College: Worth Every Penny?

College education is still a great deal.

This may sound surprising, what with growing concern over yearly cost increases in private and public college education. Compensating for tight government budgets, higher faculty salaries, and other logistical costs, universities continue to ask for more from students and their parents. Many parents and pundits have cried foul, lamenting the rise in price tags and questioning the worth of the expense.

But when you look at the facts and figures, college education still comes out on top as a useful, needed addition to a successful adult life.

Benefits of College

College graduates, on average, earn more than high school graduates. According the Census Bureau statistics in 2002, high school grads earned an average of $1.2 million over their adult working life. Adults who held associates degrees earned around $1.6 million. Bachelor’s degree holders earned around $2.1 million, nearly double that of high school graduates.

A 2005 study by the College Board painted this disparity in different terms. Women aged 25-34 with bachelor's degrees earned 70 percent more than those with high school diplomas in 2005, up from 47 percent in 1985. For men, that gap was 63 percent, up from 37 percent in 1985. In addition, full-time workers aged 25-34 with college degrees make an average of $14,000 a year more than those with high school diplomas.

College degrees seem to add to quality of life as well as financial security in life. A report by the Institute for Higher Education Policy published in 1998 noted that college grads enjoyed higher levels of savings, made better consumer decisions, were more mobile in their professional and personal lives, and were able to provide better quality of life for their children. Other reports link college education to such benefits as a more cultured and rational mindset, an open-minded and knowledgeable worldview, and even better health, for the grads and their children.

Costs of College

The problems arise in the yearly increases of college tuition and costs. For the past 11 years, college prices have rose faster than inflation, according to the College Board.

In 2006, the average cost of a four-year private college broke the $30,000 mark for the first time. This cost reflects both tuition and room and board (the cost to live in a dorm and eat on a meal plan). For four-year public colleges and universities, the average costs ranged from nearly $13,000 for in-state residents and higher for out-of-state.

But perspective is necessary to understand the full meaning of college costs and their value.

According to the College Board:

• About 65 percent of students enrolled at four-year colleges or universities attend institutions that charge tuition and fees of less than $9,000 per year.
• About 56 percent of full-time students enrolled in public four-year colleges and universities attend institutions that charge published in-state tuition and fees between $3,000 and $6,000.
• Only about 5 percent of all students attend colleges with tuition and fees totaling $33,000 or higher per year.

Paying for College

It may help to see the reality of college costs, but it may not help the anxiety of saving for your child’s college education, especially since fees increase every year. But the facts show that student aid is widespread and growing, and helps the majority of students achieve their college dreams. For example:

• Almost two-thirds of full-time students receive grant aid that lowers their tuition costs.
• Total student aid increased 3.7 percent to $134.8 billion in 2005-06.
• Over the past decade, total student aid, including grants, loans, work-study and tax benefits, increased by 95 percent, adjusted for inflation.
• In 2005-2006, aid in the form of grants and tax benefits averaged about $2,200 per student at two-year public colleges, over $3,100 at public four-year colleges, and about $9,000 per student at private four-year colleges.
• Loans constitute 51 percent of total aid to graduate and undergraduate students, while grants made up 44 percent.
• 41 percent of all students attend two-year colleges. The average full-time student enrolled in a public two-year college student receives about $2,200 in grants and tax benefits, which reduces the average tuition and fees paid from the published price of $2,272 to a net price of under $100.

As these figures show, college is not out of your reach, and should not be discounted from your children’s future. Learn more about ways to fund college education, frequently asked questions, and tax break details in our continuing series.

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