The Future’s Still Bright for College Grads by Christopher Thompson, AllianceBernstein
Is college worth it? It’s not an uncommon question these days, especially with soaring college costs, ballooning student debt levels and higher unemployment. But research shows that pursuing a college degree can result in far more than just a diploma.
Better Days Ahead
College isn’t cheap. The price of higher education has increased exponentially in the past couple of decades. And despite improving unemployment data, many members of the younger working-age population are without jobs. Realities like these have left many second-guessing the wisdom of going to college, but the return on investment for college graduates is pretty significant.
According to CollegeStats.org, college graduates enjoy numerous benefits, including better pay throughout their lifetimes, lower unemployment rates and more fulfilling careers than those without college degrees. Jobs requiring college degrees, on average, pay better than those that don’t, and those who make enough money to make ends meet are happier.
Life Beyond the Diploma
College graduates can look beyond the benefits of a paycheck and a career. They also enjoy stronger marriages, longer life expectancies and a better overall quality of life. College grads live an average of five years longer than those who haven’t completed high school, according to a report by the Robert Wood Johnson Foundation’s Commission to Build a Healthier America. Men see the most benefit, living an average of 6.8 years longer. College grads also have healthier lifestyles, exercising more, eating better and being more likely to avoid smoking.
More Bang for the College Buck
Although saving for college slipped as a priority during the last global recession, investors haven’t lost complete faith in the college promise. Recent data from Sallie Mae’s annual report, “How America Saves for College,” points to a resurgence in college savings. And now that many investors have rebuilt their retirement nest eggs, they’re upping their college savings efforts. Total college savings per family are over $15,000, up from just under $12,000 last year.
This news couldn’t have come at a better time. This past tax season may have brought investors an unpleasant—and unexpected—surprise. A new Medicare surtax was implemented, which means certain investors faced up to a 4% additional tax on their net investment income. But some items don’t count as investment income, including tax-advantaged college savings. Forewarned is forearmed.
An increasing number of students are now enrolling in online universities as well, which has reduced their tuition costs and the amount needed for transportation and housing. While the tuition rates at online universities vary, students are sure to save money when they go this route. Online students can work full time while they take their courses, since they do not have to worry about going to class. In addition, these students can apply for financial aid to help them to pay for their courses and that can help to alleviate some of the financial burden.
Higher Education Lasts a Lifetime
A college education isn’t fleeting; a degree is for life. Although the cost of tuition and the uncertain jobs picture can be daunting, investing in a college degree now can lead to a happier, brighter future.
The views expressed herein do not constitute, and should not be considered to be, legal or tax advice. The tax rules are complicated, and their impact on a particular individual may differ depending on the individual’s specific circumstances. Please consult with your legal or tax advisor regarding your specific situation.
Christopher Thompson is Senior Managing Director and Head of the US Retail Client Group at AllianceBernstein Holding LP (NYSE:AB).