A Diploma with Less Debt
Forget that a degree from a prestigious university has more value, it’s just more expensive…
According to Laurence Kotlikoff, a Boston University economist who has studied earning and consumption patterns, in his interview with William Baldwin in Forbes magazine, he advocates we start to think differently about college degrees. First, Mr. Kotlikoff states prospective students should choose a major carefully–considering the cost of the degree and future earning power once graduated and long-term potential for employment. Dividing majors into “high payoff” and “low payoff”, he compared majors which on average produce high and low incomes, but also showed what happens when the cost of education is added into the mix–something college students and their parents may consider.
But should future earnings from a major be at the top of the list? Or should the cost of the education itself take the number one slot? And what about those students who are following their dream, do either of these matter?
Consider this, there are expensive colleges and inexpensive colleges to choose from. By doing a little research, you can determine where you get the most payoff for your money. Here are a few examples:
These are tuition free colleges:
Berea College, Deep Springs College, Cooper Union and U.S. Military Academy–you cover room and board.
These are colleges and universities at the highest end for tuition:
Bard College, Columbia University, Sarah Lawrence College, Wesleyan University–all over $54,000, including room and board.
Mr. Kotlikoff found it’s not that grads do well because they went to an expensive university, it’s that they had talent and ambition to begin with, and that’s an important point. Some wealthy students going to expensive colleges might have better connections, usually through parents and classmates, which helps a great deal to do better once graduated.
As I’ve advocated in other blogs, students could opt for the local community college, then switch to a state university. Saving on tuition, room and board by living at home, and having parents close to help with finances and emotional support is a plus. Mr. Kotlikoff seems to concur with that idea, finding students taking this particular route have on average $40K in debt–much less than their counterparts spending four years at a university.
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