4 Essential Steps to Decide If College Is Worth It for You

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Is college worth it? That’s a tricky question. College isn’t cheap, but many believe it’s the way to obtain a “good” job. You have to spend money to make money, right? But does that make it worth it?

It depends. The cost of college has created a situation in which 44 million people have had to use student loans to get their degree. And 53 percent of those with student loans would change their past borrowing decisions if they could, according to the Financial Industry Regulatory Authority’s 2016 National Financial Capability Study.

While that doesn’t necessarily indicate regret over going to college, it does suggest regret in how they handled the cost of college. So one of the questions shouldn’t just be “Is college worth it?” but also “Are student loans worth it?” Here’s how to make sure you can turn the answer into a “yes” for you.

Making your college education worth the cost

The best way to see if college is worth it is to understand that everyone’s situation is different. Then consider the four questions below to come up with an answer that’s right for you.

1. Do you have a clear plan for success as a college student?

College should be fun, but it shouldn’t turn into a life experiment costing you tens of thousands of dollars. To make sure college is worth the debt, you need to have a clear plan of how you’ll be successful.

Even if you don’t particularly like school, you can optimize your course load to get good grades. Strategically schedule your classes for times you’re most alert. Make sure you don’t overload yourself with too many challenging courses at once.

One of the most financially crippling events is taking out student loans and then not finishing a degree. A 2016 College Board report cited data showing that 24 percent of students who dropped out defaulted on their student loans within two years. Only 9 percent of those who did get degrees defaulted.

Leaving school without a degree or certificate puts you in a position of taking on debt without the benefits a degree can offer. This includes more employment opportunities and higher pay potential. Finishing your degree is crucial.

Get to know yourself and what you need to do to succeed. Talk to people about the study habits that work best for them. Take a look at the resources your school might have to offer. The better you do in college from the start, the more worthwhile your investment can be.

2. Can you find an affordable way to go to college?

The next step is to take on as little debt as possible. Here are a few things you can do.

  • Take core classes at a community college. Then, transfer to a four-year school so you can spend far less on your first two years.
  • Take summer and winter break classes to finish your degree more quickly. (Just make sure you do the math, as sometimes these particular classes cost more per credit.)
  • Go to a local school so you can live at home — avoid room and board costs.
  • If you receive offers for school-specific scholarships, consider choosing the school that gives you the most money. (The tuition remaining should still be less expensive than your other options.)
  • As you evaluate schools, give extra consideration to those offering work-study programs. Those can enable you to earn money towards your degree.

Once you’ve figured out how to shave as much off your college costs as possible, think about how to pay for the rest.

  • Use websites such as FastWeb to look for scholarships you qualify for. Apply for as many as possible before you resort to loans.
  • Fill out your FAFSA to see what kind of federal financial aid you can get. This can help you avoid private student loans.
  • If you need help paying for your education, opt for the cheapest financial aid first.

3. Can you calculate how you’ll handle student loans after college?

If you have to take out loans to pay for college, figure out how much they’ll cost. Then use this student loan payment calculator to see what your payments will look like when you graduate. That way, you’ll know if you can actually afford the school that’s on the top of your list.

Keep in mind that your calculations might change over time due to unforeseen circumstances. This includes a hike in tuition costs or a changed major that leads to longer schooling. While there is some unpredictability in this, that doesn’t mean you can’t make sure you’re as prepared as possible.

Once you know what you’ll be dealing with, start crafting a plan now for how you’ll handle the loans. Will you start saving for an emergency fund while you’re in school so that you’ll have a cushion ready when you graduate? Do you know how to change student loan repayment plans if needed? Start figuring out what you’ll want your finances to look like now so you can set the plan — and the habits — early.

4. Do you know what kind of work can get with your degree?

If you’re lucky enough to know what you want to study early on, you can choose a school based on the quality of that program, their job placement record, and the cost of the program compared to other schools.

But even if you’re not yet sure what you’ll major in, you can start your research on what to expect after graduation with the help of your school’s career center and sites like TheMuse. Knowing how much you can expect to earn in different fields will help you evaluate them from a financial perspective.

Take a look at potential pay and how competitive the job market is in your field with the help of Glassdoor and Payscale. After you’ve found some salary ranges, use sites such as Paycheck City to understand what the take-home pay will be. Then go back to your student loan calculations to see how much of that salary would be taken up by your student loan debt.

So, is college worth it? The stats say yes

In December 2016, the College Board released a report called Education Pays 2016: The Benefits of Higher Education for Individuals and Society. Updated every three years, this report analyzes various life outcomes for those who do and don’t have a college degree.

Here are just a few key findings from the report:

  • Those with a degree earn more on average. In 2015, full-time employed bachelor’s degree holders earned 67 percent more than high school graduates without a degree.
  • Degree holders fare better in the job market. The 2015 unemployment rate for 25- to 34-year olds was just above 2 percent for bachelor’s degree holders, compared to more than 8 percent for those who only had a high school diploma.
  • Employees with a degree are more likely to receive retirement benefits. In 2015, 52 percent of private sector, full-time workers with a degree were offered retirement benefits, compared to only 43 percent of the same without a degree.
  • More degree holders have employer-provided health insurance. In 2015, 38 percent of bachelor’s degree holders had employer-provided health insurance, while only 26 percent of those with just a high school education did.
  • Poverty is more common among non-degree holders. According to the U.S. Census Bureau, 2015 saw more than 12 percent of those 25 and older without a degree in poverty, compared to just above 4 percent of bachelor’s degree holders.

All that said, is college worth it? Apparently so — even with the debt involved. The report goes on to say the average person who graduates in four years will earn enough to compensate for the cost of college by the time they turn 34. And even those who went to college but didn’t get a degree will still, on average, exceed the earnings of a high school graduate by the time they’re 35.

According to the report, “the longer college graduates remain in the workforce, the greater the payoff to their investment in higher education.” In other words, if the thought of college and debt are completely overwhelming to you now, you can still look forward to a more positive future because of these things — if you handle them thoughtfully.

Need a student loan?

Here are our top student loan lenders of 2020!
LenderVariable APREligibility 
1.25% – 9.44%*,1Undergraduate and Graduate

Visit SallieMae

1.24% – 11.98%2Undergraduate, Graduate, and Parents

Visit College Ave

1.24% – 11.44%3Undergraduate, Graduate, and Parents

Visit Earnest

1.24% – 11.37%4Undergraduate and Graduate

Visit Discover

1.30% – 10.00%5Undergraduate and Graduate

Visit SoFi

2.73% – 13.01%6Undergraduate and Graduate

Visit Ascent

3.52% – 9.50%7Undergraduate and Graduate

Visit CommonBond

* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.


1 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

2 Important Disclosures for College Ave.

CollegeAve Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

  1. Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
     
  2. This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. This informational repayment example uses typical loan terms for a first year graduate student borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.10% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $141.66 while in the repayment period, for a total amount of payments of $16,699.21. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 7/1/2020. Variable interest rates may increase after consummation. Lowest advertised rates require selection of full principal and interest payments with the shortest available loan term.


3 Important Disclosures for Earnest.

Earnest Disclosures

  1. Rates include 0.25% Auto Pay Discount
     
  2. Explanation of Rates “With Autopay” (APD)
    Rates shown include 0.25% APR discount when client agrees to make monthly principal and interest payments by automatic electronic payment. Use of autopay is not required to receive an Earnest loan.

    Available Terms
    For Cosigned loans – 5, 7, 10, 12, 15 years. 
    Primary Only – 10, 12, 15 years

    In school deferred payment is not available in AL, AZ, CA, FL, MA, MD, MI, ND, NY, PA, and WA).


4 Important Disclosures for Discover.

Discover Disclosures

  1. Students who get at least a 3.0 GPA (or equivalent) qualify for a one-time cash reward on each new Discover undergraduate and graduate student loan. Reward redemption period is limited. Please visit DiscoverStudentLoans.com/Reward for any applicable reward terms and conditions.
  2. View Auto Reward Debit Reward Terms and Conditions at DiscoverStudentLoans.com/AutoDebitReward.
  3. Aggregate loan limits apply.
  4. Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for the Discover Private Consolidation Loan and include an Auto Debit Reward. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable margin percentage. For variable interest rate loans, the 3-Month LIBOR is 0.375% as of July 1, 2020. Discover Student Loans may adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Our lowest APR is only available to customers with the best credit and other factors. Your APR will be determined after you apply. It will be based on your credit history, which repayment option you choose and other factors, including your cosigner’s credit history (if applicable). Learn more about Discover Student Loans interest rates.
  5. Get a variable interest rate from 2.37% APR to 6.14% APR (3-Month LIBOR + 2.00% to 3-Month LIBOR + 5.77%) for either a 10-year or 20-year repayment term. Or lock in a fixed interest rate from 3.99% APR to 7.49% APR for a 10-year repayment term or from 4.24% APR to 7.74% APR for a 20-year repayment term. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable margin percentage. The margin is based on your credit evaluation at the time of application and does not change. For variable interest rate loans, the 3-Month LIBOR is 0.375% as of July 1, 2020. Discover Student Loans may adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both.
Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.

5 Important Disclosures for SoFi.

sofiDisclosures

*UNDERGRADUATE LOANS: Fixed rates from 4.73% to 11.46% annual percentage rate (“APR”) (with autopay), variable rates from 1.30% to 10.00% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.51% to 11.76% APR (with autopay), variable rates from 1.08% to 10.30% APR (with autopay). MBA AND LAW SCHOOL LOANS: Fixed rates from 4.41% to 11.67% APR (with autopay), variable rates from 0.98% to 10.21% APR (with autopay). PARENT LOANS: Fixed rates from 4.73% to 11.46% APR (with autopay), variable rates from 1.30% to 9.88% APR (with autopay). For variable rate loans, the variable interest rate is derived from the one-month LIBOR rate plus a margin and your APR may increase after origination if the LIBOR increases. Changes in the one-month LIBOR rate may cause your monthly payment to increase or decrease. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 6/29/20. Enrolling in autopay is not required to receive a loan from SoFiSoFi Lending Corp., licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. NMLS #1121636 (www.nmlsconsumeraccess.org).


6 Important Disclosures for Ascent.

Ascent Disclosures

Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.

  1. Competitive variable rates calculated monthly at the time of loan approval based on a margin plus the 1-Month London Interbank Offered Rate (LIBOR) rounded to the nearest 1/100th of a percent. The current LIBOR is 0.190%, which may adjust monthly. Your interest rate may increase or decrease, based on LIBOR monthly changes. Rates are effective as of 07/07/2020 and reflect an Automatic Payment Discount. Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month.(See Automatic Payment Discount Terms & Conditions.)
    1. Undergraduate Loans: Variable rate loans have an Annual Percentage (APR) range between 2.73% – 13.01%. Fixed rate loans have an APR range between 3.62% and 14.50% based on your credit worthiness and your selected program. Rates reflect an Automatic Payment Discount of 0.25% (for Credit-Based Loans) on the lowest offered rate and a 2.00% (for Undergraduate Future Income-Based Loans ) discount on the highest offered rate. (See Undergraduate Loan repayment examples.)
    2. Graduate Loans: Variable rate loans have an APR range between 5.33% and 11.42%. Fixed rate loans have an APR range between 6.14% and 11.92% based on your credit worthiness and your selected program. Rates reflect an Automatic Payment Discount of 0.25%. (See Graduate Loan repayment examples.)
  2. Payments may be deferred. Subject to lender discretion, forbearance and/or deferment options may be available for borrowers who are encountering financial distress.
  3. Making interest only or partial interest payments while in school will not reduce the principal balance of the loan. There are three (3) flexible in-school repayment options that include fully deferred, interest only and $25 minimum repayment. (See Undergraduate Loan repayment examples.)
  4. Flexible repayment plans may be offered up to a fifteen (15) year repayment term for a variable rate loan and ten (10) year repayment term for a fixed rate loan. Students must be enrolled at least half-time at an eligible school. Minimum loan amount is $2,000.
  5. Interest rate reduction of either 0.25% (for Credit-Based Loans) or 2.00% (for Undergraduate Future Income-Based Loans) applies only when the borrower and/or cosigner sign up for automatic payments and the payment amount is successfully deducted from the designated bank account each month. The amount of the discount is dependent upon the loan product and credit history of the borrower at the time of application. Interest rate reduction(s) will not apply during periods when no payment is due, including periods of in-school, deferment, grace or forbearance, unless a regular payment amount has been arranged with the servicer. If you have two (2) consecutive returned payments for Nonsufficient Funds, we may cancel your automatic debit enrollment and you will lose the interest rate reduction. You will then need to re-qualify and re-enroll in automatic debit payments to receive the interest rate reduction.(See Automatic Payment Discount Terms & Conditions.)
  6. All applicants (individual and cosigner) are required to complete a brief online financial literacy course as part of the application process to be eligible for funding.
  7. Eligibility, loan amount and other loan terms are dependent on several factors, which may include: loan product, other financial aid, creditworthiness, school, program, graduation date, major, cost of attendance and other factors. Aggregate loan limits may apply. The cost of attendance is determined and certified by the educational institution.
  8. The legal age for entering into contracts is eighteen (18) years of age in every state except Alabama where it is nineteen (19) years old, Nebraska where it is nineteen (19) years old (only for wards of the state), and Mississippi and Puerto Rico where it is twenty-one (21) years old.
  9. 1% Cash Back Graduation Reward subject to terms and conditions. Click here for details. In order to be eligible for the 1% Cash Back Graduation Reward, borrower must meet the following criteria after graduation:
    • The student borrower has graduated from the degree program that the loan was used to fund.
    • The student borrower may change majors and/or transfer to a different school, but must obtain the same level of degree (e.g. – undergraduate or graduate)
    • The graduation date is more than 90 days and less than five (5) years after the date of the loan’s first disbursement.
    • Any loan that the student has borrowed under the Ascent loan is not more than 30-days delinquent or in a default status as of the graduation date and until any Graduation Reward is paid.
  10. Students can apply to release their cosigner and continue with the loan in only their name after making the first 24 consecutive regularly scheduled full principal and interest payments on-time and meeting the other eligibility criteria to qualify for the loan without a cosigner.

* Application times vary depending on the applicant’s ability to supply the necessary information for submission.


7 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restrictions. Loans are offered through CommonBond Lending, LLC (NMLS #1175900).

  1.  Rates are as of July 1, 2019 and include auto-pay discount. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment. Variable rates may increase after consummation.

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.