Financial literacy has gained increasing importance in high schools as educators recognize the value of equipping students with the knowledge needed to make informed economic decisions. When it comes to choosing post-high school pathways, students often lack the financial acumen to fully understand the implications of their choices. Given the rising costs of education, the variability in return on investment (ROI), and the long-term consequences of student debt, it is crucial that students study these financial aspects—perhaps in a dedicated financial literacy course—before committing to any post-secondary option. This article is a follow-up to an previous article, Rethinking the Path: Alternatives to College for High School Graduates and is intended to dive a little deeper into some themes previously highlighted.
The Cost Factor: More Than Just Tuition
The financial burden associated with higher education goes far beyond tuition fees. According to a report by Cengage Group, nearly half of students cite the overall cost, including tuition, course materials, and living expenses, as the biggest barrier to continuing their education (Cengage Group, 2021). This highlights the importance of understanding the total cost of attendance, which often includes hidden expenses like transportation, housing, and additional fees. Furthermore, nearly 20% of current students have no clear plan on how to finance their next semester, which underscores a lack of financial planning and awareness among students (Cengage Group, 2021). By incorporating financial literacy courses that focus on understanding these costs, students can better prepare themselves to make sound decisions.
Evaluating ROI: Is College Always Worth It?
One of the primary reasons to study the financial implications of post-high school options is to evaluate the return on investment (ROI) of different educational paths. While higher education often correlates with increased earnings over a lifetime, the costs associated with obtaining a degree have skyrocketed. According to Chris Muller (2024), the average tuition for a four-year public university has significantly increased, with private universities charging even higher rates. The average total student debt reached $1.6 trillion in the United States as of early 2024, and this debt significantly affects graduates’ ability to make key financial moves, such as buying a home or saving for retirement (Muller, 2024).
Despite these costs, multiple studies continue to affirm that a college degree is generally a worthwhile investment. A recent report in Forbes highlights data from the Economic Policy Institute, which shows that young college graduates have experienced a rapid economic recovery from the COVID-19 pandemic. The employment rate for young graduates has remained consistently above pre-pandemic levels, and wage growth for this group has outpaced inflation (Newton, 2024). Additionally, the New York Federal Reserve found that the average ROI on a bachelor’s degree is approximately 14%, which exceeds many traditional investments (Muller, 2024). However, the value of a college degree is not uniform; it varies depending on factors like field of study, institution type, and geographic location. This underscores the importance of understanding both the costs and potential benefits of higher education.
Understanding the Economics of Higher Education: A Global Perspective
The financial implications of higher education choices extend beyond U.S. borders. A recent article from The Times emphasized that understanding the economics of higher education is crucial for all prospective college-goers (Dunne, 2024). In cities like Dublin, the average monthly living costs for students can exceed €1,600, even when tuition is affordable (Dunne, 2024). This illustrates the need for students to be aware of the broader financial implications of their choices, including not only tuition but also living expenses, transportation, and other costs that can quickly add up.
Why Financial Literacy Should Be a Core Part of High School Education
Given these complexities, it is essential that all students receive instruction on understanding the economics of post-high school decisions before completing high school. This education could help them make more informed decisions and plan appropriately for their futures. A dedicated financial literacy course would teach students how to compare different educational paths, understand the total cost of attendance, calculate potential ROI, and make informed decisions about financing their education. It would also help students understand the long-term consequences of taking on student debt and explore alternative educational routes, such as community colleges, vocational schools, or apprenticeships.
Leveraging Tools for Financial Planning: The College Viability App
To further assist in making informed decisions, parents and students can use tools like Gary Stocker’s College Viability App, available at https://collegeviability.com/. This app helps users assess the financial health and sustainability of colleges and universities by providing insights into key financial indicators like enrollment trends, revenue sources, and debt levels. It offers valuable data that can guide families in selecting institutions that are both financially stable and aligned with their educational goals. In addition to the College Viability App, there is a wealth of data (another plug for an earlier article – Data-Informed Leadership in Higher Education: Challenges, Solutions, and Key Data Sources) out there that educate students and parents about the cost and value of their post-high school options. Although they may be difficult to navigate, there are people out there (and apps like College Viability) who can help navigate the sea of information and data.
Exploring Alternatives: The Role of Free Community College and Dual Enrollment
Dual enrollment, where high school students take college courses for credit, has become a popular and cost-effective way to begin post-secondary education. According to the National Student Clearinghouse Research Center, high school students now account for nearly one out of every five community college students in the U.S. (Barshay, 2023). These courses can provide a head start by earning college credits before graduating from high school, thereby reducing overall college costs and time to completion. Programs like free community college further provide less expensive routes to higher education, allowing students to minimize debt while earning a degree or certification (Benavides-Colón, 2024). However, students need to understand both the benefits and limitations of these programs, such as potential transfer challenges and differences in course quality.
A Plea for Colleges and Universities: Modernize Policies to Support All Students
Please excuse me while I get on my academic administrator soap box. Given the growing number of students entering college with dual enrollment, AP, or IB credits, as well as adult learners returning to complete unfinished degrees (more than 40,000,0000 and counting), it is crucial for colleges and universities to review and update their policies and curricula to better accommodate these diverse student populations. Many existing policies create unnecessary barriers that prevent these students from thriving. Now is the time for institutions to modernize their transfer credit policies, streamline student support structures, and develop flexible curriculum paths that recognize and accommodate the unique experiences and needs of these students.
One significant barrier that many students face is the limited acceptance and use of transfer credits. Too often, credits earned through dual enrollment, AP, IB, or previous college coursework are not fully utilized, with many being classified as “elective credits” that do not count toward a student’s major or degree requirements. This practice forces students to retake similar courses, wasting time and financial resources. To better serve these students, institutions should aim to maximize the acceptance of transfer credits, applying them directly toward degree requirements whenever possible, and minimizing or eliminating the number of credits that are relegated to electives without a clear path to fulfilling graduation requirements.
Additionally, universities need to offer more flexible student support services that are accessible to working students, such as those provided in the evenings or online. Many adult learners and non-traditional students balance work, family responsibilities, and education, making it essential to provide services like academic advising, tutoring, career counseling, and mental health support outside of the traditional 9-to-5 schedule. Without these accommodations, many students struggle to access the resources they need to succeed.
Another barrier for adult and non-traditional students is the lack of programs that incorporate competency-based education (CBE) and credit for prior learning. Competency-based education allows students to progress at their own pace by demonstrating mastery of a subject, rather than adhering to a rigid course schedule. Similarly, offering credit for prior learning acknowledges the knowledge and skills that students have gained through work experience, military service, or other non-traditional pathways. By embracing these approaches, institutions can help students accelerate their time to degree completion and reduce overall costs.
Specific policies that are particularly unfriendly to adult learners include rigid residency requirements, which often mandate that students complete a certain number of credits on campus, regardless of how many credits they have already earned elsewhere. These requirements can be especially burdensome for students who have already completed significant coursework at other institutions or have obtained substantial professional experience that could qualify for credit. Similarly, policies that do not recognize or give credit for prior learning or work experience fail to account for the diverse backgrounds and competencies that adult students bring to the table.
To better serve the growing and diverse student body, institutions should adopt more flexible transfer credit policies, offer evening and online support services, and integrate competency-based education and credit for prior learning into their curricula. By breaking down these barriers, colleges and universities can create a more inclusive and supportive environment that enables all students to achieve their educational goals.
Timing and Usage: Critical Factors in Maximizing the Value of a Degree
While a college degree generally offers strong financial returns, the timing of when a student chooses to pursue that degree can be crucial. Starting college immediately after high school may not always be the best financial or personal decision for every student. Many students could benefit from taking a gap year (or even multiple years), jumping into the workforce, or exploring other educational opportunities, such as vocational training or certification programs. This time can provide valuable life experience, help students clarify their goals, and potentially allow them to save money for future education expenses.
By delaying college, students may also have the opportunity to explore career paths, gain work experience, and make more informed decisions about their field of study or educational institution. This approach can lead to more deliberate and financially sound choices, ultimately increasing the likelihood that their investment in a degree will yield a positive return. Understanding that college is just one of many pathways—and that there is no “one-size-fits-all” timeline—can empower students to choose the right moment to invest in their education.
Encouraging students to consider the timing of their educational pursuits, rather than feeling pressured to enroll in college immediately after high school, can help them make smarter financial decisions that better align with their personal and career aspirations.
Conclusion: Financial Literacy as a Critical Skill for the Future
Given the significant financial implications of post-high school decisions, it is clear that financial literacy should play a critical role in preparing students for their futures. By understanding the costs, potential ROI, and alternative educational pathways, students can make more informed decisions that align with their financial realities and career aspirations. Incorporating financial literacy into high school curricula, along with tools like the College Viability App, can empower students to navigate the complex landscape of post-secondary education and ensure their investments in education pay off in the long run.
References
Barshay, J. (2023). PROOF POINTS: High schoolers account for nearly 1 out of every 5 community college students. The Hechinger Report.
Benavides-Colón, A. (2024). Free community college just keeps growing. Will it pay off? The Chronicle of Higher Education.
Cengage Group. (2021). Cost is the biggest barrier to post-secondary education; ‘Free college’ would have the biggest impact on students completing/returning to school, according to Cengage Group report.
Dunne, E. (2024). All college-goers should study the economics of higher education. The Times.
Henry, B. (2024). The Rising Costs Of College. National Society of High School Scholars.
Muller, C. (2024). The evolving value of higher education: Costs, debt, and career paths. Forbes.
Newton, D. (2024). There’s even more evidence that a college degree is worth it. Forbes.