The rising cost of college

Spiking tuition over the last two decades has led observers to rethink the value of a college degree. Even though tuition costs have people questioning whether college is still a worthy investment, college graduates tend to earn more than those without a college degree.

An increase in the number of students who borrow money for tuition is significant. Sixty-nine percent of graduates borrowed money for college in 2012 compared to 60 percent in 2008 and only 52 percent in 1996, according to a report by Pew Research Center. This translates to a 17 percent increase over the course of 16 years.

Graduates have also been borrowing higher amounts of money per graduate than in previous years. The same study found that graduates borrowed an average of $26,885 in 2012 for their bachelor’s degree compared to an average of $17,000 in 1996 (adjusting for inflation).

As a result of the rise in tuition, people are looking more closely at the return from careers after higher education. The return from a college degree has held steadily at 15 percent for the past decade, according to Jaison R. Able and Richard Deitz of the Federal Reserve Bank of New York. In other words, graduates from college can expect an average of 15 percent in return from their investment in tuition. Numbers reveal, although tuition has increased and wages have declined, people without higher education struggle more financially than those with a college degree.

Although not being employed in high paying jobs may be an issue for some college graduates, according to David Leonhardt of the New York Times, the student with less debt who never graduates from college tends to struggle more. The same goes for students who earn a degree or certificate that holds low value. These are the students who pick programs that will not help them obtain the job they will eventually pursue or who are underestimating the amount of debt they will accumulate compared to the amount of money they will eventually make.

Seniors need to add one more thing to their to-do list. Have a firm grasp on their financial position, choice in school or major, and truly realize the amount of debt that they will likely accumulate.

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