Is college worth the cost?

Today's parents are paying substantially higher out-of-pocket costs for higher education than their parents did 30 years ago. And the public has noticed. Three out of four Americans say college is unaffordable for most people, according to the widely publicized survey Pew Research Center survey "Is college worth it?"

A four-year degree is becoming increasingly difficult to attain due to several factors:

  • College costs are rising at nearly three times the rate of inflation, according to
  • More than 1 in 10 students graduate with more than $40,000 in undergraduate student debt, according to the Project on Student Debt.
  • Fewer entry-level jobs are available for students once they do graduate.

While scholars debate whether mounting student loan debt approaches the magnitude of the mortgage crisis, the students themselves are just looking for a financial break. Here's how to determine if college is worth it for you.

Who's drowning?

Certain cohorts of students are more likely to get in over their heads than others, says Sandy Baum, a consultant for the College Board and senior fellow at the George Washington University School of Education.

"Students enrolled in for-profit institutions, almost all of them borrow and they borrow more than similar students enrolled in other institutions," she says.

According to the Department of Education, students attending for-profit private institutions are nearly twice as likely to default on student loans as those attending public institutions. Baum adds that students who don't graduate from college are also more likely to default. Among students who default on student loans, nearly 75 percent dropped out before graduation, according to

Among undergrads, first-generation college students, low-income students and adult students working full time are less likely to graduate and more likely to have problems paying off student loans than their peers, says Alisa Cunningham, vice president of research and programs for the Institute for Higher Education Policy in Washington, D.C.

"Graduate students, too," she says. "It's kind of amazing how much (private loan debt) they're taking on."

Unfortunately, financial aid isn't keeping up. According to Education Trust, an education research nonprofit in Washington, D.C., government aid is losing its buying power. The Pell Grant -- the federal government's largest grant program -- covered 77 percent of college costs in 1979. Today it only covers 34 percent, forcing more families to rely on loans.

Why borrowing is a problem

Unlike credit card or mortgage debt, student loans usually can't be dismissed in bankruptcy. This means taking on high college expenses could be a lifelong problem. Should your loans go into default, lenders have the right to garnish your wages, take your federal and state tax refunds, lower your credit rating, tack collection costs onto the amount you'll have to pay back and sue you for the remainder of the loan, according to the Department of Education.

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