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Education’s big payoff

By Judy Martel · Bankrate.com
Friday, April 25, 2014
Posted: 4 pm ET

Most people automatically think of investments as tangibles -- stocks, bonds, cash, real estate -- but a strong human capital investment in education brings its own rewards.

College-graduationJust over half the respondents in a survey by HSBC say that the best investment you can make is paying for a child's education. And they expect a return on their investment, with 44 percent believing their children will gain the ability to compete in the workplace.

The numbers tell the story

Parents' expectations of the value of a education are not unfounded. According to a Bankrate analysis, those with a bachelor's degree earned nearly $30,000 more in average annual income in 2011 than someone with a high school diploma or GED equivalent.

Over a lifetime, those with a bachelor's degree earned an average of nearly $2.3 millionĀ -- 73 percent more than high school graduates.

Possession of a bachelor's degree also might help parents avoid the "boomerang kids" trend, where children move back home because they can't find a job. In the Bankrate analysis, the 20-year average unemployment rate for those with a four-year degree or higher is 2.8 percent versus 9.3 percent for those with a high school diploma.

Save early and often

The challenge for parents is how to plan for the expenses of higher education. In the HSBC survey, 77 percent of parents say they expect to foot the bill either partially or in total, and they'll do it through current income or savings.

Perhaps for this reason, 37 percent say they find the process of financial planning around education daunting and 51 percent wish they had begun saving earlier.

Check out the million dollar edge of a college degree.

Do you think a college is worth the money? How would you pay for it?

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