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Is a College Degree Worth the Investment?

Over the next couple of weeks, six finalists will be auditioning for the opening of “staff writer” at shizennougyou. Each will be providing two guest articles to share with readers. After the six writers have shared their guest articles, readers will have an opportunity to provide feedback before we select the staff writer.

This article is presented by Debbie Dragon, a full time freelance writer and co-owner of ReliableWriters.

Last year, in spite of the recession, the difference in the median earnings between high school graduates and college graduates rose to record highs according to The New York Times’ David Leonardt. He reported on the average earnings of graduates, based on information from the Census Bureau which state the following average annual salaries for people of varying education levels:

  • High School Graduates: $27,000
  • Some College (no degree): $33,000
  • Bachelor’s Degree: $47,000

What isn’t clear from Leonardt’s argument that college is the best investment a person can make, is how much debt the average student graduates with in order to complete their education. As a 29 year old college graduate still paying student loans for a Bachelor’s Degree obtained in 2002, I think the amount of student loan debt a student must carry to complete their education is an integral part for determining whether the education was worth the investment or not.

The College Board reports the average cost of tuition in 2009-2010 as:

  • Public 2-year colleges: $2,544
  • Public 4-year colleges: $7,020
  • Private 4-year colleges; $26,273

These numbers represent tuition only, and do not include room and board, books and other miscellaneous fees which anyone who has gone to college or paid to put their child through college knows can add up to considerable amounts each semester. It’s true that many students receive grants (money that doesn’t have to be paid back) which helps reduce the amount they pay out of pocket or through loans — but according to The Project on Student Debt, graduating seniors who receive educational grants actually end up with higher student loan debt than students who do not receive grants. Graduating college seniors receiving Pell Grants had an average debt of $24,800 in 2008. Other than academic or merit-based grants and scholarships, students receiving grants usually have lower family incomes than students who are not eligible for grants –- so it makes sense that they would go on to borrow more money to cover the miscellaneous fees, room and board and books in addition to tuition costs.

Average student debt upon graduating, according to the Project on Student Debt in 2008:

  • Public Universities: $20,200 in debt
  • Private Non-Profit Universities: $27,650 in debt
  • Private For-Profit Universities: $33,050 in debt

So while there is no question that statistics show us that most college graduates earn a higher annual salary than non-graduates, there are still other factors to consider to declare whether the cost of education was a good investment.

Adrian Cartwood, a blogger at, questioned about the extra 4 years a high school graduate has in the workforce while the college students are still in school. Don’t they average a 4 year head start earning money? He shows that if the high school graduate saved 15% of his or her earnings every year and earned the average 8% return, he or she would end up with $468,168 after 26 years of working and saving (based on the U.S. Census Bureau’s 2007 American Community Survey of estimated salaries for high school graduates and a 4% income increase annually). He determined the college grad, even after getting a 4-year later start on saving and starting out with $20,000 in debt, would end up with $794,000 at the end of 26 years. In Adrian’s example, we see that college is worth $326,000.

All of these statistics and examples have made good points, but I think the answer to whether or not a college education was worth the investment depends on each individual and really can’t be summarized by “averages.” If a student goes through college and graduates unable to get a job in his or her field of study –- chances are they’re going to earn wages that are closer to the high school graduates’ salary. That income is not likely enough for the new graduate to pay back student loan debt, pay for their living expenses, and begin saving for retirement upon graduation. There are even college graduates who DO get positions in their field of study that don’t start out at the top of the pay scale which makes it difficult for them to keep up with living expenses and student loan repayments after graduating. Since there are never guarantees that a college graduate will land a well paying position due to their degree, I think a college education might better be classified as a high-risk investment.

This is a guest article by Debbie Dragon, one of six finalists interested in being shizennougyou’s staff writer.

Photo credit: Yakinodi
Is college worth the money?, MSN Money, Morning Joe video, September 28, 2009
College Costs – Average College Tuition Cost, The College Board
Project on Student Debt

Updated June 23, 2016 and originally published November 23, 2009.

{ 15 comments… read them below or add one }

avatar 1 Anonymous

The other “issue” with a 4-year degree is that a lot of people ultimately end up doing something totally different than what they studied (“unable” and “doesn’t want” to get a job in one’s field are two totally different issues.)

In my case, I earned a BS in Computer Science and wanted nothing to do with it. And for several years after college, I was employed in jobs that did not require a degree at all.

Then there’s grad school… I went through an MS program in applied math that is only 9 months of study for a full time student, and doubled the hourly wage I was making before going to grad school.

And BTW, the two degrees together set me back $80k in student loan debt. $50k was from undergrad, and I do question whether or not it was worth it. $30k for grad school? Without a doubt, no questions asked, worth every dime in interest that I will pay.

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avatar 2 Luke Landes

There needs to be a broader definition of “worthwhile.” When it comes to something as important as education, financial return on investment cannot be the only measure. The purpose of obtaining a college degree is rarely solely to earn more money or become wealthy. Some courses of study are mostly functional, like a business degree, so it makes more sense to judge those on ROI alone. But education and other experiences beyond high school provide more to the human mind and spirit the the ability to function in a job.

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avatar 3 Anonymous

@Flexo Agree, worthwhile can mean a lot of different things. For education purposes, college is more about the name than anything. In a lot of ways you could be better off at a less expensive local school, but you are paying for the brand name most of the times. Also, the college experience is more than just education. There is so much learned about life through college.

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avatar 4 Anonymous

Dan’s example is interesting. His undergrad degree doesn’t feel worth it, but his graduate degree does. I feel the same way about my BA. It was fun, but what I learned wasn’t that useful and my on-paper qualifications were pretty much nil afterwards. But I needed a BA in order to get the master’s degree I wanted. The program of study isn’t available except at a graduate level. So sometimes the undergrad degree isn’t worth much on its own, but it’s worth more in the long run because of the ways you can build on it.

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avatar 5 Anonymous

One other thing… When we ask these “is the debt worth it” questions, we are doing people a dis-service if we don’t consider the NPV ramifications. This is especially true with mortgages and student loans, where the interest rates are generally quite low.

When I look at my total payments, including interest, over the next 20 years, I am looking at $140,000. But if I run them through an NPV calculator, assuming equal payments of $7,000 each year at a 3.5% discount rate, the NPV of the payments is just shy of $100,000. That’s only $20k more than what I actually borrowed. The payback period for that $20k is very, very quick — for me.

The same can be done with mortgage payments, which are at even lower rates than student loans. Considering this, I’m not sure that a very strong case can be made for paying off a mortgage early.

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avatar 6 Anonymous

Everything is rational. If you think a college degree is worth it, it is worth it, b/c you will try and use it for whatever your end goal is. The end goal could include socializing, going to med school, or entering the world of finance.

Education is the #1 best investment anybody can ever make. The question really should be, is Grad School worth it not undergrad. That’s much more interesting.


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avatar 7 Luke Landes

Good points, Sam. I’d add that sometimes your “end goal” isn’t clearly defined when you begin college, and there is nothing wrong with that.

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avatar 8 Anonymous

Why is that?

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avatar 9 Anonymous

Even if we take the knowledge gained from college out of the equation then one of the biggest benefits is still just the fact that simply having a college degree opens many many doors. That little piece of papers earns interviews, clients, promotions, etc.

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avatar 10 Anonymous

There are obviously pros and cons to getting a college degree. Not to be discounted are the value of the relationships you develop in college – the value that comes with being able to build a network that you can leverage later in your career. This applies to both undergrad and graduate programs.

In the end though, you have to take a look at what you want to accomplish over the long run and then see if going to college or grad school fits in with your life goals and your career strategy. For many people, it may. For others (for example, those that want to go into the trades), a trade school or apprenticeship may be more worthwhile than attending a traditional college.

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avatar 11 Anonymous

Flexo, where are the male writers? Doesn’t look like equal opportunity here! :)

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avatar 12 Luke Landes

I’m sure Ray is also not a woman.

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avatar 13 Anonymous

Even with a masters degree, a highly-regarded endorsement in my field, and two stipends to my (non-negotiable) salary, I will need to work for at least 12 years before I reach $47,000, much less average it. (Recent pay cuts aren’t helping.) I’m at nine years right now.

But I learned a lot in college (and grad school, which I didn’t go through right away), I came out a better, more fully-formed person than I went in, and I love my job.

I have eight years left on my student loans and have no doubt that there are many many jobs I could have gotten without a degree that would be paying me more right now. But I don’t want those jobs. There is more to life than money, and having a job that I enjoy is a big one.

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avatar 14 Anonymous

I am surprised that your article failed to treat how the type of degree influences earning power, and the likelihood of obtaining a job. It isn’t random. One can pick up a newspaper, Consumer Reports, or preview to get a good feeling for what is available now, and it will probably be similar in only 4 years.

While in high school I learned that electrical engineering was something I was capable of doing–being gifted in math and science–and widely varied job opportunities were there. They are still there, and my earnings are x2 to x3 that of one of my college roomates who elected to study elementary education. Yes I had to work a lot harder in school than he did [he was throwing together kindergarten lesson plans on “Winter” while I was cranking out seemingly impossible differential calculus problems], but that was my choice.

A college education is “risky”, as you say, if you couple a weak job market with weak earning potential. It is much less risky in a weak (or robust, for that matter) job market with high earnings. “English” or “Medieval history” may be risky degrees from a financial perspective, but who knows–they are perhaps more intellectually stimulating for some.

Regarding debt, as for me I providentially managed to graduate debt free by working summers and choosing a state university. With the skyrocketing cost of university education, I will encourage my children to take the first 2 years at a community college. Then there is the option of military service and the GI Bill.


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avatar 15 Cruxman

Man one year ago I would have said NO! But now, having two kids a girl and a boy it’s so important to have an education and for what I want to do I will need some form of degree. I took out a $60,000 student loan and I will not settle for less than 45,000 a year period!

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