A couple weeks ago I shared how much my Master’s degree cost me, so I’m also going to share how much I paid for my Bachelor’s degree because I want people who may be considering college or parents with young children to better understand the potential costs and payoffs since as a kid out of high school I really didn’t have a good idea.
You frequently hear that going to college isn’t cheap these days. According to ValuePenguin.com, the average tuition cost of one year of college at a public four-year university was $9,970/year:
When I began college in the early 2000’s, I started at a two-year school and since the grants I received were a little more than the cost of tuition, I probably made a few hundred bucks from my time in community college.1
When I transferred to a four-year school in 2005, tuition was $6,194/year for me at the University of Illinois at Chicago.2 The total tuition and fees I was charged for my two years at UIC was $17,278:
Of the $17,278 in tuition and fees at UIC, I obtained $11,117 in student loans and received $5,601 in grants:
I paid off my $11,117 in student loans five years after graduating and according to my 1098-E forms (student loan interest statements), I paid $1,734 in student loan interest expense over that time.3
So if you add the tuition and fees I was charged, reduce it by the grants I received and then include the student loan interest and another $1,000 or so for textbooks, the total cost for my Bachelor’s degree in finance came out to around $14,400. I started making $50,000/year not too long after college, so I think I definitely got a great return on that investment.
Of course, going to college isn’t the only way to obtain a great career and increase your lifetime earnings. Trade school, military and entrepreneurship are other career options if you hate school as much as I do, though somehow I decided after high school that spending even more time in school and going to college would probably be the best path for me.
If you do decide to go to college, the most critical thing to understand is how much you can realistically earn after graduating because some degrees have an extremely poor return on investment. (For some compelling reasons as to why college may not be worth the cost, read this article: https://alawyerandhermoney.com/college-actually-not-worth-the-cost/)
Some people view a college degree as a “golden ticket” to a great career and higher earnings but don’t fully realize some degrees can just saddle you with a lot of debt in a poorly paying field with few opportunities:
“Many students treat a college degree as a ‘golden ticket’ to the middle class. The decision to go to college is fundamentally a cost-benefit calculation. If the financial return to college is high enough, then students should theoretically be willing to pay high amounts for tuition, because they still come out ahead in the long run. But few students are sitting down with Excel spreadsheets to calculate the return on college; instead, they rely on impressions of how much a college degree will earn them in the long run. Yet only some degrees are worth paying top dollar. The general impression that every degree is valuable—a ‘golden ticket’ so to speak—pushes up students’ willingness to pay for college, and consequently inflates college tuition.”
https://www.forbes.com/sites/prestoncooper2/2020/08/31/a-new-study-investigates-why-college-tuition-is-so-expensive/
A college degree probably isn’t for everyone, and it isn’t a guaranteed ticket to the middle or upper class, but on average a degree in a solid field will usually result in higher pay and the data doesn’t lie.
- Going to community college and transferring to a 4-year school can be considerably cheaper than taking all your classes at a 4-year university.
- Going away for college and paying for room and board can cost more than the tuition itself, so unless you can obtain scholarships or grants to substantially offset those costs I would be very hesitant about doing something like that unless avoiding that really isn’t possible for some reason.
- There were “Hope” and “Lifetime Learning” education credits offered at that time worth $1,650/year but since my parents claimed me on their tax return, they got the tax credits so I’m not reducing my costs by those amounts. The government currently offers up to a $2,500 “American Opportunity” tax credit per year, so you could potentially reduce the cost of your 4-year undergraduate degree by $10,000 ($2,500/year x 4 years).
