Conventional wisdom is that college is worth the money because it provides a path to considerably higher earnings than usually can be earned with a high school diploma alone. But is that true?

If you are considering attending college, you likely are at least partially drawn in by the prospect of earning more money when you graduate. The College Board, a not-for-profit association, has long contended that college degrees are worth the money because they pay off over high school diplomas to the tune of $800,000 more in pay over the course of a 40-year career.

However, in recent years increasing tuition costs and a difficult job market have called those figures into question. In an interview with Forbes magazine, Mark Schneider, of the American Institutes for Research, called the calculation “a million-dollar misunderstanding.”

Reduced Earnings Still Higher for College Grads

Taking into account the increasing cost of college, student loan debt, and breaks in employment, Schneider estimated that college graduates earn about $280,000 more than high-school graduates. A researcher commissioned by The College Board in 2007 put the figure at about $450,000.

Most researchers agree that college is worth the money, because graduates, on average, do earn more than their counterparts with only high-school diplomas.

One way to make sure that college pays off for you is to take advantage of grants and scholarships when applying. Carefully read the terms of any student loans you apply for to make sure the terms are favorable. And research average salaries in your desired field so you can deicide how much debt, if any, you are comfortable taking on.

College offers more than just a path to a higher salary–it offers a change to learn and grow. A carefully thought out financial plan can help you achieve that.

Sources:
Jennifer Cheeseman Day and Eric C. Newburger • The Big Payoff: Educational Attainment and Synthetic Estimates of Work-Life Earnings
U.S. Census Bureau
Mary Pilon • What’s a Degree Really Worth? • Feb 02, 2010

With the national economy still fragile and many Americans struggling just to make ends meet, what’s the best way to tackle the high cost of college? Explore a number of strategies to make college more affordable.

Unless you’re a football or basketball high school stand-out with serious scholarship prospects, entirely avoiding the high cost of college probably isn’t possible. However, you can take steps to offset or minimize what you pay for that sheepskin.

According to The College Board, one year of tuition and fees at a private university now cost a whopping $26,273, while that education costs $7,020 per year at the average state school.

Financial Aid Helps with the High Cost of College

Of all undergraduate students, 66 percent received some type of financial aid in 2007-08, with the average amount being $9,100, according to the National Center for Education Statistics.

• Scholarships and grants. More than half of 2007-08 undergraduates received grants. All students hoping to secure financial aid should complete the Free Application for Federal Student Aid (FAFSA) no later than February 1 of the year they intend to begin their studies.
• Loans. Two-thirds of four-year college graduates incurred some debt to pay the high cost of college, with the average being $23,186 in 2007-08. But think carefully before taking on debt, and apply first for government loans for students with favorable interest rates.
• Tax credits and deductions. The federal government has a variety of tax credits and deductions designed to minimize the high cost of college. These include allowing withdrawals from Individual Retirement Accounts tax-free to pay for college, hefty tax credits such as the Hope Scholarship and Lifetime Learning credits, and federal income tax deductions for student loan interest payments.
• Pay as you go. Working your way through school may not be your ideal way of dealing with the high cost of college, but it’s an option. Increasing numbers of students attend college part-time while also working. Even if you go to school full-time, the federal student work-study program pays you at least the minimum wage for 10-to-15 hours of work a week.

With careful thought about your post-college career aspirations and some advance preparation, the high cost of college can be made manageable.

Sources:
Fast Facts: Financial Aid for Undergraduate Students
National Center for Education Statistics
Free Application for Federal Student Aid
2009-10 College Prices
The College Board