Finding Your Passion Early In College Can Save You and Your Parents Money and Heartbreak

by Hank Coleman

I finished college, earning a Bachelors Degree in four years.  I am beginning to be the outlier among my generation.  Getting a Bachelors Degree in four years is no longer the rule of thumb it once was.  It has increasingly become the exception rather than the rule.  More and more college students are taking longer to earn their degrees.  For example, in one state first-time recipients of bachelor’s degrees in 1999-2000, who had not stopped going to college for 6 months or more, took about 51 months from first enrollment to degree completion assuming that they did not transfer schools. 

graduation-throwingThink going to community college for the first two years will help you get that degree on time?  Think again.  A recent study found that students who begin at public 2-year colleges or universities took about a year and one-half longer to complete a bachelor’s degree than students who began at public 4-year institutions (71 vs. 55 months). 

Historical research based on data collected by the U.S. Department of Education and the U.S. Census Bureau has shown that college completion rates had changed very little between 1972 and 1992 (between 66% and 67%). But, in the mid-1990’s measurable changes in students who stayed in college five years or longer became evident.  Students in the mid-1990’s were found to be more likely to be enrolled 5 years after they began their postsecondary studies.  

More students are staying in college longer.  More students are also moving back home with their parents after college as well.  In a recent online survey by CollegeGrad.com, a job search Web site, 68.9% of the more than 2,000 respondents said they would move back in with their parents after graduating from college and stay there at home until they found a job. That is up from 64.6% in 2008 and 62.6% in 2007.

So, what does this mean for parents?  And, more importantly, what does it mean for their wallets?  What does this mean for the students overall earning power?  Not only are our parents footing the bill for our generation’s living expenses and college tuition in most cases, but now many parents are having to delay their own retirements as well.  The sacrifices parents are making may not even be the worst of it when you consider how much earning power is lost by delaying entry into the workforce.  According to the United States Bureau of Labor Statistics, the median weekly income in 2008 for a college graduate is $978.  That is a median annual income of $50,856.  While most college graduates do not start out making the median amount, you will still lose quite a bit of earning power with each extra year you stay in college.  In my profession, a brand new middle manager, 22 years-old, straight out of college with a Bachelors Degree can expect to earn my company’s baseline salary of $45,000.

If you save 15% of your income for retirement each year, you will miss out on $6,750 that would have compounded over 43 years (65 years-old minus 22 years-old).  That $6,750 alone would grow into $82,600 over those 43 years at 6% annual interest.  If that is not an incentive to study hard and finish college in four years, I don’t know what is.  You can also bet on your total earning to be reduced by every year you are not in the workforce.  If you retire at age 65, you will lose that year of $45,000 to $50,000 in income because you were in college at age 22.  Or, you will have to work an extra year to make up the difference.

So, what does this all mean?  It might benefit everyone if our college age children found their passion earlier in their lives.  Our children need to head off to college having a good idea of what they want to do with their lives career wise after graduation.  It is never too early for a freshman to start thinking about his or her major and their future after receiving their diploma. Finishing your education in four years and getting out of college needs to be everyone’s goal, parents and students alike.  Your pocketbook and your child’s may depend on it.

SOURCES: U.S. Department of Education, National Center for Education Statistics. (2003). “The Condition of Education 2003″ and “College Persistence on the Rise? Changes in 5-Year Degree Completion and Postsecondary Persistence Rates Between 1994 and 2000”

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