The following is a guest post from Douglas Boneparth and Heather Boneparth, the authors of The Millennial Money Fix. If you’d like to guest post on Money Q&A, be sure to check out our guest post guidelines.
Ultimately, understanding the return on your college investment isn’t as easy as plugging numbers into an equation. After all, the college experience is much more than just what you learn in the classroom and what job you land after school. Yet, some basic math can actually teach us if choosing a certain school is a good or bad financial decision. Yet, for all the AP math classes out there, no one seems to be doing the simple addition and subtraction needed to figure out if pursuing a college degree is really worth it.
Calculating Return on Investment for a College Education
As our book, The Millennial Money Fix (Career Press, 2017) points out, we know that those with a college education earn more than those who don’t have one – something like $17,000 more a year on average over a 30-year career. While this statistic is compelling, this is only one-half of the equation.
What we fail to show young people is how the cost of obtaining that education affects their ability to go into the world on solid footing. The average college graduate leaving school with close to $37,000 in student loan debt, making it obvious that one of the main sources of paying for college for many people is through loans. And in some extreme cases, students are borrowing hundreds of thousands of dollars to enjoy the college experience but no know exactly what it is they want to do. Yikes!
In order to help those thinking about going to college or those already in school (it’s not too late for you older Millennials), I am going to share with you the simple real-world math that anyone can use to quickly determine if they are making a smart financial decision regarding higher education and borrowing loans to make it happen.