The Case for College

Reasons to go to college and a step-by-step guide for estimating the return on this investment.

This is a chapter preview. To read the full book, click here. 

 

TL;DR

 

1. Earning an associate’s or bachelor’s degree can grant access to many high-paying jobs, buy you time to explore career options, and build your professional network
2. You don’t need a master’s or doctorate for most jobs, but statistically, you will be paid more with a higher level of education
3. Applying to FAFSA is the gateway to more than $150 billion in aid via grants, scholarships, and federal work-study programs
4. Loans can be used as a last resort to afford a college degree if your estimated future earnings with the degree suggest that you can comfortably repay the borrowed amount. For example, if the repayment on a ten-year loan is less than 8% of your estimated postgraduate income, you can assume it won’t be challenging to repay this amount.    

 

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Benefits            

 

College is a phenomenal catalyst for your future earning potential. Employers are willing to pay a premium for the intelligence and resourcefulness demonstrated by college degree earners. 

Additional education correlates with higher earnings and lower unemployment rates 

Earning a college degree can be a tool for building generational wealth, as households led by a second-generation college graduate have a median wealth of $92,500 more than those led by a first-generation college graduate. 

Earning a college degree also expands your employment opportunities. Today, nearly 60 percent of all jobs in the U.S. require higher education. Most of these jobs are white-collar; however, workers across all industries can benefit from having a college degree. 

 

Jobs available with a college degree

The most accessible college degree is an associate degree. An associate degree – commonly earned at community college – provides credits that you can apply towards an advanced degree, like a bachelor's. However, an associate degree alone is a satisfactory prerequisite for many jobs:

 

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*The projected percent change in employment from 2021 to 2031. You can find additional jobs on the BLS website.

**The Bureau of Labor Statistics does not provide salary ranges above $80,000 a year; however, jobs in this category can earn significantly more than $80,000 annually. For more precise salary figures, refer to online salary databases like Payscale.com. 

 

The most commonly sought-after college degree is a bachelor’s degree. Full-time workers with a bachelor’s degree (and no additional advanced degree) have median earnings $27,000+ higher than full-time workers with a high school diploma. Bachelor’s degrees typically take four years to complete and are often earned in person at a college campus. Many jobs require a bachelor's degree as a prerequisite, including the following:  

 

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 A master’s degree is an additional program of study to further master an academic or professional discipline via critical thinking and independent research. While you can pursue a master’s degree immediately after completing a bachelor’s degree, many applicants wait to apply until they develop additional professional experience. 

You don’t need a master’s degree for most jobs; however, it serves as an advantage when applying. People who do not have a master’s degree can still be afforded the same opportunities by leveraging on-the-job experience. 

 

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Lastly, a Ph.D. is a doctoral research degree and generally the highest level of academic achievement.  This degree usually takes three to four years of full-time work towards a thesis providing an original contribution to your subject. Doctoral degrees are rarely required for employment but are pursued by those seeking expertise in their domain of study. 

  

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Keep in mind that the “or more” median pay can be much higher than $80,000

 

Money aside, college provides students with autonomy that high school lacks. In college, you determine which classes to take, when, and how to spend the time in between. For many, it’s the first opportunity to decide on your schedule and priorities before entering the workforce full-time.  

 

 

 

 

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 I know why you want to go to college you dirty dog

 

College campuses can also provide a diverse student body to make friends and build relationships that often extend past graduation. Plus, there are endless extracurricular opportunities to meet new people, including fraternity life, on-campus sports, and a club for almost every interest. For many, these connections act as personal and professional support systems through networking and knowledge-sharing. 

Unlike most high school classes, college classes are designed for collaboration and to challenge assumptions. Professors expect students to problem-solve together in preparation for real-world experience. Learning this way will expose you to new perspectives, improve decision-making, and sharpen your sense of self. What’s more, being able to work alongside people with different backgrounds and experiences is a skill employers value as highly as the degree you work towards.

College programs are inherently flexible to help students identify and pursue a career that best fits their interests and skills. Unlike certification programs or trade schools, colleges allow students to explore different career paths before committing. Ultimately, if you don’t enjoy what you’re studying, you can change majors and often still graduate on time, which 30% of students do. To help plan your course load and subsequent career, colleges provide resources such as dedicated counselors, a career center, and access to professors with real-world experience.

By the end of your college experience, you will develop a network of students, professors, and faculty to reference and leverage throughout your career. Remember that most job-seeking candidates find work through mutual connections. Graduates from your university – including those before and after your attendance – are invested in seeing their fellow alums succeed. 

                                                        

The Price of College

 

In a perfect world, your college experience would already be paid for by the government, your family, or the school itself. If this isn’t your reality, there are tools to make tuition affordable.

Don’t avoid college because it costs money. Rather, take the steps below to determine whether it makes financial sense for you. 

1. Fill out the Free Application for Federal Student Aid (FAFSA)
2. Apply to multiple schools
3. Determine the net cost of attending each college 
4. Calculate your anticipated return on investment 

 

1. FAFSA

Filing the FAFSA is the most important thing you can do to get money for college. It’s the gateway to more than $150 billion in aid. Common types of financial assistance are listed below:

 

Scholarships

Scholarships are gifted money you don’t need to repay. Thousands are offered by schools, employers, individuals, private companies, nonprofits, communities, religious groups, and professional and social organizations. In addition to FAFSA, you can learn about scholarships by contacting the financial aid office at the school you plan to attend and using the U.S. Department of Labor’s free scholarship search tool. 

Grants

Grants are financial aid, typically based on need, that do not have to be repaid. Grants can come from the federal government, state government, college or career school, or private or nonprofit organizations. Specific scenarios may require repaying a portion or all of the grant funds: for example, if you withdraw from school before finishing a semester or receive a TEACH Grant and do not complete your service obligation. Learn more about Department of Education grants and eligibility requirements on studentaid.gov.

Federal Work Study

Federal Work Study provides part-time jobs for undergraduate and graduate students with financial needs, allowing them to earn money to help pay education expenses. The program encourages community service work and work related to the student’s course of study. Federal work-study jobs can be part-time or full-time and occur on or off campus. This program isn’t available at all colleges, so you should verify participation with a school's financial aid office.

Loans

Loans are money you borrow to pay for school; you must repay your loans and the interest that accrues. Borrowing money should be a last resort for affording an education, although it can be worth the investment. More loan information is available on studentaid.gov, and the appropriate use cases for borrowing money are discussed further in this chapter. 

 

Most applicants receive some form of financial aid regardless of their family’s income status, and many universities — including private schools — require the FAFSA as part of the application process. Because financial assistance provided via FAFSA is first-come, first-served, you should apply to take advantage early in your college search process. 

Filing the FAFSA is free and can be done in less than an hour. Before starting the application, ensure you have the necessary information, including your social security number, driver’s license number, and tax return forms. If a parent or guardian claims you as a dependent, you must also reference your parents’ federal tax returns. For additional information and a step-by-step guide, visit studentaid.gov.

 

2. Apply to Multiple Schools

After you complete the FAFSA, increase your chances of being accepted to a college program that makes financial sense by applying to different schools. At this stage of your college search, focus more on the attributes of the schools you are applying to than the price. While cost will ultimately determine which schools are worth attending, you will not know the reality of your financial aid package until you apply and are accepted to enroll. 

Each college application can cost up to $100 and carry unique requirements, so limiting the number of applications you send and prioritizing the quality of your submissions over quantity is worth it. Your goal should be to have several acceptance letters to choose from, but not too many as to be left indecisive.

To find colleges to apply to, the US Department of Education created the College Scorecard database to search by location, acceptance rate, and type of degree. 

 

The scorecard website also includes the ability to compare universities of interest. 

 

If you’re unsure where to start, use the “show me options” feature to generate a baseline list to consider. When building your list of prospective universities, consider common differences between schools. 

 

Safety vs. Reach schools

A safety school is one where your academic credentials exceed the school's range for the average first-year student. You should be reasonably confident that you will be admitted to safety schools based on your GPA and SAT or ACT scores.

Although you can rarely guarantee college acceptance, colleges that accept the majority of their applicants are generally considered safety schools. To better predict whether to expect an acceptance, compare your SAT or ACT scores to the student body average using the College Scorecard website’s Test Scores and Acceptance section.

 

If the college you are applying to does accept ACT or SAT scores, your test results should be at the higher end or above the testing range to reasonably expect an acceptance letter. 

 

Note that some schools have an open admission policy or do not accept SAT or ACT scores as part of their application process.

 

Conversely, a reach school is any college you may have difficulty getting into because the acceptance rate is low. Reach schools depend on the individual, but for high-performing students, these are typically more prestigious and well-known institutions with acceptance rates at or under 20 percent.

Lastly, match schools fall between the safety and reach criteria. Your GPA and test scores should match the current incoming first-year class. You should expect to qualify for enrollment; however, you are not guaranteed an acceptance letter. 

Consider submitting applications to at least two safety schools, two match schools, and two reach schools to diversify your options.

 

Public vs. Private

Public colleges source the majority of their funding from the government. In contrast, private colleges fund their academic programs by relying on student tuition, alumni donations, and endowments.

Since public schools are funded mainly by the government, they can afford to charge lower tuition rates — especially to in-state students. Conversely, because private schools rely on tuition for more of their funding, the cost of attendance is usually much higher; however, they compete with public schools on price by offering select students more significant tuition discounts in the form of scholarships. 

Public universities generally boast more comprehensive program offerings and research opportunities, while private universities typically offer a more personalized college experience through smaller class sizes and flexible faculty support. Choosing between private and public colleges ultimately amounts to preference, and the customized aid package each is willing to provide. 

You can find more information regarding the differences between private and public universities on BestColleges.com. 

 

Community college vs. four-year college

Community colleges are public institutions that offer remedial education, GEDs, high school diplomas, technical degrees and certificates, and a limited number of bachelor’s degrees. After graduating from a community college with an associate’s degree, many students transfer to a four-year college or university to continue their studies by earning a bachelor’s. 

The primary benefits of community colleges are the easy application and admittance processes and the relatively low cost. In fact, community college can be tuition-free for selected students in 47 states under the College Promise program, available to those who complete the FAFSA. 

Suppose you intend to complete your bachelor’s degree at a four-year university. In that case, community college offers an affordable way to complete introductory courses and position yourself as a stronger university applicant. However, sometimes the transferability of community college credits is not guaranteed. Students interested in pursuing a bachelor’s degree by starting at a community college should evaluate credit availability and articulation agreements between community colleges and four-year universities as part of their decision-making process. 

The accessibility of community college comes with additional considerations. Students wishing to pursue higher education part-time while remaining close to home may appreciate the ability to commute to school and complete courses around their schedules. However, the affordability of community college can come at the expense of other resources, such as on-campus housing, meal plans, or extracurricular activities. Additionally, a community college's alumni network and campus culture can be less developed than a four-year university. 

 

In-state vs. out-of-state

In-state public colleges often provide cheaper tuition than out-of-state options. Additionally, students may prefer the familiarity and lower travel costs of staying close to home. However, in-state colleges are not guaranteed to be your cheapest option depending on factors such as financial aid.

Students considering applying to out-of-state programs should be comfortable being independent and willing to embrace a culture change. While out-of-state schools can present greater potential for personal growth, this transition can be more challenging than staying closer to home. 

 

Online vs. In-Person

Those seeking flexibility in pursuing higher education should also evaluate online or distance learning programs. Like community colleges, online colleges allow students to earn a degree on their own schedule but without the obligation of commuting to a college campus. Online classes are typically more affordable than in-person learning and may appeal to those with a busy schedule outside of class. For an example of a cheap online college program, refer to University of the People.

Online degrees require students to be tech-savvy and highly motivated. Because they don’t provide the same interaction between students and professors that in-person classes do, online courses can require students to assume greater personal responsibility to learn class materials. Thankfully, online materials continue to improve by integrating “hands-on” learning experiences such as live video conferencing, real-time messaging, and take-home projects. 

Consider your learning style when deciding whether to pursue an online degree. The VARK Questionnaire can help you think through your learning preferences, keeping in mind that preferences are not always strengths and that most of us learn in various ways (e.g., seeing, hearing, reading, doing). 

 

Domestic vs. International

Students interested in foreign cultures and leaving their comfort zone should consider international colleges. International colleges provide the adventurous but challenging opportunity to further your education while immersed in a new culture. 

Embracing new experiences abroad is exciting; however, adjusting to life in a foreign country can distract from your education. For this reason, students interested in studying abroad should generally have a clear major and career path in mind before applying. Additionally, while there are international colleges that operate on US academic credit systems, most international colleges use different systems. Before applying to an international college, understand the commitment by researching the school’s language requirements, learning environment, and cultural expectations. 

In terms of price, international study varies by country and university. In some instances, you can credit aid provided through FAFSA to an international program. Additionally, many domestic colleges partner with international colleges to offer their students more accessible study-abroad opportunities. 

 

 3. Calculating Net Cost

Once you have a list of colleges you wish to apply to, calculate the anticipated net cost of attending each. The net cost of attendance includes the price of tuition as well as all additional school expenses, including room and board, transportation, and savings from financial aid. You can estimate the price of college attendance using the U.S. Department of Education’s search tool or a cost comparison worksheet like the one provided by BestCollegeFit.com.

 

 

For each prospective university, find the annual sticker price of tuition. Then, add expenses unique to each school, including room and board, transportation, and school supplies. Note how these expenses differ depending on the location and type of university. 

Adding all expenses to the tuition price gives you the total cost of attendance. Next, subtract savings from financial aid to arrive at the annual net cost of college attendance. To get the full cost, multiply this annual figure by the number of years needed to earn the degree. If the net cost is more than zero, evaluate whether the anticipated return of a college degree justifies its cost.

 

4. Calculating Return on Investment  

If you can reasonably pay for the net cost of attendance using personal savings, family support, or a work-study program, it should be considered worth the cost because, as previously demonstrated, you can expect to earn more money with a college degree than without one. If not, consider whether private reimbursement opportunities, government programs, and debt are worth funding the remaining balance. 

 

Private Reimbursement

Some companies offer tuition assistance programs (TAPs), or tuition reimbursement, as a workplace benefit to their employees. These companies reimburse eligible employees a certain amount of money spent on tuition. Companies offer this to encourage their employees to work for them longer, as some studies suggest that encouraging employees to pursue further education positively impacts a company's bottom line. Since the amount offered via TAP may not cover all higher education costs, tuition assistance is another term for this type of program. 

Tuition reimbursement is not a component of your regular salary, but some companies set these funds aside to help their employees pay for college tuition. There is no cap on the amount of money an employer can invest in educational benefits. However, many employers limit the benefit to $5,250 annually for tax purposes.

For example, Starbucks employees based in the U.S. who work an average of 20 hours per week and who do not yet have a bachelor’s degree are eligible for the Starbucks College Achievement Plan. Introduced in June 2014, this opportunity allows all eligible U.S. employees to earn their college degrees from Arizona State University online with full tuition coverage. 

Students considering a tuition reimbursement program should remember that employees must meet specific requirements before the employer will pay. For example, some employees must pay their total tuition before being reimbursed. Employees may also need to take a specific course set covered by the tuition reimbursement program, and reimbursement may not apply to all degree types. Because every employer is unique, students interested in TAP opportunities should explore their options early in their college search and revisit them when applying for jobs. 

You can find a list of companies that offer these programs on eStudentLoan.com.

 

Government Sponsorship Opportunities

Beyond the government benefits afforded through FAFSA, government employees can find support for higher education expenses through the Federal Employee Education Fund (FEEA), established by members of federal unions and management associations to assist government employees in need. This non-profit accepts membership from federally employed civilians and postal workers.

For those considering a career in the military, the government provides scholarship and reimbursement opportunities for current students, active-duty personnel, and veterans. Additionally, each branch of the U.S. military has its college-level service academy to train future officers. These academies are free to attend in return for a commitment to serve.

In addition to their service academies, the Air Force, Army, and Navy (including the Marines) sponsor Reserve Officers' Training Corps (ROTC) programs at many colleges. ROTC programs provide college scholarships to eligible students who apply during high school. Students already in college can also apply for scholarships depending on when they expect to graduate.

ROTC scholarships cover tuition and educational fees and may include a monthly stipend for related expenses. Remember that ROTC scholarships require a commitment to participate in training during the school year and serve after graduation.

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Additional military funding opportunities include the U.S. Department of Defense's Military Tuition Assistance, which functions like a private market tuition reimbursement program and is available to active-duty, National Guard, and Reserve Component service members who want to pursue higher education in their off-duty time. Although veterans are not eligible, they can access alternative programs via the Department of Veterans Affairs (VA).

Both private and public funding opportunities require significant time and effort committed to the funding institution. But you should consider these opportunities if they align with your long-term career goals and make your college plans feasible.

 

Student Loans

As a last resort, borrowed money, or student loans, can be used to pay for a college degree. As with any debt, you will need to repay loans for higher education eventually, and failure to do so on time poses risks to your financial health. Therefore, knowing these risks and strategies to mitigate them is critical before borrowing money. 

While you can borrow money for student loans from private lenders, student loans provided via the federal government offer benefits that don’t typically accompany private loans, including fixed interest rates, income-based repayment plans, loan cancellation for select types of employment, deferment options, and interest rate reduction based on the repayment method. For these reasons, consider prioritizing federal student loan options before private loans.

Four types of federal student loans are available through the Department of Education:

 

Direct Subsidized Loans are loans made to eligible undergraduate students who demonstrate financial need to help cover higher education costs at a college or career school.

Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students, but eligibility is not based on financial need.

Direct PLUS Loans are loans made to graduate or professional students and parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid. Eligibility is not based on financial need, but a credit check is required. Borrowers who have an adverse credit history must meet additional requirements to qualify.

Direct Consolidation Loans allow you to combine all your eligible federal student loans into a single loan with a single loan servicer.

 

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If you are an undergraduate student, the maximum amount you can borrow each year in Direct Subsidized Loans and Direct Unsubsidized Loans ranges from $5,500 to $12,500 per year, depending on what year you are in school and your dependency status. If you are a graduate or professional student, you can borrow up to $20,500 yearly in Direct Unsubsidized Loans. 

You can also use Direct PLUS Loans for the remainder of your college costs not covered by other financial aid. If you are a parent of a dependent undergraduate student, you can receive a Direct PLUS Loan for the remainder of your child’s college costs, as determined by their school, not covered by other financial aid. Direct plus loans can be used in addition to unsubsidized loans to increase the amount of money available to borrow.

Determining whether a student loan makes financial sense requires anticipating how likely you are to comfortably repay any debt after graduating. Although this is somewhat unpredictable with many variables, as a rule of thumb, your student loan payment should be no more than eight percent of your gross income after college. If you are considering borrowing money, you must determine 1) your anticipated earnings with a college degree and 2) your anticipated loan payment to judge affordability. 

 

 

 

 

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You can use College Scorecard to estimate your anticipated earnings for a college degree. For each university with available data, Scorecard displays the median annual earnings of individuals who received federal student aid and began college ten years ago, regardless of their completion status.

 

The median yearly earnings for UCLA students is approximately $73,744 compared to the four-year school midpoint of $47,822

 

Alternatively, if you have a postgraduate career in mind, you can use the median salary provided by the Bureau of Labor Statistics as your reference point. 

Next, estimate your anticipated loan payment using the Federal Student Aid Loan Simulator. The simulator will ask whether you are borrowing for a future or current program of study, the degree you plan to earn, program length, and your school name and dependency status. When completing the simulator questionnaire, you must select your family’s annual earnings and the money you anticipate needing to borrow.  Entering this information will show you the school’s average undergrad cost for the duration of your program and the estimated cost to you based on your family income. For public universities, this cost assumes in-state residency. 

 

These figures result from estimating a future four-year bachelor’s program at UCLA as a dependent student with family earnings between $48,001 - $75,000

 

Lastly, the calculator will prompt you to enter the amount you believe you will need to borrow for school. If you are unsure of this amount, the form includes the option to help estimate this by factoring in anticipated aid money and any family contributions. The result is a Department of Education estimation of the amount you are eligible to borrow and what this would look like to repay monthly with a standard ten-year plan. 

 

Using the previously entered responses, I anticipated borrowing $25,000, of which the calculator estimated I would be eligible for $24,250 in federal loans. A $236/mo payment is $2,832 for the year, which is approximately 3.8% of my anticipated annual earnings: $73,744. Because this percentage is well below 8%, I am confident I can repay it. 

 

Suppose the estimated payment is below eight percent of your anticipated gross earnings. In that case, you have data to support the notion that you can afford to repay this amount comfortably. If it isn’t, explore how changing various inputs impacts results. For example, you may estimate different federal aid packages, degree types, and anticipated incomes. If you have doubts about your ability to repay a loan, consult studentaid.gov and consider speaking with a financial advisor. Remember that if you struggle to repay a loan, options are available to refinance or consolidate your debt before it threatens your financial health. Ultimately, if college is not worth the cost, there are alternatives for entering the labor force. 

 

 

 

 

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