Is A College Degree Worth Accumulating Student Loan Debt (Pros & Cons Explained)

Deciding whether to pursue a college degree is an incredibly important financial decision that can have consequences for years to come.

With the cost of higher education continuing to rise year over year, students and families are left wondering whether the investment will pay off in the form of career opportunities, earning potential, and financial stability.

This article examines whether accumulating student loan debt in order to earn a bachelor’s degree is truly worth it for most students.

We’ll analyze expert opinions, earning potential data, job placement rates, and more to help you make an informed decision.

The Rising Costs of College

Over the past several decades, the total cost of attending both public and private 4-year universities in the U.S.

has increased significantly:

• According to data from the National Center for Education Statistics (NCES), average undergraduate tuition, fees, room, and board were $17,237 at public institutions and $44,551 at private nonprofit institutions in 2017-18 (in current dollars).
• These totals represent a sharp increase over the course of 20 years.
  
  Adjusting for inflation, the average total cost has risen $7,390 at public schools and $15,943 at private schools since 1997-98.

As costs continue to outpace inflation, families are left paying higher prices for college each year.

These costs can quickly add up over 4 years into tens of thousands of dollars in total tuition and fees.

The Student Debt Crisis

To afford these increasing upfront costs, more students have turned to loans to fund their education.

Currently, Americans owe over $1.5 trillion in outstanding student loan debt spread across 44 million borrowers.

The Federal Reserve estimates that over one-third of adults under 30 have student loan debt.

Rising debt levels have led many to question if college is still a smart investment given the burden of paying back student loans over a decade or more once graduates enter the workforce.

Especially for students attending expensive private universities, mid-tier public schools without merit aid, or those who struggle to complete their degree, the debt-to-earnings ratio after graduation can seem unreasonable.

The Monetary Value of a College Degree

While costs are rising, study after study still shows that a bachelor’s degree vastly improves individuals’ long-term earning potential and job prospects.

Some key statistics on the monetary value of a college degree:

• Lifetime earnings potential: The Georgetown University Center on Education and the Workforce estimates that over their careers, bachelor’s degree holders will earn a median total of $2.8 million.
  
  That’s nearly $1 million more than the median for those with just a high school diploma.
• unemployment rates: Those with a bachelor’s degree had unemployment rates of 2.2% in 2019 compared to 3.7% for those with only a high school diploma, according to the Bureau of Labor Statistics.
  
  More education correlates to lower chances of unemployment generally.
• Higher pay: Full-time workers aged 25-34 with a bachelor’s degree earn a median annual salary of around $24,900 more per year compared to those with just a high school diploma, as reported by the Pew Research Center.
  
  This pay advantage remains relatively stable across most age groups.

When accounting for a lifetime of earnings – even when factoring in debt payments – pursuing higher education still proves to pay off financially for most students in the aggregate.

The college payoff calculates to an additional $800,000 to $1 million in earnings for the median bachelor’s degree holder.

Expert Opinions on the Value of a Degree

Industry experts and economists nearly unanimously agree that, for most students, the long-term payoff of a college degree ultimately outweighs the costs.

Some opinions on the overall value:

• In a 2014 Brookings Institute report titled “Is College Worth It?
  
  Clearly, New Data Say”, authors found an average value of college at over $300,000 on a lifetime present value basis.
  
  When factoring in probability of completion, the value falls to $150,000-$200,000 – still a significant premium.
• Economist David Autor published a paper in the journal Science concluding, “For most individuals, college is a prudent investment.” He argues the earnings premium has remained high even as rates of enrollment increase.
• A report by Georgetown’s Center on Education found bachelor’s degree holders earn $32,000 more annually despite rising enrollment.
  
  The authors conclude that, while the system faces issues, “arguments that question the overall value of college in today’s economy are largely unfounded.”

Experts agree: despite rising costs and debt risks, earning a college degree still remains a sound financial decision for most students the majority of the time.

Risks to Consider

Of course, not ALL paths to a bachelor’s degree make financial sense given the costs for certain students.

When considering ROI, you must account for total expenses as well as your field of study, job prospects post-graduation, interest rates on loans, and ability to keep up with payments.

Some scenarios where degrees carry higher risk include:

• Attending expensive private universities without significant scholarship or grant aid, leading to $200,000+ in total debt that becomes difficult to repay.
• Low-paying majors or industries like social work, elementary education, fine arts, etc. Students must research typical salaries to understand debt burdens.
• Failing to complete a degree after taking on loans, causing repayment without the salary boost of a college graduate.

While the above situations face increased uncertainty, they can still work out financially depending on the circumstances.

Just know that higher debt totals and lower incomes add risk when determining if you’ll end up with positive ROI.

Conduct thorough research when making major and college selections.

Choosing certain high-paying fields greatly improves your chances of landing a job out of college and repaying debts without issue:

In-Demand College Majors

Data from the National Association of Colleges and Employers (NACE) shows the highest-paid recent graduate majors typically include:

• Engineering ( petroleum, computer, chemical)
• Computer Science
• Finance & Accounting
• Nursing
• Information Sciences

Engineers can expect starting salaries between $66,000-$76,000!

Combined with economics and high job placement, an engineering degree is a secure path to ROI.

Well-Paying Entry-Level Jobs

College grads entering careers like the following see high beginning incomes above the average salary of $55k:

• Investment banking – $100k+
• Consulting – $80k-$90k
• Software engineering – $70k-$85k
• Registered nursing – $60k-$70k

Landing one of these coveted roles vastly speeds up debt repayment and wealth building after college.

Expert Tips for Maximizing College ROI

Industry leaders, career counselors, and financial experts propose several smart tips for earning a bachelor’s degree that pays off:

• Do your research before choosing a major: Understand job outlooks and average pay beforehand so your studies align with in-demand roles.
• Limit total loans to the federal maximums: Federal loans pose lower default risk. Private loans lack protection if you struggle to afford payments.
• Maintain good grades for scholarship opportunities: Grants and awards help lower overall costs and debt totals.
• Begin payments early at reduced amounts: Pay interest or make income-based payments rather than deferments to prevent balloon payments down the road.
• Enroll in income share agreement (ISA) programs if offered: ISAs allow repayment as a percentage of your salary and help align education costs to actual wages earned.

The Bottom Line

While no educational path is guaranteed to work out financially, experts overwhelmingly cite college as a sound investment for achieving higher lifetime earnings for bachelor’s degree holders in most cases.

Mitigate risks by researching fields carefully, limiting overall debt, graduating on-time, living frugally early in your career, and making smart financial decisions as a student and young adult.

While student debt poses a challenge, degree-holders across varying majors and careers confirm the long-term payoff ultimately makes it worthwhile for most.

Approach with eyes wide open, choose your path wisely, work hard during and after college, and a bachelor’s degree should prove well worth the investment for your career success and financial prosperity.