College has not always been a necessary prerequisite for success in America, but since the late 1990s it has become increasingly difficult to find gainful employment without at least a bachelor’s degree. Even in jobs where a degree is not a requirement, studies show that employers are more likely to hire an applicant who has a college degree. As a result, more and more people are choosing to go to college, and the over 4,000 colleges and universities in the U.S. now enroll over 17 million students, more than at any other time in history. At the same time, the price of education has also been steadily rising; students today should be aware of the costs, as well as the benefits, of earning a college degree before enrolling in a program.
When calculating the price of a college education, prospective students must be sure to account for a number of different expenses. The average tuition and fees alone for a private college are over $26,000 per year while public universities cost around $7,000 and community colleges about $2,500 per year. Most colleges today earn around 60% of their annual budgets from tuition and fees. Another 20% comes from student room and board expenses, while the remaining 20% comes from endowment funds and donations from alumni.
However, these numbers reflect only the tuition and fees that students must pay, and do not account for expenses such as books, supplies, room and board, insurance, transportation or any number of other living expenses. In particular, the price of textbooks has increased dramatically in recent years, and the average student now spends between $700 and $1,100 per year on books, around 10% of their yearly college expenses. Between 1986 and 2004 alone, the average cost of college textbooks tripled, creating a multi-billion dollar industry for the publishers that make these books. These and other additional expenses typically increase the cost of higher education by several thousand dollars per year.
As a result of the rising costs of education, student debt has also steadily increased over the past decade. Today, approximately 2 out of 3 college undergraduates have student debt when they finish school. The average student graduates with about $20,000 of student loan debts while 10% of students finish school over $40,000 in debt. Graduate and professional degree programs can further add to this debt load. For instance, according to the Association of American Medical Colleges, the average student debt for medical school graduates is more than $150,000.
This climbing student debt is also impacting the real income that college graduates can expect to earn after their degree. College graduates often require decades to pay off their student loans, which can significantly decrease their net or take-home income. It can take years before a college graduate is able to enjoy the financial benefits of their college education. For instance, the average college graduate over the age of 25 earns around $42,000 per year while non-graduates in of the same age earn around $26,000 per year. However, it still takes an average of 14 years before college graduates actually have net positive pay because a large percentage of their income is spent on monthly student loan payments. Additionally, roughly 45% of students who take out student loans never actually graduate from college. These students must then pay off their college debt without the benefit of the higher pay that a degree typically affords.
If you are interested in understanding or influencing the rising price of higher education, there are a number of fields that you may want to consider studying. For instance, finance is the study of how people, businesses and governments invest their money, and it can provide you with insight into both the student loan industry as a whole as well as the personal costs and benefits of a college degree. The study of public administration, on the other hand, will teach you about how government resources and programs like student aid and federal student loans are managed and how they can affect the cost of education. Finally, the field of business administration will teach you how profitable institutions like colleges are able to make money, as well as techniques for making these organizations or any business run more efficiently.