for many college students.  From one student to the next, if you borrow the money, make sure that you make it count for something.  In life, we often need tricks, tips and cheat codes like a video game; here are 7 tips for my fellow student loan borrowers that may be helpful:

  • Use the Student Loan Calculator to determine you expected monthly student loan payments to your expected salary upon graduation.
  • New graduate student loan repayments should not exceed 10–15% of their starting monthly income.
  • Parents should use the Parent Debt Calculator in order to estimate their ability to take on additional debt.
  • Parents should limit their total debt repayments (including education loan repayments) to 37% of their gross income.
  • If times get hard, a borrower can extend the repayment period, depending on the lender, for up to 25 years which is called extended repayment.
  • Make sure you balance the long-term cost of any repayment plan against short-term payment relief.  If you don’t, you could end up owing and/or paying a lot more in the long run because you’ve slowed down your repayment of the principal.
  • Parents should also use the Parent Loan Repayment Calculator to estimate their monthly payments which are based on the loan principal amounts, the repayment period, and the annual interest rate.

Anybody who has ever been in business, anybody who has ever paid bills, anybody who has ever lived in a serious adult life knows that indebtedness is a killer.                                      Frank Lautenberg