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The ROI of a College Education

College tuition + fees + housing and a meal plan total $50,000 annually. It's no secret that college is expensive, but numbers like these still cause sticker shock.

Given the price, it's natural -- and wise -- to question what the return on investment (ROI) of college will be. In short, what is the worth of a college degree today? How can you minimize the financial burden and maximize the rewards of higher education?

Cost of a College Degree

Don't panic. Not many people pay $50,000 for a bachelor's degree. According to the College Board, 53 percent of students spend less than $9,000 a year on tuition and fees, and average annual tuition/fees break down as follows:

    • Private 4-year universities: $26,273
    • Public 4-year universities: $18,548 for out-of-state students
    • Public 4-year universities: $7,020 for in-state students
    • Public 2-year colleges: $2,544


Furthermore, most students rely on financial aid to mitigate out-of-pocket expenditures. In 2008-2009, the average amount of aid per student was $10,000, and more than half that figure was grant money that would not have to be paid back.

So to maximize the ROI of your college degree, lessen the cost by investigating aid options. Government loans are often a shrewd choice, but try to minimize debt by applying for scholarships. Also keep in mind that pricey, elite universities have large endowments and therefore often award generous grants.

Value of a College Degree

A Bureau of Labor Statistics survey reveals that in 2009, the median weekly wage of someone with a bachelor's degree was $1,205 -- or $399 more than the average for individuals with high school diplomas only. Attaining advanced degrees raised compensation, which topped out at $1,532/week for those with doctorates.

So investment in any college degree leads to a substantial return. But when it comes to payouts, not all degrees are created equal. In 2010, engineering and computer science majors were the highest earners right out of school. Business-related degrees like economics were also lucrative. The average starting salaries of the top five degrees were:

    • $86,220 (petroleum engineering)
    • $65,142 (chemical engineering)
    • $64,552 (mining/mineral engineering)
    • $61,205 (computer science)
    • $60,879 (computer engineering)


Whatever your course of study, in order to be satisfied with the ROI of your college education, consider how much debt you anticipate being comfortable carrying after graduation, given average salaries in your desired field.

It can be difficult to write tuition checks, but it's smart to invest in education. No matter what your first job pays, you'll have emerged from college savvier than before, and better equipped to maximize your long-run earning potential.


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