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Invest in Your Kids

Here at The Motley Fool, we're celebrating back-to-school days with financial advice for parents, kids, and students of all ages. Check out the entire curriculum right here.

Your kids may want to go to college for all the wrong reasons. At first, they may scare you to death, being on their own for the first time. And when it comes to how they're spending their time, you just might not want to know.

But in the end, the economic payoff from having a college degree is too big to pass up -- even if your kids are too busy partying to realize it.

The big payoff
The statistics are staggering. According to 2005 figures from the Census Bureau, college graduates earn an average of more than $52,500 per year, compared to less than $27,000 for high-school graduates. Those who go on to get advanced degrees have even higher earnings -- master's degree holders earn almost $67,000 on average, while doctorates bring $91,000 and professional degrees almost $113,000.

Now, it's true that these statistics are affected by big wage-earners. But even when you look at median figures -- where the impact of those billionaires is negligible -- college grads earn almost double the money their high-school counterparts take home.

Why it's an investment
Of course, for most people, college education isn't free. Parents have to work hard to get their kids to college. As a student, you'll spend plenty of money on tuition, fees, and living expenses while you're in college. And for the most part, you'll also have to give up earning whatever you could make from full-time work for four years. With the price tag for college exceeding $100,000 at many schools, the prospect of big student loans and years of debt repayments may make college seem less attractive.

Still, with college grads making up an increasing percentage of the workforce, it's more important now than ever not to fall behind. Employers from Cisco (Nasdaq: CSCO  ) to Wal-Mart (NYSE: WMT  ) will be looking for smart and savvy employees, especially in light of the aging population of skilled workers and the difficulty in replacing them.

But just as investing in stocks often takes a long time to produce big profits, investing in your education has long-term benefits that aren't necessarily obvious at first. It may take you years to make up for lost time by choosing not to start working full-time at age 18. But if your earnings go up as a result of getting more education, eventually you'll close that gap, ending up well ahead by the end of your career. According to one estimate, over the course of a typical career, college graduates will make nearly a million dollars more than those who just have a high school education.

It's never too late
More importantly, going to college opens the door to further opportunities. You just can't work in some occupations without a college degree. Largely because of that trend, institutions like Apollo Group's (Nasdaq: APOL  ) University of Phoenix and ITT Educational (NYSE: ESI  ) have grown in recent years. For those seeking more education late in their careers, programs tailored to practical training often have more appeal than traditional curricula, which emphasize theory.

So whether you're just finishing up your senior year in high school, or you have dozens of years of hard work under your belt, it's worth looking at how higher education can help you make more out of your career. With the opportunities that education brings, it can be a great way to invest in yourself, and increase your chances for a brighter future.

To learn more about how to make your college dreams a reality, take a look at our College Savings Center. Also, consider trying out our personal finance newsletter,Motley Fool Green Light. In every issue, you'll find ideas that can help you earn more, spend less, and save more -- whatever your goals. Get free access today with no obligation, and see howGreen Light can save you money.

Fool contributor Dan Caplinger thinks about going back to school every once in a while, despite having spent a majority of his years in classrooms. He doesn't own shares of the companies mentioned in this article. Wal-Mart is an Inside Value recommendation. The Fool's disclosure policy is an educational experience.


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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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