U.S. colleges can cost a lot, and many students take on debt. Is it really worth it, financially, to pay all that money for higher education? Let’s see.

U.S. college,cost

It’s the time of year when millions of students in their last year of high school in the United States are deciding whether to continue their studies at university.

Surveys show that students in the United States are primarily motivated to go to university — or “college,” in American parlance — to eventually earn more, even if it can cost a lot of money to attend many of the leading U.S. higher education institutions, forcing many students to take on debt.

But is it really worth it, financially, to go to college?

U.S. college remains a good investment for most people.

According to a 2017 survey by researchers at the University of California, Los Angeles, the leading reason first-year students decided to go to university was “to be able to get a better job.” Nearly three quarters of the respondents said it was very important to go to college “to be able to make more money.”

The cost of a college education in the United States has increased sharply in recent years but remains a good investment, according to researchers at the Federal Reserve Bank of New York.

“While the rising cost of college appears to have eroded the value of a bachelor’s degree somewhat, college remains a good investment for most people,” according to a 2019 report published by the New York Fed.

In recent years, a typical graduate of a four-year college in the United States has earned about $78,000 a year, compared to $45,000 for the average worker with only a high school diploma, the New York Feb report said. That yields what the researchers called a “college wage premium” of well over $30,000.

Many students take on debt to finance their higher education.

How much does college cost? According to the National Center for Education Statistics, each year of study at a private, non-profit university cost on average $26,361 in 2015-16, up 4.2% from two years earlier.

Many students take on debt to finance the costs. According to Cengage, a Boston education and technology company, students typically underestimate how long it will take to pay off the debt.

A Cengage survey in 2019 showed that 51% of recent and upcoming graduates said they had student loan debt, with an average amount of $22,919. On average, respondents thought it would take six years to pay off their loan debt, while government data indicated it would take 20 years.

The survey also showed that students overestimate the likelihood they will land a job related to their education within six months of graduation.

College may not pay off for everyone.

Another study by researchers at the Federal Reserve Bank of New York, published in 2014, concluded that college may not pay off for everyone.

“A good number of college graduates earn wages that are not materially different from those of the typical worker with just a high school diploma,” the study said.

About one in four graduates of four-year U.S. colleges pay the costs to attend but reap little, if any, economic benefit in the long run, it said.

“In fact, once the costs of attending college are considered, it is likely that earning a bachelor’s degree would not have been a good investment for many in the lowest 25% of college graduate wage earners. So while a college degree appears to be a good investment on average, it may not pay off for everyone.”

Studies showing college graduates typically earn more than those who do not go to college do not measure what the college graduates would have earned if they had not continued their studies after high school. In other words, while college graduates may typically earn more, that does not mean that a college education guarantees that a student will earn more.

In short, college graduates may have earning advantages that have nothing to do with what they learn at university.

There are alternatives to four-year colleges.

Still, for many, the economic and opportunity costs of attending college are outweighed by intangible benefits.

“The desire to conform to a social norm is what often pushes students to costly four-year colleges,” said Ryan Craig, author of “A New U: Faster + Cheaper Alternatives to College” and founder of University Ventures, a private equity firm focused on higher education.

So what are the alternatives to a four-year college? Community colleges offer short-term certificates and help high school graduates land jobs and earn credits to transfer to a four-year university, if they so wish, later in life.

In a novel approach, the Make School in San Francisco offers a degree in computer coding but collects tuition only if a graduate gets hired.

Students do not have to pay tuition up front but must pay back 20% of their wages for five years after they graduate if they land a job offering more than $60,000 a year. Make School graduates earn a Bachelor of Science in Applied Computer Science in 2.5 years, compared to four years at typical U.S. colleges.

Ultimately, the decision whether to attend college depends on individual circumstances that are hard to generalize. Investing in college has both perks and drawbacks for students and families. If, like me, you’re in your last year of a U.S. high school, the choice, while difficult, is yours to make.

Questions to consider:

  1. Why do most U.S. students who attend college decide to do so?
  2. If the average college graduate earns more than the average high school graduate, why can we not say that college invariably pays off?
  3. If you are a high school student, do you think it will be worth your while to go to college? If you have already finished college, was it worth it?
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Xenia Minton is in her final year of high school at St. Andrew’s Episcopal School in the U.S. state of Mississippi. Her favorite subjects in school are Journalism and English, and she enjoys photography, graphic design, running and traveling. She plans to attend the University of Mississippi and focus on Integrated Marketing Communications, with a specialization in Social Media.

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EconomyIs attending U.S. college worth the cost? Well, it depends.