Is a Million Dollars a Year a Reasonable College Cost? Examining the Value and Expenses of Higher Education
The question of whether a million dollars a year is a lot for college costs may seem absurd at first glance. However, with the rising expenses of higher education, it's crucial to examine the factors contributing to these costs and the potential return on investment (ROI). This article delves into the complexities of college expenses, financial aid, and the long-term value of a college degree, offering insights for students and families navigating the world of higher education.
Understanding the Sticker Price vs. Actual Cost
When assessing the costs of studying in the US, it’s important to distinguish between the “sticker price” - the published rates - and the amount students actually pay once various sources of funding and financial aid are considered. Unlike in other countries, it’s rare for US students to pay the full tuition amount.
The six-figure price might be astonishing, but remember that only a handful of campuses would charge anything near that price. The lion’s share of American colleges and universities post lower, usually far lower amounts. Moreover, the widespread practice of tuition discounting means a lot of students attending that handful of highly-priced schools don’t pay the full price. Grants, scholarships, work-study, etc. cut down what a good number of students actually end up paying.
To illustrate, let's consider some examples from the academic year 2025-2026:
- Wellesley College estimated a total cost of $100,541, including tuition ($69,800), housing ($11,520), meals ($10,776), fees, health insurance, books, personal expenses, and transportation.
- Tufts University calculated a total of $100,721, encompassing tuition ($71,982), housing ($10,660), food ($8,906), fees, books, supplies, personal expenses, and health insurance.
Several other institutions were approaching the six-figure mark, including Colorado College, Amherst College, the University of Miami, Harvey Mudd College, the University of Southern California, Washington University, Northwestern University, Stanford University, Wesleyan University, New York University's College of Arts and Science, Vassar College, Cornell University, the University of Pennsylvania, and Brown University.
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Inflation plays a significant role in these rising costs. With academic price inflation running higher than consumer goods inflation, institutions charging around $97,500 or more could soon break the six-figure barrier.
The Broader Context of College Costs
The cost of attendance (CoA) refers to the total cost of tuition and fees, books and supplies, as well as room and board for those students living on campus. Necessary living expenses, such as transportation, personal care, and entertainment, may be included in the final total cost of college attendance.
The average cost of attending college for one year is $26,027. The opportunity cost of spending the average annual cost of college attending rather than investing could be over $10 million by retirement. To reach $10,452,794 by 65, the college attendee would need to invest $1,220 per month every month from age 22 to 65.
While the US remains the world’s most popular destination for international students, it’s also among the most expensive choices. Those seeking a more affordable option will find lower tuition fees at US universities within the public sector. Public universities in the US have two tuition fee rates: one for state residents and one for everyone else. Private universities tend to be much smaller than public universities and have a more diverse student population due to the fact that tuition is the same price for all students.
According to College Board, published tuition fees for 2018/19 at state colleges are an average of US$10,230 for state residents, and $26,290 for everyone else. This compares to an average of $35,830 at private non-profit colleges.
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The Value Proposition: Is College Still Worth It?
Despite the rising costs, a college degree often remains a worthwhile investment. College graduates typically earn more over their lifetime compared to those with only a high school diploma. A 2014 Pew Research Center report revealed that college graduates earned significantly more than high school graduates. Bureau of Labor Statistics data indicates that college graduates earn over $459 per week more than employees with only a high school diploma. Over a lifetime, a college graduate will have earned over $2.3 million compared to an employee with a high school diploma earning just $1.3 million throughout his/her professional career.
The Brookings Institution reports that the lifetime value of a college degree remains significant, as college graduates earn about two to three times more over their lifetimes compared to those with only a high school diploma.
However, the benefits of a degree are not always easy to predict and can vary in a number of different ways. Typically, the median college graduate will earn about $1 million more in their lifetime compared to the median high school graduate.
Getting a college degree does two things in the job market: A college degree leads to higher earnings, and it leads to more steady work. College-educated workers are more likely to be in the labor force, have less unemployment, and are more likely to land full-time rather than part-time work.
Maximizing the Return on Investment
To make college "worth it," students should consider the following strategies:
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- Choose a Major Wisely: The choice of major significantly impacts earning potential. Fields like engineering, computer science, nursing, and economics often yield higher returns than art, music, religion, and psychology.
- Explore Financial Aid Options: Scholarships, grants, FAFSA, and tuition reimbursement programs can help reduce the overall cost of college.
- Consider Community College: Taking core classes at a community or technical college can be a more affordable alternative to a four-year university.
- Manage Student Loan Debt: If student loans are necessary, keep the total debt below the expected first-year salary.
The ROI of Different Degree Programs
The median bachelor’s degree is worth $306,000 for students who graduate on time. But the median conceals enormous variation. Some fields of study, including engineering, computer science, nursing, and economics, can produce returns of $1 million or more. Others, including art, music, religion, and psychology, often have a zero or even negative net financial value.
When accounting for the risk that a student will take longer than four years to finish college, or drop out entirely, median ROI drops to $129,000. Twenty-eight percent of bachelor’s degree programs have negative ROI when adjusting for the risk of non-completion. If ROI is adjusted to reflect the underlying cost of education, not just tuition charges, the share of non-performing programs rises to 37%.
Most bachelor’s degree programs in engineering, computer science, economics, and nursing increase lifetime earnings by $500,000 or more, even after subtracting the costs of college. Differences in ROI between programs can amount to millions of dollars.
Weighted by student counts, the median ROI across all 30,000 bachelor’s degree programs in the College Scorecard is $306,000. Sixteen percent of programs have negative ROI. These programs have no financial value for their graduates after accounting for tuition and opportunity cost. At the other end of the spectrum, 12% of programs have ROI of $1 million or more.
Within ten years of graduating college, students in 99% of engineering programs have fully recovered the costs of college. But the same is true for just 33% of communications and journalism programs and a paltry 2% of psychology programs.
Alternative Paths to Success
Not everyone needs to attend college to achieve success. There are plenty of good-paying jobs that don’t require a four-year college degree. These jobs still require highly-skilled, trained employees, but can be a less costly path for those that don’t believe college is for them.
Ultimately, the path you choose is up to you - becoming successful and wealthy can be possible if you go to college and take out student loans. It can be possible if you never attend college.
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