The cost of college tuition has risen a mind-boggling 160 percent since 1980.¹ And with it, of course, student debt has also increased. With that information in mind, you might wonder, “Does it still make sense for my child to attend college?”

For the most part, the answer is yes. 

A bachelor’s degree can increase a person’s lifetime earnings by nearly 60 percent when compared to having only a high school diploma. This means that even with the rapid rise in tuition rates, education is still a valuable and worthwhile expense. 

Let’s take a look at the long-term impact of student loan debt and what to consider before taking it on.

Calculating the ROI for Education 

Preparing for college is an exciting time for a teenager (and for you as their parent), but sometimes the dreams of 18-year-old independence and empty-nest date nights can overshadow the financial planning component. While you’re touring campuses and reviewing course catalogs with your child, it’s important to consider the cost of each school they’re considering and how it will impact their balance sheet once they graduate. 

Think of it this way: your child’s college tuition is an investment in their future—and just like any good investment, the return needs to outweigh the cost. If your child is going to take on debt, their anticipated salary should be sufficient enough to pay back the debt effectively.

In other words, you don’t want your child to rack up student loan debt to pay for an education that leads to a career in which they can barely pay back said loans. 

So if your child is considering an ivy league or private school but they don’t yet know what they want to major in, or their field of study isn’t likely to help them recoup the cost of tuition once they’re in the workforce… they might need to rethink their decision—especially if they can get a quality education in their area of interest from a reputable university or state school at a fraction of the cost. 

Including the Whole Family in the Decision-Making Process

Maybe your teen isn’t 100 percent sure if college is right for them, and they want to explore their options. In cases like this, it can be beneficial for them to “get their feet wet” in the world of academia before diving head first into a four-year degree program. 

Online courses or community college classes are great cost-effective options to help someone get a feel for the college experience without racking up unnecessary debt. Trade schools also offer valuable life skills, and they tend to be more affordable than traditional universities.

Or your child might consider taking a “gap” season to work and think about what they’d like to do. Not everyone knows exactly what career they’d like to pursue when they graduate high school, and that’s okay. It might also help your teenager to talk with other adults in their life and get feedback about what they would have done differently or how impactful their degree has been on their career. 

In any case, if your child isn’t at least someone confident about their career path, it can be beneficial for them to explore their options before committing to an education (and the subsequent expenses) that might not be relevant to their career trajectory. 

There are also lots of online resources that can help you and your child calculate the cost of college, understand repayment plan options, and determine the ROI of attending their dream school. 

Either way, the important thing is to plan ahead and help your teen consider the best (and most practical) options for their goals. 

In part two of this blog, we’ll discuss some best practices about saving for college and paying back student loans. If you have questions or you’d like to discuss college planning in more detail, we’d love to talk with you. You can schedule a consultation with us here. 

^Sources

^{1https://cew.georgetown.edu/cew-reports/roi2022/}