Is a College Education Really Worth it?

Is a College Education Really Worth it?

Before a student decides to enter the world of post-secondary education either through an online school or a ground institution; it’s tremendously important to weigh possible tuition expenses, compare types of federal or private aid and try to develop a sense of fiscal responsibility.

Education is an expensive investment and it’s important to evaluate the full cost of your education before you enroll. Additionally, students who want to really improve their financial savvy should take into consideration their expected “ROI,” or return on investment.

A look into a Student’s Return on Investment (ROI)

An ROI is how much money, you, as an online or ground student, will gain or lose (via future income/salary) on an investment (education) relative to the amount of money you initially invested (tuition, education expenses, federal or private loans). “One way to judge whether the ROI is worthwhile,” says Mark Schneider author of a new outlook study, “is to figure out how much it costs students to borrow money to attend a college and compare those costs to the rate of return.”

The rate of return will be the students anticipated net income. Simply speaking, is investing money in a specific degree program worthwhile? Will the degree help you to attain “gainful employment,” or employment that is profitable enough to ensure that your loans will be repaid in a timely manner? These are essential questions to consider when choosing a post-secondary school.

Is a College Education Really Worth it?

Currently, unsubsidized federal student loans (or, loans that begin to garner interest upon acceptance) carry a 6.8% interest rate. Unsubsidized loans, which are just one example of a type of loan that many students take out upon entering a post-secondary education institution, offer one “starting point” that students can use to compare ROIs. This means, “if the rate of return is lower than the cost of the borrowed money, attending that college does not seem like a prudent choice.”

By calculating a loan and its interest rate, students can see how much the loan will cost to pay back after completion of a degree. After doing so, students can then look at average income levels in their chosen field and see if the investment into a particular school or education track will be a valuable one.

Students can look into these average wage premiums to see if they will potentially earn enough to “overcome the high monetary cost of obtaining the degree.”

Schneider is one of the many who are advocating to make ROI data more readily available to students. This information, he says, “will help students make more informed choices and will increase market-based accountability, to the extent that campuses with low rates of return face falling enrollment and student concerns about poor performance.”

Education is one of the most important investments for your future. Before choosing a school, whether an online college or ground school, take account of the investment you are making and ensure that it will work successfully in your favor.