Guest Post by Sabrina Manville, Co-Founder of Edmit
College is an investment –and it might be one of the biggest you ever make. Despite those big numbers, the data show it’s probably worth it—but you’ll need to make many decisions along the way that will impact how much the investment pays back.
We’ve discussed how to calculate the ROI of your degree using your best estimates about the cost of college, your expense budget, and the career outcomes on the other side. But life will inevitably take some unexpected twists and turns, so it’s wise to consider how those numbers could change (in either direction!).
Here are four risk factors that could make a significant difference for you financially in college, and reduce or increase the bang for your buck from college.
- Transferring colleges
More than a third (37%) of students transfer colleges at least once in the course of their degree. If you transfer, it won’t surprise you to hear that there’s no guarantee you’ll pay the same at the new school! If you started at a less expensive school and transfer to a more expensive school, you could be hit with unexpected costs. Plus, there is a chance that some of your credits won’t transfer to your new college – meaning you’d have to retake classes and pay for more credits (and maybe more housing and living expenses, if you need to stay for another term or more). If most of your credits transfer over, the plus side of starting at a lower-cost college is that your overall cost of college is less. This is why many people choose to start at a community college and then transfer to a four-year institution to finish their degree. But before you make the decision, make sure you understand how the credits will translate.
- Graduation time
No one starts college thinking they won’t graduate, but the reality is that many college students take longer than 4 years to graduate, whether it’s because they need more time to complete their credits or because life intervenes and they need to take a break to address family or personal issues. Only 65% of students who start their studies at public four-year universities have completed any degree six years later, according to the National Student Clearinghouse. The financial implications? Six years of college costs more than four years of college, since your career start will be delayed, and in the most dangerous scenarios, people who have college debt but no college degree are trying to pay off loans without the ability to get high-paying jobs.
There is no one-size-fits all formula to make sure you graduate on time, but you can set yourself up for success by preparing academically: build good study skills in high school, and perhaps consider taking a college course or two if it’s offered so that you feel ready for that level of work. It’s also important to evaluate the advising and student support available at the colleges you consider. Those services can make all the difference, and vary by college.
- Your first job after college
After graduation, you may be in a rush to join the real working world and start paying back your loans. But make sure you choose a job where your college education will be put to use. If the job you take does not require a college degree, this is termed “underemployment,” and it’s risky. A recent study done by the Strada Institute for the Future of Work and Burning Glass Technologies found that your first job after college is predictive of long-term success, and that being underemployed early in your career can set you back for a long period of time. According to the study, “college graduates who are underemployed in their first job are likely to still be underemployed up to 10 years later.”
What does this mean for you? Get a head start before graduation by carefully considering your major, building your work experience, and developing skills that are in-demand in the workforce so that you are hired for a college graduate job (and paid accordingly!). If you don’t, you may find yourself having paid for a degree that you aren’t using and, therefore, wasn’t worth the money.
- Graduate school
You think college is expensive, but so is graduate school, and even more so! There tends to be less financial aid available and prices have risen more quickly for graduate schools than for undergraduate colleges. Graduate school students have, on average, 3x the debt of undergraduates.
While you may think that graduate school is far in the future and unknown, it’s worth considering the possibility that if you do go, you’ll need to take on student loans unless you have tens of thousands of dollars available in savings—so the smaller your existing loans, the better. If you know you’re considering graduate school, you may want to prioritize finding lower-priced undergraduate schools (with the caveat that you should feel confident you can graduate and be well positioned to secure a career and graduate school admission from whichever school you attend).
Like any large decision, you’ll be making your college choice with some data but also many unknowns. That’s to be expected! To be a savvy college-goer, consider your risks in addition to the rewards—that way, you will be prepared to take the twists and turns with confidence and come out financially stronger on the other side.
College Coach has teamed up with Edmit to offer a “high tech + high touch” college planning experience for families. Edmit Premium is a subscription service combining Edmit’s proprietary “financial fit” software with College Coach’s expert guidance. Learn more about Edmit Premium.