Student Loans by the Numbers: Is College Worth It?

These days, it’s not uncommon to hear about recent college grads who struggle to repay student loans. According to the Institute for College Access & Success, seven in 10 college seniors who graduated from public and private nonprofit colleges in 2013 had student loans, averaging $28,400.

With dim job prospects and loan debt on the rise, many would-be college students and their parents might be wondering if a college degree is worth it. While the thought of repaying student loans may not be ideal, a college degree can still be worth the cost, provided the numbers work in your favor.

One of the first questions you might be wondering is: Does a college degree really matter? The statistics say they do. According to the Pew Research Center, people with four-year degrees generally fare better than people whose education stops with high school or a two-year degree. Here are some of the findings from the Pew Research Center regarding earnings and college:

The unemployment rate among members of the millennial generation with a four-year degree is 3.8 percent as compared to a rate of 8.1 percent among those with a two-year degree or some college and a rate of 12.2 percent among high school graduates.

The median income (in 2012 dollars) among full-time workers aged 25 to 32 for those with at least a four-year degree is $45,500. Among those with some college or a two-year degree, the median income is $30,000, and among high school graduates the median income is $28,000.

The share of millennials with only a high school diploma living in poverty is 21.8 percent, while among those with at least a four-year degree the share living in poverty is 5.8 percent.

While there can be some earnings overlap among those with two-year degrees and those with four-year degrees in the early years of employment, data indicates that as a career advances, that gap in education opens wider to favor those with more education.

According to the Center on Education and the Workforce at Georgetown University, a high school graduate can expect to earn about $1.3 million over a lifetime, while someone with a bachelor’s degree can expect to earn $2.3 million. Beyond those, someone with a master’s degree can expect $2.7 million, and a doctoral recipient can expect $3.3 million. Professional degrees are the most profitable, with an expectation of $3.6 million over a lifetime.

After looking at the financial advantages of a college degree, student loans may not seem to be a reason to skip going to college. In fact, the Georgetown study found that post-graduate and professional degrees could provide even greater advantages than four-year degrees, provided they are pursued in certain fields.

Now that we’ve shown you some of the numbers that point to the benefits of earning a college degree, let’s talk about choosing a major and the role that plays into lifetime earnings.

The Georgetown data shows that occupational choice can play a big role in determining lifetime earnings. Choosing a major that will help you get into a good career might matter more than simply attaining a certain degree level.

For example, you might do better with a bachelor’s degree in engineering than you would with a masters in fine arts because engineering jobs are in high demand, require a certain degree of specialized skill and expertise, and command higher pay than many jobs in the arts. The Pew Research data agrees with this assessment, indicating that those in science and engineering fields find their degrees useful to a greater degree than those in other fields.

When determining whether college is worth the cost of those student loans, your expected salary upon graduation and the cost of the school you are attending should both be considered. Education expert Mark Kantrowitz says that students should avoid amassing student loans in an amount beyond what they can expect to earn upon graduation. If you can expect a starting salary of $55,000 per year in your field of choice, for example, amassing $150,000 in student loans is probably not the best idea.

Many millennials find themselves in trouble after they graduate from college because they have a degree in a low-paying career field from an expensive school. A little more attention to degree choice and an effort to avoid unnecessarily expensive schools might go a long way toward getting a degree that makes good financial sense.

Miranda Marquit is a freelance writer and professional blogger specializing in personal finance, family finance and business topics. She writes for several online and offline publications. Miranda is the author of Confessions of a Professional Blogger: How I Make Money as an Online Writer and the writer behind PlantingMoneySeeds.com.