The cost of college is soaring, and that may have people wondering whether the expense associated with getting a college degree is worth it.
According to the Bureau of Labor Statistics, college graduates have better paying jobs than non-college graduates and, based on a report issued by the U.S. Census Department last year, college graduates have more money in investments and a higher net worth, too.
College graduates make more money
One of the major advantages of obtaining a college degree is that education results in far more employment opportunities.
In 2014, the unemployment rate for Americans with less than a high school diploma remained stubbornly high at 9%; however, the unemployment rate for Americans with a bachelor's degree was just 3.5%.
Because the unemployment rate is so much lower for college graduates, employers are paying-up to fill open positions, and that's translating into increasingly bigger paychecks.
The typical American with a bachelor's degree had median weekly earnings of $1,101 last year, while the median paycheck for a person without a high school diploma was less than half that amount.
College graduates portfolios are bigger
Americans with bachelor's degrees not only make more money, but they also tend to have far more money in investment accounts, such as IRAs and 401(k) plans, than those who didn't go to college.
In 2011, the most recent year for which this information is available, the Census Bureau reports that the median value of stocks, mutual funds, IRAs, and other retirement accounts among Americans with bachelor's degrees totals $101,400. That figure far outpaces the $48,128 that the typical person without a high school diploma has socked away.
The census data also suggests that if you're thinking about extending your time in college to get a graduate degree, it could be worth it. Individuals with a graduate degree have a median of $130,000 in these accounts.
College graduates have a higher net worth
Despite many college graduates being saddled with student loan debt, their net worth, which subtracts debt from assets, is still higher than it would be if they hadn't gotten their diploma.
Americans with only a high school diploma have a median net worth of $67,600, those with four-year degree are worth a median of $101,400, and Americans with a graduate degree have a median net worth of $240,750. That means that the median net worth for those with post-graduate degrees is a whopping 24 times higher than the median $9,800 net worth among those who never completed high school.
Keeping it in perspective
A college degree can pay-off handsomely in terms of financial security, but only if the extra income earned thanks to the degree is spent and invested wisely.
There are plenty of people who haven't obtained a college diploma that have accumulated significant wealth because they've lived within their means and kept their debt in check. There are also, of course, countless college graduates that struggle to make ends meet.
This isn't to say that a high income tied to a college degree doesn't provide more financial flexibility, because it does; it's rather to say that such financial flexibility has to be used wisely.