4 Questions to See If an Expensive College Is Worth It

April 6, 2020 Loans & Finance

As you’re weighing where to attend college, you may wonder: Is going to an expensive college worth it? The class of 2019 graduated with an average debt of $29,900 is already daunting, so the prospect of an even higher price tag deserves careful consideration.

Depending on your situation, an expensive college, such as an Ivy League, could give you access to powerful alumni networks and end up boosting your earning power. On the flipside, you may be saddled with an even heavier debt burden.

Is going to an expensive college worth it? 4 questions to ask
Are there any benefits of going to a prestigious university?
How to choose a college
6 tips: How to make college less expensive

Is going to an expensive college worth it? 4 questions to ask

If you’re considering a relatively pricey school, here are four things to consider before making a decision:

1. How much more will my total costs be?
2. Will my job prospects be better?
3. Will it improve my future earning potential?
4. What does this college offer that other schools don’t?

1. How much more will my total costs be?

The first step in deciding whether an expensive college is worth it is to take a look at your total costs. In addition to college tuition, you’ll need to look at other costs associated with college, including books, living expenses and transportation.

According to the College Board, private, nonprofit four-year schools cost $36,880 per year on average for 2019-2020 — and that’s just tuition and fees. Compare that to a public four-year college with in-state tuition, where the average cost is $10,440.

2. Will my job prospects be better?

Even with a high sticker price, it might still be worth going to an Ivy League school. In some ways, the value of college education also depends on what you do with it.

“Ivy Leagues are very proud of their alumni networks,” said Lindsey Conger, a college counselor at Moon Prep. “Students can tap into this network to find a job or internship.”

It’s fairly common for graduates of Ivy League schools to help each other, and this could lead to a better job out of the gate. Plus, many prestigious schools have name recognition that companies might be impressed by when looking for candidates, Conger pointed out.

“Graduating from a prestigious school gets your resume looked at a second time in many cases,” Conger said. “Some companies, like Goldman Sachs, Morgan Stanley and Citigroup, recruit heavily from [the University of Pennsylvania] to help fill entry-level positions.”

3. Will it improve my future earning potential?

There is the possibility that your future earning potential could be impacted by attending a top school. When deciding if it’s worth going to an Ivy League school, you might be surprised at the reports.

For example, Georgetown’s Center on Education and the Workforce (CEW) offers a handy ranking that looks at your return on investment depending on the school you attend. Harvard, for example, ranks eighth when it comes to 20-year return on value for attendance.

However, the school you attend might impact your earning power based on specialty. The two schools that offer the best return on investment 20 years down the road, according to CEW, are the St. Louis College of Pharmacy in Missouri and the Albany College of Pharmacy and Health Sciences in New York.

The top five schools in CEW’s rankings at the 20-year return level are all private schools. If you want a better return within 10 years though, the top four schools are all public — and three of them are focused on nursing programs.

If you end up needing to refinance your student loans, a higher earning potential can make a difference later.

4. What does this college offer that other schools don’t?

You should also ask yourself what the more expensive college offers that other schools you’re considering don’t. Will you get access to world-class research facilities? Is there a certain program that you’re looking at that isn’t available elsewhere?

When weighing whether it’s worth going into debt for college — particularly if private colleges are worth it — you need to consider if there’s something extra that makes the cost a price worth paying. This is particularly true if you decide you need private student loans to close the funding gap.

School choice seems to matter more for some majors than others, said Conger, citing research from Brigham Young University and San Diego State University.

“Business majors who attended prestigious schools earned 12% more than their counterparts at lower-ranked schools,” said Conger. “However, the same study found that for science majors graduating from top schools don’t see a statistically significant earning difference compared to middle-of-the-pack schools.”

Basically, unless your school has some sort of secret sauce for your major, or there’s some other compelling reason to attend, the value of a college education at an expensive school might not be worth enough to justify the cost difference.

Are there any benefits of going to a prestigious university?

There are benefits of attending a top university, especially if you have a certain major. In addition to networking opportunities and potential career path benefits, Conger pointed out that, on average, prestigious universities spend more on each student. She also noted that students at top universities often have access to top researchers and education, as well as state-of-the-art facilities.

However, even though there are potential benefits of attending a top university, there might be other factors to consider before you borrow a large amount of money to attend.

“If the extra cost to attend a more prestigious school is going to require a student to take on a heavy debt burden, it might not be worth it,” said Debbie Schwartz, a college preparation expert and founder of the website Road2College. “Studies have shown that getting accepted to a prestigious school is the more important factor in success, not necessarily attending and graduating from that school.”

If you decide an expensive college is worth it, it’s important to make sure that you take full advantage of the opportunity. “Build relationships with professors and students throughout and reach out to alumni,” Schwartz said. “Participate in clubs and activities. If you’re paying more for the prestige, you should take advantage of it.”

How to choose a college

The right way to choose a college for you is to consider multiple factors, rather than just relying on whether the school is prestigious. Some factors to consider include:

Graduation rate
Job placement
Alumni network
Educational opportunities
Program rankings

Don’t forget to consider your major as well. According to research from economist Doug Webber at Temple University, your chosen major actually matters more than the school you attend. While you might see a bit of a premium by attending a more expensive college, ultimately it might make more sense to pay attention to whether the college you choose has a good program in a major likely to offer a higher return.

Webber’s research indicates that a bachelor’s degree in chemical engineering is likely to provide about $1 million more in lifetime earnings than a bachelor’s degree in advertising. From that perspective, deciding on a college is less about the name on the administration building and more about the major you choose.

However, finding the perfect college for you is also about the location and feel of the campus. Think about things like where you might live, the amenities of the area and the overall experience in addition to the cost and how much you might have to borrow. There’s no one right way to choose a college, and how you go about it depends on your own priorities.

6 tips: How to make college less expensive

No matter what choice you make, college is expensive. As a result, it’s important to consider ways to make college less expensive for you, regardless of where you go to school. Here are some tips to cut your college costs:

Consider less expensive colleges: First of all, consider attending one of the least expensive colleges. If you choose the right major, even attendance at a less expensive college can lead to a good career — without breaking the bank.
Make sure you fill out the FAFSA: This is how you qualify for need-based financial aid with most schools. You can also see if you qualify for federal financial aid in the form of grants, work-study and federal loans. Some prestigious schools, like Harvard, have programs that make attending school very affordable for those who get in and qualify for need-based aid.
Apply for scholarships: If you qualify for scholarships, you might be surprised at how much you can save on college. Search for scholarships, large and small, from a variety of sources, including local and national opportunities.
Ask about merit-based aid: Some schools offer merit-based aid based solely on your test scores, grades or other factors, according to Schwartz. Find out what’s available and you might be surprised at how much you can reduce your college costs.
Consider working during school: If you have a job, you might be able to reduce how much you have to borrow for school. Consider federal work-study programs on top of more traditional work.
Start at community college: Rather than spending a lot on a four-year school to start, consider going to a community college first. It costs less, and you can transfer to a four-year school later.

Christy Rakoczy contributed to this report.

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