College: An investment in yourself and your future, but is it enough?

More than half (53%) of all undergraduate college students attend a four-year college costing less than $9,000/year for tuition and fees. So the math puts an average four-year degree at $36k. Of course, life is always about choices. The average annual tuition and fees for a private, four-year college cost $35,000 or more. Math places a sticker price of $140k on that one. Big difference, right?! 

The choice is yours, and depending on your situation there may be financial aid, grants, scholarships, or the bank of mom and dad. Most of us will be forced to take out student loans and pay for our education over the next 20 years or so, assuming we will obtain a job and can afford to pay that money back.

So, what is the reality? And how far is that starting salary going to take you? Let's take a look:

According to Campus Grotto, many first-year college students are having concerns about being able to afford college. Student surveys from 2009 indicate that financial concern has reached a 40-year high when it comes to paying for college. This financial pressure is forcing more students into debt, as 53.3% turned to student loans in 2009, up nearly 4 percentage points from 2008 and the highest level reported in nine years.

The reality is that student loans are going to be a necessity to afford to pay for your education. Bummer! But there's more bad news . . .  You are going to have to work while attending college.

Higher Education Research Institute (HERI) reports fewer students are in the workforce as high-school seniors, with 62.8% having worked, compared with 69.3% in 2007. About half (49.3%) of all students were planning to get jobs to pay for college. 

Okay, you take out the loans, work part-time, study your butt off, and graduate. What do you get in return? NACE completed a salary survey report in 2009 showing the average starting salary offer for recent college graduates is $49,307.

Of course, we are not all average; the list below shows most majors and average starting salaries.

Optimistically, you land that first job with the average starting salary of $49,307. What kind of financial position does that get you, in today's economy? Let's remember that figure is for gross income and not what you actually bring home. Paycheckcity.com has a great calculator allowing you to enter your state for the most accurate calculation. 

Net income, or take home pay, turns out to be more like $29,400. Why the difference? Well, let's see: Uncle Sam takes a cut, there's a deduction for health insurance costs, and hopefully you will make a contribution for a 401K or other retirement plan. Now that we have a more realistic figure, let's examine the average cost of living.

To help you, click on this calculator to estimate the cost of living in your area. I live in PA, so here is an example of what my expenses would be:

See the total? $30,324. I'm coming up a little short--yikes! We are also making a lot of assumptions, like I haven't amassed a load of credit card debt and I have a relatively small car payment--oh, and that I can stick to this budget.  

Most recent graduates, even if lucky enough to land that first job, are not in an ideal situation and often start their adult journey in debt and unemployed. 

So what can you do to pick the right college, pick the right major, and land that job? There isn't a magic formula, but you can ease future financial pitfalls by developing good money management skills now. Budget, live within your means, be careful with the plastic, and save for a rainy day! 

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Suzanne Cramer

Suzanne is a certified credit counselor working in our Ask the Expert forums as a coach and a Social Media Specialist for CareOne. Suzanne writes for our Blended Finances and A Straight Talk on Debt blogs.  As a soon to be divorced single mom, Suzanne also writes for the Divorce, Debt, and Finances blog. Ask her questions, share your story or just follow Suzanne on her journey as she navigates dealing with divorce, debt, and finances. Suzanne is also very active on Twitter and manages two CareOne accounts: ADivorcedMom and Ask CareOne where she shares the latest debt industry news and tips to keep your finances in check.

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