Most high school students or other young adults considering attending college don’t actually weigh or understand the costs and benefits of whether college is a good or bad decision for them. Outside influences (namely parents) generally make the decision for college students, in some cases before the child is even born or before they grow into their own personality. College is not a choice or a privilege anymore for average Americans, it is just the next step after high school before entering the real world. A step that costs a lot of time and a lot of money.
The most common factor overlooked when determining the true cost of college is the opportunity cost of time. Most bachelor’s degrees require at least four years of full-time college courses (120 or so credits). This time can be slightly altered by taking AP courses in high school, early enrollment in basic college courses through local community colleges and by taking summer courses, but even with maximum alterations, most likely you are looking at losing at least 3 years of potential time working for money in order to attend college full-time. However recent statistics show the average college student take a little more than 5 full academic years to graduate with a bachelor’s degree.
One can argue the cost of time lost by not going to college and working a standard blue collar type job is easily made up by salary increases due to having a bachelor’s degree, but this may not always be the case. According to a study from the U.S. Bureau of Labor Statistics in 2018, the average annual income of a non-college graduate is about 65% of the average annual income of a college graduate with a bachelor’s degree. The average annual income of a recent U.S. college graduate is just under $50,000. Meaning you can expect without a college degree to make approximately $35,000 annually.
Let’s make a little table to show the simple opportunity cost of time not working and going to college full-time vs. the time working and not going to college.
Table by The Modern Spartan
Our table here shows the average opportunity cost of going to college is missing out on potential income of $175,000. This is an average number, it’s quite possible an entrepreneur might be able to blow that number away for a creative and motivated individual.
The average cost of college including room and board is around $25,000 per year; therefore a four-year college degree (which takes the average student 5.1 years to get) costs approximately $125,000. When you factor this in with the missed potential income of $175,000, those who go to college are $300,000 in the hole in comparison to those who don’t attend college, not including student loan interest, which is one of our biggest problems. The average student loan interest rate is about 6% and the average student loan takes more than 20 years to get paid off. Student loan interest alone over 20 years can account for close to $100,000 in additional debt, bringing out cost of college to around $400,000.
Now, let’s make another simple chart to show how long it takes for a college graduate to catch up with a non-college graduate (starting at age 23 - 5 years after high school) using a fixed income of $35,000 annually vs. $50,000 annually. Obviously this is a simplistic and dumb downed chart not including raises, inflation, taxes, etc., but the simple chart should give a close enough view to the opportunity cost of attending college vs. not attending college to drive the real price of college home.
Table Continued….
Table by The Modern Spartan
Wow! Check it out! According to this simple chart, it takes 27 years and until age 50 before obtaining a college degree pays itself off. Obviously these numbers are based on averages and aren’t taking account into what your degree is in (doctors, engineers, lawyers, CPAs, etc. make much more) or if you build your own business or work on Wall Street and learn about investing - however the point is made. An average worker vs. an average college student who obtains an average white collar job takes about 27 years to make up the cost of going to college. By age 65 (your average retirement age), this college grad will have out-earned the non-college graduate by $225,000, when you factor this in with college experiences and the comfort of a white collar college job, college might be worth it, but you have to wait until your more than 50-years-old to experience the benefit of your degree.
There are plenty of ways to make the college experience less painful, like graduating early, working through college, paying off student loan debt early, getting a high paying degree, etc., however in the average situation - it may be more beneficial to attempt to start your own business without getting a college degree and specializing in a particular field where you can get a head start in field experience vs. a college graduate. In addition, the military is a great option, not often enough explored. I recommend everyone do their own research and create similar tables and pros and cons lists before deciding to go to college without a second thought. Researching your options and knowing the true cost of college prior to committing to such an extravagant expense is something all students should do before making such a major life decisions as attending college.
Sources:
https://www.bls.gov/careeroutlook/2018/data-on-display/education-pays.htm
http://money.com/money/4777074/college-grad-pay-2017-average-salary/
https://smartasset.com/retirement/the-average-salary-by-education-level
https://nscresearchcenter.org/signaturereport11/
https://www.studentdebtrelief.us/news/average-cost-of-college-2018/