Is College Worth the Money? Suze Orman Weighs In
Written by
Nicole Spector
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Molly Sullivan
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For decades, a four-year college degree (bachelor’s degree) was a core requirement for most government jobs. But in the last few years, numerous states have dropped this as a requirement for government state jobs. And they’re not the only ones eliminating this rigid rule. Tons of companies are ditching the once standard requirement of a bachelor’s degree. The trend is expected to continue. Research by Georgetown University Center on Education and the Workforce projected that in 2031, only 42% of jobs will require at least a bachelor’s degree.
Most Americans who pursue a bachelor’s degree get a pile of student loan debt with it. We’re talking tens of thousands of dollars in debt, on average. Is college worth the money and, in so many cases, the debt? In a recent blog post on her website, Suze Orman weighed in on the matter.
College Degrees Have Excellent ROI
The best way to assess whether a college degree is financially worth it is to determine whether it will enable you to make more money than you would without it. What’s the return on investment (ROI)? Orman pointed to numbers crunching done by the Federal Reserve Bank of New York.
“The median graduate gets a 12.5% annual boost to their income compared to what they would earn if they stopped at a high school diploma,” Orman wrote. “That’s an even better rate of return than what stocks have delivered.”
This is an excellent ROI, but there are more things to consider when deciding whether a college degree is worth it.
Ask Yourself, ‘Can I Really Finish in 4 Years?’
It takes four years to get a bachelor’s degree, but only if you’re pursuing it full time on the university’s terms. Many students sign up to get a four-year degree with the intention of graduating in four years, but end up taking six years or more. Delaying graduation is a costly move.
“If you take five years, your lifetime return drops from 12.5% to an average of 9.3%,” Orman wrote. “Take six years, and it’s down to 7%. The issue here is not just the extra cost of being in school those years, but the fact that you’re likely not working full time in those years, and even if you are, until you earn a degree, you aren’t going to have the credentials that will pay you more.”
Don’t Pay a School More Than Its Net Price
Orman pointed out something that you may not know about. Every school must publish its “net price” — the average out-of-pocket cost you pay to attend net of all financial aid. Orman suggested that college may not be worth it if you’re paying more than that net price. The key here is to go to a school that offers standout financial aid.
“If you attend a school that doesn’t offer you a good aid package, your family will likely need to borrow more, and that can be a long-term hit to financial security,” Orman wrote.
Focus On Schools That Are Good Financial Fits
Our society spends far too much time hyping elite universities. For example, we’re all familiar with Stanford and its laurels. We’re less familiar with the cost. For the 2023-24 school year, the cost of attending was $20,577 per quarter. And that’s just the cost of tuition — it doesn’t include housing and other potential expenses.
So, you may really want to get into Stanford, but do you really want to be on the hook for all that money? Orman recommended focusing on schools that are smart financial fits so that you graduate with the smallest amount of debt possible. What’s the point of attending a dream school if it turns your adult life into a financial nightmare?
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