Financial Matters: Return on Investment
Deciding on the “right” college can feel overwhelming. There’s so much to think about: location, academic programs, extracurricular opportunities, career preparation, but all of that is secondary if a college isn’t affordable. Just like when making a big purchase, such as a car or house, families need to weigh the costs of college against the expected benefits. The goal is to ensure the investment in college pays off without creating an overwhelming financial burden.
Many students graduate with significant debt, only to find that their starting salary doesn’t match the amount they owe. That’s why it’s so important to think critically about both the total cost of attending college and the potential career outcomes.
To get a clear picture of the total cost of attending a school, look beyond just tuition. Include room, board, fees, transportation, and everyday expenses such as cell phone bills, textbooks, and trips home. Keep in mind that costs like tuition and fees are likely to rise each year, so plan for increases when calculating the total cost over four or more years.
Once you know the full cost, it’s time to consider what the return on your investment might look like. Research whether the school provides strong career support, including internships, networking opportunities, and job placement services. Look into the average starting salaries for graduates in your chosen field and consider whether your potential earnings will justify the cost of your degree.
Financial aid can play a major role in determining whether a college is affordable. Start by submitting the FAFSA (Free Application for Federal Student Aid) as early as possible to maximize your chances of receiving federal and institutional aid. Some colleges also require the CSS Profile for scholarships and grants, so be sure to check your school’s requirements.
Carefully review your financial aid packages to understand what you’re being offered. Are there scholarships or grants (which you don’t have to repay), or are you mostly being offered loans? Compare offers from different colleges to see which provides the most aid and aligns with your budget. If you haven’t yet received a financial aid package, you can complete the Net Price Calculator for each of your colleges for an estimate of financial aid.
A common rule of thumb is to avoid borrowing more than your expected first-year salary after graduation. If the total cost of a school exceeds that guideline, it may be worth exploring ways to reduce costs.
Earn college credits in high school: Many students take Advanced Placement (AP) exams or enroll in dual-credit classes at local community colleges, which can reduce the time and money needed to complete a degree.
Consider in-state colleges: Public universities often offer lower tuition rates for in-state students, making them a more affordable option.
Work during college: A part-time job or work-study position can help cover expenses and reduce the need for loans.
While college is undoubtedly a significant investment, it’s important for families to carefully weigh the costs against their financial realities. Taking on some level of debt can be a reasonable choice if it aligns with future earning potential and doesn’t create an unmanageable financial strain. Ultimately, college remains a worthwhile investment, but families must strike a balance that ensures they’re not overburdened while still supporting the long-term benefits of higher education.
