Graduate from high school. Go to college. Earn a degree. Get a good job. Live happily ever after.
The conventional path to success in the U.S. has looked the same for many generations. There’s a good chance your parents expected you to pursue a traditional, four-year education to land a respectable career ― and if you have a child nearing adulthood, you probably expect the same.
But considering that Americans now collectively owe $1.5 trillion in student loan debt, it’s time for families to take a step back and seriously rethink whether that’s the best option.
Is college worth it?
If you examine whether college is worth it from a purely statistical standpoint, the answer is yes.
A 2015 study by Georgetown University found that on average, workers with a bachelor’s degree earn $1,000,000 more over their lifetimes than those with only a high school diploma. However, majors make a difference. Almost all of the highest-paying college majors are in engineering, with petroleum engineering ranking No. 1 at a median annual salary of $136,000. Education, arts and social work comprised many of the lowest-paying majors, with early childhood education coming in last, at a median annual salary of $39,000.
But lifetime earnings are just one piece of a pretty complicated puzzle. You should also take a step back and define what “worth it” means to you and your child.
For instance, the average Class of 2017 graduate who took out student loans graduated $39,400 in debt. Your child should consider whether getting into that level of debt in pursuit of a higher-paying job is worth putting off major life goals such as getting married or buying a home. According to a 2015 survey, 45 percent of Americans with student loan debt delayed these types of milestones because of the added financial burden.
Sometimes college isn’t the right choice. Joel Sproul
Further, due to competition among college grads looking for jobs, many end up taking positions that aren’t in their field of study or that don’t even require a degree in the first place.
Researchers with the Federal Reserve Bank of New York found that nearly half of young adults who graduated from college during the post-Great Recession period of 2009-2013 worked “non-college jobs,” defined as a position in which fewer than half of workers with that job need a bachelor’s degree. About one-fifth held low-paying service positions such as baristas and bartenders, while many of the rest worked in better-paying roles such as administrative support and sales.
While non-college positions usually don’t pay as much as the typical post-college job ($78,500 annually at the time of the study), nearly half of these underemployed workers could still expect salaries above what a college-educated employee in early childhood education or social work might earn. For example, those working in information processing and business support earned an average annual salary of $59,059. Managers and supervisors could expect $55,415 per year.
High school grads are sometimes able to make up for the lack of a college degree with work experience, depending on the field. The U.S. government considers three years of general experience in a federal position equivalent to a bachelor’s degree, for example. And people with only a high school diploma generally have the benefit of a four-year head start in the workforce.
Still, it appears that even if a college grad ends up in a field other than the one they studied, they’re at least more likely to nab a job, period. Georgetown University found in 2016 that of the 11.6 million jobs created after the recession, 11.5 million went to workers with at least some college education. Overall, college grads have the lowest unemployment rates.
Wage stagnation is also affecting the working class particularly hard. Earnings have remained flat over the last two years while inflation has grown to 2.9 percent. Meanwhile, the wage gap between those with and without four-year college degrees has steadily increased since the 1970s, when college graduates were earning 134 percent of high school graduates’ wages. Now they’re earning 168 percent of high school graduates’ wages.
So the numbers suggest college is worth it. However, they are based on averages. Not everyone is cut out for a career in a high-paying field such as engineering or prepared to shoulder five figures in debt. Your child could be one of the outliers who ultimately won’t benefit from a traditional college degree, and it’s crucial to find that out as soon as possible.
Get on the same page with your kids ― and do it early.
“I think parents have this preconceived notion that [their kids] have to go to college,” said Joel Sproul, a certified financial planner in New York state who specializes in helping families with college planning. “In many cases, it does make a lot of sense. But you have to be honest with what the student’s abilities and interests are. Sometimes college isn’t the right choice.”
One of the signs a child might not be a good candidate for college is if they weren’t particularly strong academic performers in high school. It’s unlikely they’ll develop a passion for reading and listening to lectures once they head to college, and poor grades could prevent them from graduating.
This can be a tough realization for parents, but pushing a child into a traditional college career can be an incredibly expensive mistake that could affect their finances for decades.
There’s also a chance that their field of interest doesn’t require a four-year degree. Working as an electrician, plumber, pharmacy technician or real estate agent can be challenging and rewarding, and there’s no bachelor’s degree required.
And sometimes, it’s just not in the cards financially.
“You’ve got to schedule time with your kid to have that college money talk,” said Sproul, explaining that most college-bound kids don’t understand what a degree really costs or what their parents can contribute. If you wait too long to talk about it, they might make a decision that you ultimately can’t afford.
So how can parents make sure they’re on the same page with their kids about college?
Sproul said it’s important to schedule time to discuss college as a family, noting that if you don’t put it on the calendar, it’s unlikely to happen.
From there, establishing an open dialogue with your child is key, according to Kimberly Foss, a certified financial planner in California and the founder and president of Empyrion Wealth Management.
Maybe you do decide that a four-year university is the right option. Perhaps your child will complete the first two years at community college to save money. Or maybe vocational school will help your child enter the career of their choice. Regardless, you should know what their goals are well before it’s time to submit college applications.
“The first step in helping your children make a solid decision on which college to attend is achieving good communication with them about their life goals, professional aspirations and motivations,” Foss said. “Different schools have different strengths, so knowing what your child wants to achieve is central to helping them align their own vision with the institution that is best equipped to give them the tools for realizing it.”
From there, you can crunch the numbers together.
Higher education comes with a cost, and part of the responsibility for covering that cost rests on [students]. Kimberly Foss
“Figure out what your expected family contribution is,” said Sproul, referring to a federal calculation that most universities follow. “Basically, it says based on your income and assets, what do we expect you to pay for college?”
Also consider what type of contribution your child will make. For instance, will they be expected to get a part-time job to cover living and entertainment expenses? How much of the cost will be covered by student loans, and who will ultimately be responsible for paying back the debt? Does your child understand how student loans actually work?
Foss explained that it can help for your child to have “skin in the game” and understand that “higher education comes with a cost, and part of the responsibility for covering that cost rests on them,” said Foss.
Once you know exactly how much you can afford to pay as a family, you can decide whether college is worth it, and if so, narrow down your list of schools. Foss suggests weighing variables such as tuition, out-of-state fees (if applicable), housing costs, transportation expenses and other financial considerations.
Also consider factors such as graduation rates, percentage of graduates employed following graduation, average earnings of graduates and average rates of acceptance into medical, law and other professional schools. “These reports, while not necessarily the most objective available, can certainly serve as a jumping-off point for further research by you and your child as you evaluate the very best place for them to go in this next crucial step in their life journey,” said Foss.
The decision of whether college is the right path for your child is a deeply personal one, and one you should make with them. Although college is worth it in many cases, it isn’t always. Be open to that possibility ― it could save your child from becoming another statistic in the growing student loan crisis.