We all know a good education is the foundation of future financial security. But convincing a child to go to college can sometimes be a tough task. To help stress the importance of education and self-discovery, here are some cold, hard facts about the current and future costs of college, as well as the salary gap that exists between graduates and nongraduates.
How many zeroes was that?
According to the College Board,1 the average total cost for in-state students at public colleges was $12,796 for the 2006–2007 school year. At a private university during that same year, the average total cost was $30,367. This cost included:- Tuition
- Fees
- Room and board
The sobering reality for parents is that the cost of four years of college for their children will run four to seven times as much as their own education. And for a child born today, a college education will probably cost three to four times as much as it does now.
If you've heard it suggested that the cost of a four-year college education for a child born today will be in excess of $300,000, don't go into shock. While this may be true for some, keep in mind that this number is based on the costs of the highest priced institutions. It also assumes gross prices, without considering that grants lower costs by 25 percent. If your child is bound for an expensive school, the good news is that the higher the cost of the institution, the more potential the student has to receive aid.
In any situation, however, with these large numbers staring at you, it's understandable why some parents and children may be reluctant to:- Take on student loans
- Apply for financial aid assistance that seems to shrink each year
- Commit to four years of learning that the child may not wholeheartedly want
Think of it as a long-term investment, not an expense
While some students may look at college as a four-year vacation on Mom and Dad's dime, they should be encouraged to view it as a crucial key to their financial independence and one key to their ability to participate fully in today's knowledge-based economy. Experts have measured the salary gap between high school graduates and college graduates—and the numbers are telling.
The U.S. Census Bureau conducts annual surveys of educational attainment. The following table illustrates some findings that can be derived from the 2006 survey data.2
Degree | Annual Income Age 18+: All Workers | Lifetime Income Age 25–64: Full-Time, Year-Round Workers | | High School Graduate | $26,933 | $1,531,400 | | Associate's Degree | $36,645 | $1,920,680 | | Bachelor's Degree | $52,671 | $2,742,160 | | Master's Degree | $66,754 | $3,337,800 | | Doctoral Degree | $91,370 | $4,449,440 | | Professional Degree | $112,902 | $5,612,760 |
This shows that a bachelor's degree recipient has lifetime earnings of $1.2 million more than someone with just a high school diploma. And a doctoral degree recipient earns $1.7 million more than someone with only a bachelor's degree.
The bottom line is that education has never been more important to future financial independence.
1. Trends in College Pricing 2006 is based on data collected in the College Board's Annual Survey of Colleges, 2006–07. It reports tuition, fees, and other charges for the current academic year, 2006–2007.
2. Educational Attainment in the United States: March 2006 published in March 2007, using 2005 income data. This data is collected as part of the national Current Population Survey.
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