Sending Your Kid Off to College?
By Ric Edelman
Calculate the return on your investment before picking a school
It’s the time of year when college acceptance letters begin to arrive— followed by financial aid packages and bills for tuition and fees. Talk to your child about the cost of his or her proposed college choice before you agree to sign a large check to that school.
Above all, a college degree is an investment. One important way the return on that investment will be measured is by the salary your child will earn with her degree. That means your student should consider her future earnings when selecting a college.
If your daughter wants to major in education at Brown University, she needs to know that the mid-career median pay for people with a degree in education is $54,900, according to PayScale.com — just $2,570 more than one year of tuition, fees, and room and board at Brown. With a starting salary of $35,100, she’ll have to work more than six years just to make back the $220,000 she’s likely to spend on that education, not to mention the income she lost while pursuing her education.
Compare that with a major in chemical engineering at Brown. The starting salary is $64,800 and the midcareer median pay is $108,000. It will take about 3.5 years of work to equal the cost of tuition. By comparison, Penn State’s degree costs $160,000 and thus takes fewer than 2.5 years of work. When you do the math with your child, you both may avoid overspending on a degree.
Originally published in Inside Personal Finance April 2011