College is expensive, to say the least, so it’s important to get the most “bang for your buck” when deciding on higher education. Fortunately, a new study done by Georgetown University’s Center on Education and the Workforce (CEW) ranks 4,500 colleges and universities based on their return on investment.

The average cost of a college education in 2022, including books, living arrangements, and supplies, is $35,331 per year. For most four-year institutions, that’s a whopping $141,324.

The prices of tuition keep rising exponentially too. In fact, according to the U.S. Bureau of Labor Statistics, tuition is 1,446% higher in 2022 versus 1977. That pales in comparison to the average inflation rate of 370% during that same time.

We can all agree that a college education offers a wealth of opportunity. It can prepare students for higher-paying and more satisfying careers. It can also help young adults learn independence and intellectually enrich them with courses in literature, history, political science, and more.

But, given its high cost, it’s now more important to measure an education’s return on investment. In the past, hardly anyone questioned the payoff of a college education. But unfortunately, this has changed. Today it’s critical to ask yourself, how long will it take you and your child to make an investment in college pay off? This is particularly important if your child will be taking out large loans that, eventually, need to be repaid. Will the salary they receive cover the costs of the education?

Center on Education and the Workforce Study

As you review data from the study (and we encourage you to do so), take a look at the average ROI for immediately following graduation, as well as 15 years, 20 years, 30 years, and 40 years beyond. Try to find schools that you or your child have expressed interest in. Then ask yourself, how does the ROI compare to other, similar schools?

To help you make sense of the data, we’ve pulled together a few key points we discovered:

• Nearly 30% of the colleges had a very poor ROI. In fact, 10 years after enrollment, more than half of their students earned less than a high school graduate. But it’s important to note that the salaries could be due to lower graduation rates, and disparities in race, ethnicity, and gender. The study did not take these key factors into account.

• Colleges and universities specializing in health and science offer a better ROI. For example, 10 years after graduation, it’s no surprise that Massachusetts Institute of Technology (MIT) ranks #6 in the nation for its This means that if a student invests in an education at MIT, the return (your salary and earnings) over the years is quite high compared to other, similar schools. Surprisingly, a 2-year nursing program, Southern Westchester BOCES-Practical Nursing Program, ranked #1 in the nation with an NPV of $429,000.

• Careers in music and art, in general, offer a lower ROI. Some of the nation’s leading art and music schools (Berklee College of Music, The Julliard School, and Rhode Island School of Design), unfortunately, rank lower on the list. The reality is many careers in the arts may pay less long-term. This shouldn’t deter your child from pursuing a meaningful career in the arts; after all, life isn’t just about maximizing every dollar. But it should be a consideration as you plan ahead.

The bottom line: Financial planning is critical when considering higher education

Whether your children are still small, they’re in elementary school, or they’re headed out the door soon, it’s important to do careful financial planning when considering a college investment. After all, you don’t want your child to be saddled with thousands of dollars in student debt, and unable to earn more to pay it off.

At Lake Road Advisors, we suggest talking to an advisor as soon as you have a baby—or even beforehand. When your baby is born, you can open a college-savings account and begin earning on your investment. You will need to consider the benefits and tax implications of opening a 529 plan, versus a Coverdell Education Savings Account, or simply by adding more money in a Roth IRA (if it makes sense to do so).

Remember, there are many options for saving for higher education, but it is indisputable that the earlier you do so, the better. This gives your investment time to grow. If you’re interested in learning how front-loading contributions into your kids’ college savings accounts can pay off, check out this Kiplinger article. You may be amazed at how much more you can save when you invest earlier rather than later.

Educate Your Child On The Financial Realities Of College

It’s important to think about the financial implications of your child’s future career. Talk to your child about their hopes and dreams for the future. Then ask them to research the average starting salary for their desired profession. Sit down and do the math with them or financial advisor. It’s important for your child to see the numbers and how long it may take them (or you) to pay off their education.

Keep in mind, many high school students may not know what they’d like to do with their careers. If this is the case, you can still encourage them to seek lower-costing colleges and universities and to explore professions that may offer a better quality of life.

If your child would like to pursue a career with a lower starting salary, discuss the education options that may make the most sense. Remember, the name of the game isn’t to discourage your child to pursue a different, higher-paying career—but to find an option that won’t bury them in debt. Your child has gifts, interests, and abilities. It’s important for them to find a career that allows them to excel where they naturally perform well.

Lake Road Advisors, a Fee-Only, independent financial planning firm with offices in Corning, NY, Ithaca, NY and Portland, OR works with clients virtually all across the country. Paul Sydlansky, the founder of Lake Road Advisors LLC, has worked in the financial services industry for 20+ years. Prior to founding Lake Road Advisors, Paul worked at Morgan Stanley in Manhattan for 13 years. While at Morgan Stanley, Paul was a senior-level manager within the Institutional Equities Department. In 2018 he was named to Investopedia’s Top 100 Financial Advisors list. Paul received a Bachelor’s degree in Economics from Marist College and holds an MBA from New York University Leonard N. Stern School of Business. Paul is a CERTIFIED FINANCIAL PLANNER™ and a member of the National Association of Personal Financial Advisors (NAPFA) and the XY Planning Network (XYPN).