College tuition fees in the USA are among the highest in the world, yet there persists a belief that gaining a degree is the only way to get ahead in life. While it’s true that a college education can unlock job opportunities with decent salaries, not all graduates become wealthy later in life, and investing in university is often not worth it. The tuition fees alone for four years at a private university costs just under $140,000 when you factor in the average annual price increase, but perhaps the biggest cost associated with college is time.
It’s important to understand the financial impact of the time you’ll spend at university as well as how else you could use the time, to decide whether attending college is really in your best interests. Most students know how much they’ll need to spend on tuition, and many people can cover the costs through trust funds, part-time work, scholarships, and savings. However, even if you have the money to pay for university, you should consider how much cash you’ll need to survive for four years, how long it will take for the costs associated with the university to bring a return on investment, and whether you could better invest your savings and time elsewhere.
Time is Money
We all know that gaining a college education requires a time investment of four years, but not everybody realizes that it takes longer than that to reap the rewards. Below, this article analyses how long it will take for a college education to provide a return on investment.
Surviving Four Years – or More – in College
Even when taking tuition fees out of the equation, surviving at university costs a lot of cash. You need to pay for a room, food, transport, and books, and all that totals to thousands of dollars every year. According to average estimates published by The College Board, it costs $11,890 for a room and board at a private university per year and $10,400 at public institutions. Surprisingly, students spend a whopping $1,298 on books annually, making the cost of board and books over four years a total of $52,752 for private universities and $46,792 for public institutions. Of course, some students find ways to make significant savings, but those totals don’t factor in food or living costs. Perhaps more worryingly, they fail to consider the number of students who spend additional years at college.
You shouldn’t assume that nothing will hold you back at university, especially when the dropout rate is an astonishing 40 percent. People leave their family homes for the first time to study at college, and not everybody can quickly adjust to their new way of life with so much responsibility resting on their shoulders. Many people will confess how easy it is to get carried away at university and neglect studies, and that is partly why 64 percent of those who eventually graduate spend more than four years studying. If you consider the fact you were expecting to start working after four years at college, each additional year costs up to $70,000 in lost wages, fees and living costs.
Thus, taking tuition fees out of the equation and focusing solely on the expenses of actually living at a private university, you’ll need around $52,752 to graduate on time and an additional $13,188 for every extra year. The total financial cost of your time investment for six years at college could be up to $192,752, which starts to make the tuition fee look small. Plus, that figure assumes you find work right after graduating.
How Many Years Will You Spend Paying off Your Student Debt?
Needless to say, it’s not easy to pay to survive at college for a minimum of four years, which is why 44 million ex-students, including graduates and those who dropped out, owe more than $1.3 trillion in student debt, a figure that increases annually. Fortunately, most students don’t rely on loans to cover every cost associated with college, with many using savings and money from parents to cover tuition and working part-time to subsidize their living costs. Nevertheless, the average 2016 graduate accumulated a debt of $37,172, and because that’s a six percent increase from the previous year, new starters can expect to owe over $45,000 after graduating if trends continue.
According to Student Loan Hero, the average monthly loan repayment is $351, which means it would currently take more than eight years to pay off completely. However, the median monthly repayment is just $203, meaning those who graduate four years from now may be repaying their loan for more than 18 years. However, those calculations fail to take interest rates into account, and federal loans for undergraduates have a rate of 3.76 percent, and private loan providers’ rates can be as high as 8 percent. It’s safe to say that you may end up paying back more than $45,000 over the space of decades regardless of your loan’s interest rate.
Just before we move on from the time aspect of debt, it’s worth noting that you can’t escape your student loans regardless of your financial situation after graduating. Shockingly, you can’t get rid of your student debt even if you apply for bankruptcy in the clear majority of cases, which is why only 1,000 out of over 32 million students attempt to get their student loan discharged every year.
Finding Work after Graduating Takes Time
Many people are beginning to realize that finding work right after college is far from easy nor guaranteed. Your parents may be professionals who remember the days when it wasn’t difficult to find employment with a college degree, but the economy and working landscape has changed since they were studying, and things are now more challenging. Of course, there are still plenty of jobs out there for graduates, but it may take longer than you expect to find them. Plus, when you eventually find a job, it might not be what you wanted.
It usually takes between three and nine months to find work following graduation, which is quite a substantial amount of time when you have loans to repay and career to start. Unfortunately, many graduates struggle to find a graduate job for years, and 49 percent of those who graduated in 2014 felt they were underemployed in their first job and only 52 percent were employed full-time. Only half of the graduates said their employer offered clear progression and training opportunities, which isn’t what you expect after earning a college degree – and spending hundreds of thousands of dollars in the process.
If you’re trying to value your time investment when considering a college education, always remember to factor in how long it will take to find work when you graduate. Be realistic, research your desired career and decide whether your time and money are worth pursuing a degree.
Evaluating Your Time Investment
As you can see, you shouldn’t think you only have to invest four years of your life for a college education to be worthwhile. Your student loan could be a lifelong burden, and you need to think about how much paying between $200 and $350 a month in repayments potentially for years will affect your disposable income. Plus, while you thought it took four years to complete university, don’t forget how many people drop out before graduating, and you’ll lose up to $70,000 annually by staying in college for additional years. Of course, you might still want to go to college if you’re passionate about a particular career, but consider investing your time elsewhere if you think university might not be worth it.
Investing Time Elsewhere
So far, this article has looked at why investing your time in college isn’t always a smart idea regarding your finances and effort. However, people get a degree to land a job they like in addition to being well-paid. You might not be keen on leaving school to start a career with little job satisfaction, but there are other ways you can invest your time for financial and career gains besides university.
As more and more people realize it’s not always worth spending time at university, skills-based courses at vocational training centers have become increasingly popular. There are many compelling reasons why skills-based training is better suited to certain people. First, you only need to study for two years to complete a skills-based training course in most cases, which means you won’t amass so much debt, especially since tuition fees are less than half the cost of university fees on average. Additionally, you can start working two years earlier than university graduates, and there’s a good chance you’ll find it easier to land a job quickly than college grads too. Plus, university students accumulate 70 percent more debt than skills-based course students.
It’s worth noting that many careers that follow skills-based training courses are secure because jobs like a plumber or electrician can’t be automated or outsourced. No matter how much technology advances, there will always be demand for skills professionals who can get to the root of a problem, and tradespeople earn decent salaries. By spending just two years studying a trade or skill at a vocational training center, you can expect to earn $400,000 more than a high-school graduate in your lifetime. While that figure seems insignificant compared to the $1.1 million extra college graduates make, skills-based course graduates don’t have to repay vast sums of cash every month for years to pay off their debt.
College vs. Vocational Training
It has to be said that college can be a worthwhile investment, but most students get a degree expecting to earn good money soon after graduation without realizing it can take over a decade for their investment in time and money to pay off. Plus, four years is longer than you think, which is why so many students fail in their final years and end up having to remain in college for longer than anticipated. Of course, some careers require a college education, which means you have no choice but to invest your time in university if you’re set on a dream job. However, it’s important to remember that college isn’t the only way to land a lucrative job with clear progression opportunities, and the vocational training route requires a smaller time investment than university.
If you’d rather avoid uncertainty and land a job with decent wages sooner rather than later without the financial burden or time commitment associated with college, you should at least consider some form of vocational training. Again, nothing is guaranteed in this world regarding careers, but it’s highly likely you won’t struggle to find a secure job with a decent wage and clear progression opportunities if you learn to become a skilled worker such as an electrician or a plumber.
Is College Worth Your Time?
Now you know that tuition fees aren’t the only cost associated with a university, you’re probably interested in learning how many years it’s going to take to make a return on investment. Let’s assume that you’ve ruled out the option of full-time work right after school and that you’re interested in pursuing further education either at a vocational training center or university. Nobody can tell you exactly how much time you’ll spend getting a degree, paying off your loan and finally making a return on your investment because each case is different. However, some studies say that on average, it takes university graduates 12 years to catch up to those in skills-based jobs financially, though that figure can fluctuate wildly depending on your degree, your chosen career, and your luck. Plus, that 12 years of time you’ll spend to make a return on an investment after starting work doesn’t include a minimum of four years you’ll spend studying. Essentially, if you’re considering college now, you can expect to wait 16 years before your degree becomes truly valuable in financial terms, assuming you pay off your loan quickly and graduate on time. Needless to say, tuition fees aren’t the only thing you need to consider when deciding whether or not to attend college.
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