I’m a big fan of a continuous education that lasts a lifetime, whether earning degrees or just gaining knowledge in topics you’re not normally exposed to. But when you start focusing on money, it’s easy to raise questions about how much education is worthwhile. There is a war over the value of higher education.
College graduates on average earn significantly more than individuals without a degree. According to the Bureau of Labor Statistics, income increases with successive degrees. The median weekly earnings, including wages and salary, jumps 64% between those with high school diploma and those with a Bachelor’s degree. If you hang your Master’s degree on your wall, you’ll earn a 100% premium, doubling your income. This income advantage snowballs by millions of dollars over time.
While the averages tell one story, practicality tells another. If you earn an expensive degree or two then work in the arts, non-profit, or the public sector, it will be more difficult to recoup the costs of that education. A lot of generic financial advice, particularly the advice that can be found online for a mass audience, suggests earning a degree without going into debt, finding the cheapest college education you can, and even forgoing higher education completely and entering the “real world” as soon as possible to begin earning income.
You could look at the cost of education from a pure return-on-investment perspective and get discouraged about the value of an education. These calculations consider college expenses like tuition, boarding, and course materials. They usually conclude that it makes more financial sense to acquire the least expensive four-year degree based on tuition rates.
What these calculations don’t often take into account is that you can attend Ivy League and other private colleges for less money than many public colleges. Many private colleges offer financial aid packages that bring the costs of an education further towards affordability than public colleges. At least fifty colleges include no or only small loads with their financial aid, in order to save their graduates from the burden of student loan debt.
For example, Harvard’s tuition is $52,000. Racking up over $200,000 in college costs for a four-year degree does not sound like a good use of a family income — and you can practically forget about having your child “work his way through college.” But families earning $80,000 a year can send a child to Harvard for $6,567 a year, a contribution of less than 10%. With an income of $120,000, tuition at this Ivy League school is reduced to $16,000. See more about private colleges offering loan-free financial aid at CNN Money.
College isn’t for everyone, but for those who choose this path, I would encourage attending the best institution possible. There are a lot of different variables that go into determining what the “best institution” is, and that’s going to be difficult to quantify. I was surprised to see how inexpensive an Ivy League education could be, and my experience tells me that if you can attend an Ivy League school, you should.
Published or updated April 14, 2010.