6 rules to help you make the best college decision

Editor’s Note: It’s that time of year again. High school seniors have received their college admissions decisions, and now the ball is in their court. Most colleges require a decision by May 1.

Besides having to weigh the pros and cons of one campus versus another, some seniors may have been caught up in the debate over college itself: Is it worth it? There’s plenty of contradictory advice out there. The Urban Institute’s Robert Lerman thinks many American youth are better off not going to college. PayPal co-founder Peter Thiel encourages students to drop out of school to pursue their own innovations. Entrepreneur and academic Vivek Wadhwa has responded on this page, multiple times, in fact, arguing that entrepreneurs do benefit from a college degree and that college education is not a bubble; it still has value. That’s a conclusion echoed in a recent report from Georgetown’s Center on Education and the Workforce, which dove into which majors are worth your time and money.

Here to help high school seniors (and parents) process this debate and make their own decisions are MIT professor emeritus Frank Levy, currently a lecturer at Harvard Medical School, the University of Minnesota’s Alan Benson and management consultant Raimundo Esteva. They agree that embarking on a four-year bachelor’s degree next fall is a good investment for most students, but there are exceptions, as well as things you need to know to get the most bang for your buck.

Simone Pathe

Dear High School Senior,

You have finished a long march: completing your coursework, cramming for the SATs or ACTs, visiting campuses and writing application essays. Your work has paid off and you’re looking over a menu of shiny college brochures inviting you to the Class of 2019. You can now ask yourself: which college should I choose? Or should I go to a four-year college at all?

The second question is not a joke. You face many paths: many colleges, many college majors, many financing options, and many potential outcomes. You could be at the beginning of a promising career. Or you could find yourself saddled with enormous student loan debt and little interest from potential employers.

Proponents will tell you that college is an automatic ticket to the middle class and that the average pay gap between a bachelor’s degree-holder and high school graduate has never been higher. They paint too rosy a picture. You should see college as a stepping-stone: an investment that, if managed properly, can help you get a middle class job. In terms of financial commitment and time, it will be one of the largest investments you make in your lifetime. The good news is that unlike investing in the stock market, the investment returns to your college education are largely under your control.

Here are six rules to help you get the most from your college decision:

  1. College is a better investment if you graduate. Even at today’s high tuitions, multiple economic studies have shown that college remains a good investment for the average student. All these studies have a catch. They estimate benefits based on the earnings of persons who have earned a bachelor’s degree while they ignore the lower earnings of persons who drop out of college before getting a degree
  2. College is a better investment if you graduate on time. These same economic studies usually adopt the assumption that students will graduate in four years. This assumption is optimistic. According to a report by Complete College America, on-time graduation rates for public university bachelor’s degrees are 36 percent at flagship state universities and only 19 percent at non-flagship state universities. Government data show that graduation rates are 59.9 percent at private non-profit universities and 18.2 percent at for-profit universities, with more-selective schools having much higher graduation rates. Delaying graduation isn’t only expensive in terms of tuition costs. It is also expensive in terms of foregone earnings and valuable job experience.

    Be proactive by checking the college graduation rates in the Department of Education’s College Scorecard. You will see that at many colleges, a significant fraction of freshmen fail to graduate in six years. Other data indicate many of these students fail to graduate at all.

    A low six-year graduation rate is a sign of an institution’s problems: too few sections of required courses, a shortage of tutoring help for difficult subjects, or tuition that is too high to sustain for four or more years. If a college’s problems affect a significant fraction of its students, there is a good chance the problems will affect you too. Before choosing any college, it is important to go to the College Scorecard to see how your potential choice stacks up.

  3. Your major matters. A lot. You’ll often hear educational advocates emphasize the importance of earning a degree, as if a bachelor’s degree—any bachelor’s degree—is the key to financial security. However, not all bachelor’s degrees are equally valuable, and earnings differences among majors can be larger than earnings differences among colleges.

    Choosing a major involves more than money: If you don’t find a subject interesting, majoring in it could make you miserable and could be a poor investment if you drop out or pursue an unrelated career. Nonetheless, you should know what your major will be worth to employers when you graduate.

    A good place to start is What’s It Worth? a publication of Georgetown University’s Center on Education and the Workforce. This report gives earnings for a detailed list of undergraduate majors, the fraction of students in a major who continue to graduate school and other useful information. Combine the earnings data with your own interests to draw up a list of majors you might want to pursue. Before choosing a college, be sure it offers at least several of the majors that are on your list.

    Once enrolled in college, you can start to learn about potential majors in more detail by browsing the syllabi of courses in the major and having conversations with faculty and students in the major. Upperclassmen are particularly helpful in identifying good teachers, warning you about bottleneck courses with limited enrollments and other important information that is rarely written down. If a department (or the college) has a career office, talk with them to learn about the placements of recent graduates in the major.

  4. Consider two-year associates degree programs and 2+2 programs. Junior colleges offer students the flexibility to commute from home, maintain part-time jobs, fulfill core coursework, and save on tuition expenses. Moreover, many junior colleges have transfer agreements with excellent four-year universities, which allow their students to ease the transition to college, save lots of money, and ultimately earn the same credential.
  5. Know your financial aid options. Financial aid comes in many varieties and is available from a variety of sources. You can continue to apply for financial aid while you’re a student. Check with your financial aid office, particularly if you experience any hardship that might cause you to drop out.

    Considering a career in public service? Under the Income Contingent Repayment (ICR) program, federal loan repayments can be capped depending on your income and family circumstances. If you keep up with minimum monthly payments for your federal loans for 25 years (10 if you enter public service), your remaining federal loans may be forgiven entirely. Many private lenders also offer caps on monthly payments under Income Sensitive Repayment programs. FinAid.org has a wealth of information on loans and scholarships.

  6. Keep track of your finances. A recent report by the Brookings Institution found that about half of all first-year students in the U.S. seriously underestimate how much student debt they have. Understanding your debt is the first step to producing a plan to pay it off.

    Unlike other forms of debt, it is very difficult to erase student loan debt through bankruptcy. If you’re in severe financial distress, you should generally prioritize paying back educational loans before other loans with similar interest rates. Plan on understanding your loans, setting a budget, and living within your means.

For the average high school senior, beginning a bachelor’s degree program will be a good investment. But don’t count on an average return: college is an investment that must be properly managed. You should use your college acceptances to manage your investment wisely.