With student debt reaching a record $1.3 million, colleges are reporting the pain as students back away from taking on the expense of a college degree.
According to a recent Gallup poll, 87 percent of college admissions directors of private colleges and 51 percent at public colleges say they’re losing potential applicants because of fears about accumulating student loan debt. And according to government data, enrollment has dropped by about 800,000 from 2010 to 2014.
Which begs the question, is investing in a college degree a worthwhile investment?
“ROI (return on investment) is a major concern for most families, especially with students graduating with an average student loan debt of $37,000,” says Kat Cohen, CEO and founder of IvyWise and an independent university admissions counselor.
[See: 15 Money Management Tips for College Students.]
The math. Just like any other investment, a look at its returns can determine if it’s a good investment.
For those without financial aid, the average cost of a four-year education in 2016, based on today’s prices, is $129,640 for private colleges and $37,600 for public in-state colleges, according to the College Board (or less, of course, if you spend the first two years at a community college.)
People with a four-year college degree make an average of $1,137 per week, which is $459 more per week than those with just a high school diploma, according to the Bureau of Labor Statistics’ 2015 data.
“As a result, a person with a bachelor’s degree from a private school can recoup their cost of education, without considering other costs of living, in 5.4 years,” says Michael Blattman, senior vice president of Collegiate Consolidation Services, a loan consolidation company. “Those with master’s degrees can recover the cost of education in just 3.8 years, and those with a professional degree, in only 2.3 years.”
The unemployment rate also drops with each degree obtained, from 5.4 percent for high school diplomas to 2.8 percent for a bachelor’s, to 1.7 percent for a doctorate, according to the bureau.
And there is more income growth for an undergraduate degree, says Nayef Samhat, president of Wofford College in Spartanburg, South Carolina. “Those with a four-year degree earn (at least) 53 percent more than someone with a two-year degree and (at least) 60 percent more than someone with only a high school diploma,” Samhat says.
Which degrees pay the most? Which degree you choose has a big influence over your salary.
“The income gap between the highest- and the lowest-paying college majors is more than $3 million (over the course of a lifetime, based on median wages),” Cohen says.
Science, technology, engineering and math degrees account for the highest starting salaries, according to a recent survey by the National Association of Colleges and Employees, with engineering topping the list at an average starting salary of $65,000 for a bachelor’s and $74,000 for a master’s degree. Computer science was a close second.
The difference between the highest STEM field majors and lowest paying majors is $3.4 million, according to a 2015 study by Georgetown University.
“To maximize a student’s education ROI, pay attention to the net cost of college when considering which school to attend, consider a degree that boosts marketability, and evaluate options, like community college, in-state public universities and grants and scholarships to help lower costs,” Blattman says.
Students can also shed thousands of dollars off their degrees by getting early college credits by taking CLEP or AP exams, or dual enrolling in college while still in high school.
[See: 10 Out of the Box Ways to Save Money.]
Many colleges such as Stanford and Harvard have programs that offer free tuition for students whose families make under a certain amount per year, Cohen says.
Some states offer merit scholarships and private colleges often allow you to negotiate the price of your tuition. Apps, such as Scholly, can also help find scholarships.
Avoid dropping out at all costs, and consider taking online classes to stay on track to graduate in four years. Those who drop out of college report having a harder time financially than those who did not attend college at all.
Without college. If students think they’re not yet ready for college, they should consider learning a skill that cannot be outsourced, says Kara Carrero, a parenting author, consultant and podcaster.
“Even if it’s not what they want for their lives, they have to think outside of the box to see how to be innovative in this high-tech world as to not have a job that can be done by a computer, outsourced, or rack up debt they can’t pay off,” she says.
Trades can be lucrative. Dental hygienists average $72,000 per year, according to trade-schools.net, and plumbers can make $90,000 and more.
Coding Dojo trains students to learn coding skills for an entry-level programming job in 14 weeks, for between $9,450 and $13,495.
“Ninety percent of Coding Dojo students get a technology-related job within 180 days of graduating with an average starting salary of more than $70,000,” says Austin Williams, spokesman for Coding Dojo. “Amazon ( AMZN), Expedia ( EXPE) and Microsoft ( MSFT) are the top three employers of Coding Dojo graduates.”
Outliers’ success. The American Dream is built on success stories that show with enough drive, people can get ahead in this country by sheer will and hard work, even without a degree.
Charles J. Bonfiglio, president and CEO of the multimillion-dollar international franchise Tint World, spent his teen and young adult years in business, not in a university. At age 21, he used his savings of about $25,000 and got a bank loan for about $60,000 to launch his franchise.
Bonfiglio says working for a franchise is the fastest way to understand proven business systems, and owning one can be lucrative without a college degree.
“Bottom line: All the formal education in the world can never prepare you for the constant reinvention it takes to stay ahead in the business world,” he says.
Josiah Nelson sold a company for eight figures and started several other successful companies, all without a college degree.
[Read: 5 Reasons Donald Trump’s Presidency Will Include a Recession.]
“Without a college degree, most companies will immediately weed you out for a position even though you may otherwise have the skills for the job,” he says. “I got where I am today by just making connections and putting my name out there. It takes time but it takes a lot less time than in college and I’m definitely better for it — both experience and finances wise.”
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