On July 1 the interest rate on student loans doubled from 3.4% to 6.8%. This increase equals an average of $2,600 for a student returning to college. The cost of getting a college education continues to rise as does the amount of student loan debt incurred by graduates. During the last twelve years the cost of a pubic 4-year college education increased from just over $14,000 to over $19,000. In order to pay these costs students (and their parents) are taking out more and more loans. Student loan debt is now the largest part of American debt having exceeded $960 billion. It makes you wonder if a college education is still worth the cost.
Despite these figures, obtaining a college degree is still an important investment. The average salary of a person earning a four-year degree was $55,000 in 2012. A high school graduate can expect to earn approximately $34,000. Similarly, the more education a graduate has, the less likely they are to be unemployed. High school graduates have an 8.3% unemployment rate while those people with bachelor’s degrees have a 4.5% rate of unemployment. The unemployment rate drops to 2.5% for people with doctoral degrees.
Future jobs will need workers with more education as well. In the future the disparity in opportunities available to the educated and the uneducated will grow greater. Between 2008 and 2018 there will be 14 million new jobs generated in the United States, another 33 million jobs will need replacements due to an aging workforce, and of those jobs, 63% will require Associate and Bachelor’s Degrees.
Even though the cost of an education appears to be worth the investment, something still needs to be done to reduce student loan debt. Education experts suggest that the cost of education can be lowered by reducing waste at colleges and other financial institutions. Waste can be cut by reducing administration costs, eliminating the number of classes or majors, and reducing budgets for sports.