You might be surprised by what a big difference college education makes in one's salary. Photo: Nazareth College via Flickr.
Much has been made over the past 10 years of the skyrocketing costs of college. While the actual amount students pay at private schools (after scholarships and grants) has been level for the past decade, the cost of going to public institutions has jumped quite a bit.
That has led many to question the necessity of attending college at all. But according to a recent release by the U.S. Census Bureau, getting your degree -- especially an advanced one -- makes a huge difference in terms of your yearly earnings. For many, it can also increase their contentment in adult life -- with some important caveats.
Below, I've broken down how much the median worker earns according to how much education he or she has. In case you need a refresher on percentiles, if you're in the 75th percentile, you earn more than 75% of people with the same level of education earn. If you're in the 50th percentile, you earn more than 50% of your peer group, and so on.
Here's what the Census Bureau found:
Those with just a bachelor's degree earn 47% more than those who have an associate's degree or who started, but did not finish, college -- and 70% more than those who stopped after finishing high school.
In terms of lifetime earnings and net worth, these differences have a huge effect. Those who earn more are usually able to save more. As those savings are invested, they compound more rapidly year after year, creating an even greater gap between those who can save and those who can't.
What to do about those rising costs
This creates a vexing paradox. While college costs are rising to the point where some are having trouble affording it, getting a college degree is becoming the demarcating line between those who earn enough to save and those who can't.
Of course, scholarships and grants can help for some, but certainly not for everyone. And those who take on onerous debt levels to finance their college education are often left with little at the end of each month after making their payments.
But amid the doom and gloom of such costs, there are two important things to remember.
First, a disproportionate amount of the student debt that has piled up in the past decade has come from those who start, but never finish, their classes at for-profit universities. This tells us that while the headlines make it seem like everyone is getting into financial trouble because of college, this small subsector accounts for much of the problem. While attending one of these schools might make sense for some, prospective students should investigate the public (and often much cheaper) alternatives available.
Second, every student-to-be should read our own Morgan Housel's plan for how non-rich people can afford college. In essence, it involves going to community college to get your associates and then transferring to a four-year public institution for your bachelor's -- all while working part-time.
Simple steps like this can go a long way in helping you to afford college and making sure you have enough money left over at the end of each month to save for retirement.
