The average college student graduates with almost 30,000 in student loans. This, of course, is just a rough estimate of what you can expect to borrow while pursuing an advanced degree. Interested in attending Harvard? You can forget about the 30 K figure. Parents can’t help with tuition? That will add to your debt.
If you want to get a graduate degree, the amount you’ll need to borrow goes up considerably. We all know the promise: a good education will earn you a good job. A good job we’ll set you up for life financially.
Unfortunately, many people find that this promise does not come true. Even those who get well-paying jobs after college often struggle with their monthly student loan payments. Is it worth it? In this article, we take a critical look at the ROI of an advanced degree.
The Short Answer
Are advanced degrees the answer? That depends on the question. Advanced degrees can lead to a career that you find satisfying and deeply engaging. For example, do you want to work as a social worker? If so, you will need a college degree and quite probably a master's. You’ll spend 7 to 10 years in college and wind up with a very average salary.
During that time, you may have up to six figures in student loans. These debts may be difficult to pay off, but that does not mean that they are not worth it. If you enjoy your career and appreciate the opportunity to make a difference in the world it is worth the expense and the effort it requires.
Graduate degrees can also be worthwhile in a different sense. For example, engineers with graduate degrees can make $200,000 a year or more. Nurses can start their own practices as nurse practitioners. They can earn more than $100,000 a year and they have the opportunity to focus on areas of medicine that interest in the most.
Business people with an MBA have an extremely high earning potential. Even teachers can almost double their salaries by using their graduate degrees to pursue a career in school administration.
Below will take it closer look at how to calculate the return on investment for a college education.
Think About it Like an Investment
When stockbrokers choose investments, they think about nothing other than how much of a return they will get. Business is very simple in this way. The idea is to buy something at one price and sell it for a higher price.
College is no different. You pay money for a degree. You use your degree to earn more than you paid for it.
But that isn’t the only calculation you should be making. You also think about how much more money you will make with a degree versus without one. What opportunities are available to you because you have the degree? Do you need your degree to pursue the career you are interested in? Is the school that you are applying for financially feasible based on the career you eventually pursue?
A teacher who graduates from Harvard makes the same salary as a teacher who graduates from a state school in Indiana.
If you do think that getting a college degree is right for you then it’s important to think about it as sensibly as possible. Below we will look at ways you can maximize your return on investment.
Apply for Grants and Scholarships
Many people fail to realize how accessible grants and scholarships can be. You don’t have to be at the top of your class to get one.
True, most full-ride scholarships are only available to high-achieving students. However, the opportunities do not begin and end there.
There are many available for people based on their background. For example, if you are a first-generation college student, or if you belong to a minority group, you may find that there are less competitive scholarship opportunities available to you.
You may also find that while a B-average won’t get you a full-ride it will help you shave a few thousand dollars off your tuition each semester. That may not sound like very much when you’re looking at a four-year education that costs over $100,000 but it does add up.
We also mentioned earlier the benefit of weighing your future salary when deciding on a school. Very competitive jobs do favor applicants with a prestigious degree. Most jobs do not. If you are going to spend a fortune on your degree, make sure that you are deriving a benefit from it.
Does Online School Make College more Accessible?
Getting an online degree can make your tuition costs more accessible. Some online universities cost as little as half the price of brick-and-mortar institutions.
They will also save you a fortune on room and board and other expenses related to living on a college campus. Granted, some people appreciate the experience of living on a college campus.
Indeed, it is the experience factor that clouds many people's judgment when it comes to selecting a university. College certainly is a special milestone for many people. However, late nights on the quad and parties with your friends should not be assigned a higher value than your financial future.
Decide what means the most when it comes to college education and choose a school that meets most of your criteria.
Price alone does not need to be the deciding factor. If you want to go to school in person that is OK. Find ways to make it financially feasible.
Seek scholarships. Apply for grants. Don’t borrow more than you can reasonably expect to make within five years of graduation.
If you run all the numbers and decide that college is expensive and it’s still the right choice for you that is OK! Many people find college to be four of the happiest years of their lives.
The important thing is to make an informed choice. Too many people seek out advanced education without understanding the long-term effects it will have on their finances.
