Is College Really Worth It? Cost-Benefit Analysis

The average cost of 4-year courses in public colleges have more than doubled in the last 30 years. Student loan debt in the US is at an all-time high of $1.75 trillion, growing 6 times faster than the nation’s economy. What’s more, almost 43 million Americans have a federal student loan debt averaging $37,105.

This leads us to the big question: is college worth it?

According to 58% of Americans, yes, college is still a good investment. 36% said it isn’t.

To get a clear answer, we did a cost-benefit analysis.

How Expensive Is College?

The average annual cost of college in the US has tripled in the last 20 years. For each school year, college students spend an average of $35,720.

Tuition averages at $20,471 at any 4-year institution. It’s most affordable at in-state public universities at $9,308 per year and most expensive at nonprofit colleges with a total of $35,801. 

Other expenses that drive the annual cost of college up include:

  • Books and supplies – $1279
  • Room and board – $10,216 to $11,945
  • Additional expenses (like transportation, personal care, and entertainment) – $3,201 to $4,471

If you factor in loan interest and lost income, the cost of college goes up even further. High school graduates earn an average of $39,676 per year.

Meanwhile, the average student borrows about $37,584 to pay for college. Since the standard student loan scenario has a 5.8% interest rate and 20 years before getting fully paid, the average total loan payment reaches $63,587.

Another thing to consider is the time it takes to finish the bachelor’s degree. While 4 years is the traditional period, 60% of bachelor’s degree earners take 6 years.

Considering all the points mentioned, a bachelor’s degree will cost about $383,055 if you finish it in 4 years or $542,789 if you take 6 years.

So, what if you want to pursue a higher level of education?

A master’s degree has an average cost of $66,340. However, it can go anywhere from $30,000 to $120,000 depending on the school, major, and program length.

Master’s degree students are less likely to receive grant aid, fellowships, or tuition waivers since undergraduates and doctoral students are usually prioritized. By the time they earn their master’s degree, students have, on average, a student loan debt of $46,798.

Finally, a doctorate degree will set a student back an estimated $114,300. It takes about 4 to 8 years to complete. On average, those who have earned their doctorate degree have a $108,400 loan debt.

Will Having a Degree Help You Land a Job?

According to data from the US Bureau of Labor Statistics, yes, having a degree will increase your chances of landing a job. Not only that, but the higher your educational attainment, the lower the unemployment rate.

Here’s the data for the US civilian labor force and the unemployment rates by educational attainment in 2020.

Educational AttainmentUnemployment Rate
Doctoral degree2.5%
Professional degree3.1%
Master’s degree4.1%
Bachelor’s degree5.5%
Associate’s degree7.1%
Some college, no degree8.3%
High school diploma9.0%
Less than a high school diploma11.7%

The biggest jump in employment rate comes with completion of a bachelor’s degree, with a reduction of 3.5% in unemployment rate compared to high school diploma holders.

Do Degree Holders Earn More?

According to the same report by the BLS, it’s not just the employment rate that goes up with educational attainment, earnings go up too.

Educational AttainmentMedian Weekly Earnings
Doctoral degree$1,885
Professional degree$1,893
Master’s degree$1,545
Bachelor’s degree$1,305
Associate’s degree$938
Some college, no degree$877
High school diploma$781
Less than a high school diploma$619

The Georgetown University Center on Education and the Workforce (CEW) report shows similar results when it comes to lifetime earnings.

Educational AttainmentMedian Lifetime Earnings of Full-time Workers
Doctoral degree$4 million
Professional degree$4.7 million
Master’s degree$3.2 million
Bachelor’s degree$2.8 million
Associate’s degree$2 million
Some college, no degree$1.9 million
High school diploma$1.6 million
Less than a high school diploma$1.2 million

Those with a bachelor’s degree earn 75% more in a lifetime compared to those with just a high school diploma. Further pursuing a master’s degree doesn’t lead to much increase in lifetime earnings at just 14%. However, a bachelor’s degree holder can boost his income by 68% if he goes for a professional degree.

Will a Degree Help You Buy a House?

Considering that those with higher education attainments earn more, it’s not surprising that these people are also more likely to own a home. This is according to a report by real estate site Trulia.

Educational AttainmentHouse Ownership Rate
Doctoral degree73.7%
Professional degree76%
Graduate degree73.6%
Bachelor’s degree67.3%
High school diploma56.4%
Less than a high school diploma40.5%

Completing a bachelor’s degree will drastically improve your chances of owning a home, with a  10.9% boost compared to just having a high school diploma. After that, further going for a higher level of education will increase your chances of owning a home but only up to 8.7%.

Does It Matter What You Study?

Yes, it does matter what you study. Some majors have a better salary potential compared to others. It’s also worth considering if the career you’re choosing is in demand.

Remember, the higher your chances of getting employed at a well-paying job, the faster you can pay off your student loan.

According to the Federal Reserve Bank of New York, the majors with the best and worst median wage mid-career are the following.

MajorEarly Career Median Wage
Best Majors
Chemical Engineering$68,000
Computer Engineering$66,000
Aerospace Engineering$65,000
Mechanical Engineering$65,000
Worst Majors
Early Childhood Education$34,000
Elementary Education$36,000
Social Services$34,000
Special Education$40,000
General Education$36,400

As you can see, engineering majors will give you a high-earning job while those majoring in education might find it harder to recoup their investment.

When Does College Pay Off?

So, college is worth it, but when exactly will students start getting a return of investment?

Because they have to borrow more, those who go for a higher level of education tend to take longer to pay their student loan. However, regardless of the college degree, those who go to private for-profit institutions need almost double the years to fully pay their student debt.

  • Associate’s degree – 4 to 7 years
  • Bachelor’s degree – 5 to 9 years
  • Master’s degree – 9 to 18 years
  • Doctoral degree – 13 to 38 years
  • Professional degree – 27 years to never

In Urban Institute’s analysis, they estimated that a bachelor’s degree student who graduates after 5 years will break even when they reach 31 years old even without working part-time during college.

Thirdway’s analysis shows similar results with 65% of bachelor’s degree owners recouping their educational costs in less than 10 years.


For a vast majority of students, a college degree has significant financial value. However, there are certain factors like the institution, completion time, and major that can affect how soon you’ll breakeven, if at all.

Aside from choosing an in-demand, high-earning major, going for a public university and completing a bachelor’s degree within 4 to 6 years will minimize the costs. It will also enable you to get a return of investment sooner.

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