Straight Talk for Parents

A Message for Parents: Straight Talk

About the Cost and the Value of College

Despite what the critics of higher education claim, it is essential for your child to earn a college degree if he or she can. People who tell you otherwise are mistaken, pure and simple. Consider the following:

• In April 2015, workers with a bachelor’s degree earned an average of $57,252 per year. Those with a high school education averaged $34,736 a year.
• The median lifetime earnings for workers with bachelor’s degrees is $2.3 million. For workers with just a high school diploma, it is $1.3 million. That’s a $1 million payoff for investing in a college degree.
• Between December 2007 and February 2012, during the worst of the recent economic recession, people with a bachelor’s degree or more gained 2.2 million jobs, while people with a high school diploma or less lost 5.8 million jobs.
• The June 2015 unemployment rate for those with at least a bachelor’s degree was 2.5%. Those with just a high school diploma had an unemployment rate of 5.4%

Enduring friendships, membership in a network of successful and influential people, and openness to lifelong learning are also important products of earning a college degree. It’s no wonder, then, that a 2015 Sallie Mae/Ipsos survey on "How America Pays for College" found that 88% of families are willing to stretch financially to afford college. These are smart families.

Isn’t attending SC a lot more expensive than attending a state university?

The main costs of attending a college or university include tuition and fees, and room and board. Put another way, the main costs involve paying for instruction in academic courses and paying for a place to live and food to eat.

The table below provides a comparison of costs. For example, charges for tuition and fees + room and board at Southwestern totaled $29,270 in 2012-13. The charges at the University of Oklahoma total $17,088. Overall, tuition charges at state universities in the region are lower than Southwestern’s tuition, in large part because the taxpayers of the state are "contributing" to the state’s universities. Room and board charges are generally higher at state universities than at Southwestern.

Grants to help pay the costs.

The best way to pay for college is by receiving grants and scholarships. It’s better to spend other people’s money than your own. And grants and scholarships are not loans and do not need to be repaid. There are two main sources of grants for college:

Government grants, including federal grants like Pell Grants for students from families with modest financial resources, or state grants to help students attend public or private colleges and universities in the state in which they reside; and
Institutional grants, often called scholarships, from the colleges and universities themselves.

While government grants may vary a bit, depending on the college or university a student attends, the variation is small; a student who is eligible to receive a Pell Grant will receive that grant whether attending a state university or a private college. The size of institutional grants and scholarships, however, varies a lot, and so does the percentage of students who receive grants and scholarships at each college or university. Table 1 shows that the average institutional scholarship/grant awarded by Southwestern is $11,139. And every student at Southwestern receives this scholarship aid from the college. The institutional grants awarded by state universities are different in two ways. First, they are much smaller. Second, and more importantly, not all students receive grants/scholarships from their state universities. Almost half of the students at KU did not receive an institutional scholarship grant in 2012-13. At the University of Texas, more than 60% of students did not receive an institutional scholarship to help with the cost of their education.

Time to degree.

The third factor that determines the cost of a college education is the time it takes to earn a degree. Variations in time to degree lead to some interesting outcomes in terms of the total cost.

Because state university students in the region are much less likely to graduate in four years than are Southwestern College students, the difference in ultimate cost between Southwestern and the state schools is quite small. Indeed, graduates from two state universities with lower "sticker prices" than Southwestern leave school with more debt than Southwestern students.

And there is one more thing to consider concerning time to degree. Call it the "year five" effect—not only is your son or daughter spending time and money on that fifth year, it’s costing a year of salary. Is a student spending year five after graduating from high school paying college tuition and room and board? Or is year five spent working his or her first job after graduating from college. Avoiding that fifth year at college, with all the expenses it entails, significantly reduces the cost of earning a degree, and timely graduation helps your student start earning sooner.

What difference is a Southwestern degree going to make for my student?

Since 2008 Southwestern College has been surveying our graduates during the first year after graduation to see how they are doing. The statistics are pretty encouraging. In general, well over 90% of our graduates are in graduate school or employed in the year after they earn a bachelor’s degree from Southwestern. In the past two years that percentage has crept up toward 100%. In the survey of 2012 graduates all – let’s repeat that, all – employed respondents who majored in education, natural sciences, nursing, and the social sciences and were employed in areas related to their major field of study. Overall, 72% of those employed were working in a field related to their studies.

College is worth the cost. Southwestern College is worth the cost.