Can you justify the cost of your degree?
Young adults, ages 25 to 32 with a college degree earn more, but at what cost?
According to the Pew Research Center, the difference in average annual full-time earnings between young adults ages 25 to 32 with a college degree and those in the same age group with only a high school diploma is $17,500. Comparing a college graduate with a non-college graduate using these statistics, the college graduate would earn $525,000 more than the non-college graduate over a 30-year career.
However, at what cost?
According to Debt.com, the average student loan debt in Michigan as of 2013 was $29,583 and the student loan default rate was 14.4 percent. The median income for households in Michigan was $48,471 according to 2008-2012 data from the census bureau. With the average student loan debt greater than 50 percent of the median income and the default rate so high, young adults with college degrees who have student debt have many challenges despite their advantages.
Before borrowing for that college degree, take some significant time to contemplate the financial impacts of your decision. Ask yourself some important questions:
- Can I earn some basic credits at a community college for less cost before I transfer to a typically more expensive four-year college?
- Can I get a job that fits my school schedule and allows me to gain experience in my area of interest?
- Will the degree that I am interested in earning be marketable when I graduate?
- What are the average salaries of the people who hold the same or similar degree?
With the stakes so high, this might be one of the biggest financial decisions that you make in your lifetime.
For those of you who already have a large amount of student loan debt, there is help available; see this article by Michigan State University Extension senior educator Terry Clark-Jones for some direction. It may also be helpful to learn how to recover from a financial crisis. However, the faster you gain control of the problem the better. If you do not have a monthly spending plan it may be very helpful to make one with the student loan problem in mind. Set a S. M. A. R. T. goal (Specific, Measurable, Achievable, Realistic and Time sensitive) to regain your earnings advantage.
It may be a fact that the difference in the average annual full-time earnings between young adults ages 25 to 32 with a college degree and those of the same age group with only a high school diploma is $17,500. However, remember that it is an average. That means that it is not true in every circumstance. If you want to make sure that your degree will help maintain the average or even increase it, resolve or avoid the money problems that occur from too much debt.