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College is a dream for many. Unfortunately, ever escalating costs make college feel like the impossible dream. In 2019, student loans exceeded both credit card debt and car loans. At nearly $1.6 trillion, economists believe loan debt will reach $2 trillion by 2021 and $3 trillion before 2030.

Planning your educational and financial future will require more than putting together numbers. A good idea may be a financial wellness course. It’s a solid place not just for planning college but developing a sound financial future. “The process of borrowing money to pay for college is complicated and only 16% of millennials are considered to be financially literate. ” said Ken Ruggiero, Chief Executive Officer at Ascent Funding. With this level of misinformation in the college education system, students must take control over their finances and empower themselves with knowledge to make the right financial decisions for their future.

If you’re looking to continue your education, consider your ROI. This article will cover how to calculate the ROI of a college degree.

Putting Together Your ROI

A college degree is worth the investment. What you need are smart financial decisions. Put together the rate of return, or ROI, on what you’ll spend to get what you want out of a continued education.

ROIs are metrics that measure the potential gain from an investment. The ratio compares gain and loss against the investment relative to the cost. Get ROI by subtracting investment (all college expenses) from the investment’s final value (potential financial future), dividing that sum (net return) by original investment cost and multiplying that number by 100. You can use an ROI calculator to work the equation.

Interpreting ROI

If final figures are positive, expect your return on college investment to exceed costs. A negative number means expected financial stability after college will not meet expectations. This doesn’t eliminate college altogether. You may have to consider different institutions to get a ROI that works for you.

Specific Steps: Sample of ROI & College

Net Price

The net price is the cost of full attendance at the campus. Room and board, books, tuition, travel expenses minus scholarships and other financial help. Account for inflation. What a freshman pays won’t necessarily be what you pay every year. Likely not even every semester. According to Urban Institute, in 2015-2016, college costs on average ranged between $625 and $5,000 per year. According to FinAid.org, assume costs will go up 1%-2% each year.

Potential Debt

You’ll need your financial aid package or an idea of it. Deduct any loans, grants and scholarships you have or expect from total costs. Consider what you can contribute to manage college (savings, part-time employment). The answer helps you estimate what kind of debt is on the horizon.

Earning Potential & Missed Income

What you hope to earn is key to college ROI calculation. You can’t make smart choices about college and financial ramification without understanding salary potential. If expected annual earnings exceed tuition and loans (be sure to know how lenders want to be paid and take that calculation into expected salaries and expenses). If the salary outpaces debt, you’re on the right track.

If you’re looking to change careers and go back to school, factor into the ROI the salary you’re going to lose. If you forgo an $80,000 salary to go back to college for four years, you’ve essentially lost the opportunity to earn $320,000.

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