Are Student Loans Worth It?

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Kate Dore

By Kate Dore

April 6, 2022

Every year, college graduates hope to make the leap from student to the workforce. Two-thirds of students graduate with student loans, with an average balance of $29,990. Student loans can be a burden, especially at the beginning of one’s career. With the average starting salary of around $52,000, many wonder if their investment will pay off. Unfortunately, there isn’t a simple answer. Here’s how to figure out if student loans are worth it for your family.

College cost varies by school

It’s easy to get carried away as college acceptance letters begin to roll in. You may have visions of your dream school—until you see the price tag. There’s a big difference in the cost between schools, especially when comparing public vs. private colleges. The average cost per year for a four-year school can range anywhere from $22,180 to $50,770, for public and private schools respectively, according to the College Board.

You may imagine yourself (or your child) sporting a sweatshirt from a big-name private university. But the cost of attending may not pay off, especially if you need large amounts of student loans to pay for it. On-time graduation rates may be higher, but private schools may not lead to better job prospects. Even an elite degree from an Ivy League school may not be the fast-track to success. 

Before making a decision based on the school’s reputation alone, consider the full cost—and financing options—from a range of schools. After crunching the numbers, you may find some unexpected choices offering the best value.

Not all majors have the same income potential

At eighteen-years-old, it can be difficult to choose a future career. Students may pick a school based on a specific program, but 30% will change majors within three years, according to the Department of Education. While swapping majors may not seem like a big deal, your studies may have a direct impact on their future earnings. 

Students with a STEM degree can expect to earn the highest average starting salary, according to a 2019 survey from the National Association of Colleges and Employers (NACE). Here’s the average starting salary that students can expect for several different majors:

  • Engineering – $69,188

  • Computer science – $67,539

  • Math and science – $62,177

  • Business – $57,657 

  • Social sciences – $57,310 

  • Humanities – $56,651 

  • Agriculture and natural resources – $55,750

  • Communications – $55,750 

Student loans are a big decision that you will have to grapple with for many years after college. Before signing up for a large student loan balance, do some research on their major’s income potential. It may be easier to justify a larger student loan balance for in-demand, higher-paying fields. But you may prefer to spend less for a major with lower earning potential.  

College graduates may have more financial stability

While a college degree is no guarantee of future career success, experts agree getting an education is a good investment for most people. The median earnings for folks with a bachelor’s degree are 67% higher than those with a high school diploma, according to the College Board. The earnings gap is even wider for college-educated millennial women, who earn 84% more than women with only a high school education. And earnings for both men and women continue to rise with each level of education. 

For those who worry about the economy and job stability—and many people do—the prospect of layoffs can be daunting. Unemployment is often twice as high for those without a college degree. During the reporting period, 83% of folks with a bachelor’s degree or higher had a job, though.

The report also found a college degree increases the chance of financial stability, and it reduces the likelihood of relying on public assistance. Earning a college degree may also lead to a healthier lifestyle and lower health care costs.   

The data is clear: paying for a college degree with student loans may be worth it. But that doesn’t minimize the burden of a large balance. Luckily, there are ways to reduce college costs. By borrowing less, it may be easier to tackle student loans after graduation.

Are student loans worth it?

While a college degree may lead to higher income, that doesn’t mean student loans are always worth it. Borrowing money is a major decision, with many factors to consider. Your college major, job prospects, the cost of your school and the total amount of student loans may impact your family’s finances for decades. Before signing the dotted line, consider your field and income potential. Try to estimate your monthly payments and how they may impact your future budget. By knowing the key details before applying for a student loan, it may be easier to decide how much, if any, you’re willing to borrow for college. Before pursuing student loans, find free money for college by taking advantage of grants and scholarships. 

A good place to start:

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