Taking an extra year or two to complete a bachelor’s degree is common these days, but that additional time could cost a student nearly $300,000, according to a new study by NerdWallet.
NerdWallet examined how much one or two “victory laps,” as extra years are sometimes jokingly called, would cost students by factoring in:
Real costs: Out-of-pocket tuition plus interest paid on student loans over a 10-year standard repayment period.
Opportunity costs: Lost entry-level income and forgone retirement savings.
Here are the results:
- One extra year could cost students $147,026 at a public college or $155,244 at a private college in combined real and opportunity costs. Two extra years could cost students $282,691 at a public college or $298,995 at a private college in combined real and opportunity costs.
- The average real cost to stay in school one additional year — tuition and interest on loans — would be $18,598 at public colleges and $26,815 at private colleges. Real costs to stay in school two additional years would be $37,456 at public colleges and $53,760 at private colleges.
- Students who complete school in five years would miss out on $82,074 in retirement savings compounded over 45 years, based on directing 7.1% of their income (the average contribution rate for people under 25, according to the Bureau of Labor Statistics) with standard 7% annual returns. Students who graduate in six years would miss out on $150,882 in compounded savings.
- Taking one additional year to earn a bachelor’s degree would result in $46,355 in missed income, while taking two additional years would result in $94,353 in missed income.
Among bachelor’s degree seekers who began school in 2008, only 40% graduated in four years, while 60% completed a degree in six years, according to the National Center for Education Statistics. To avoid accruing more debt to pay off and missing out on income and savings opportunities, experts say there are several key things you can do to stay on track and graduate in four years.
- Define your career path early. It’s important for college applicants to settle on a potential career trajectory early on — in high school and even earlier if possible, says Lisa Suzuki, director of Counseling@NYU, an online master’s degree program for counseling and guidance, and an associate professor of applied psychology at NYU Steinhardt.
“The students who are able to finish in four years really have a clear idea of what they want to do and think beyond the four years,” she says.
Suzuki also says that increased advisement in high school can help students commit to one area of study, network within that area and think more strategically to reach professional goals.
- Have a degree map. Know what it takes to graduate in four years and build a schedule around those courses. If you’re unsure about your major, take general education courses to build up your credits, suggests Richard D. Sluder, vice provost for student success at Middle Tennessee State University in Murfreesboro, Tennessee.
- Aim for 15 credit hours each semester. To qualify for most financial aid, you’ll need to enroll full time, which means at least 12 credit hours each semester. But if you take only 12 credit hours, you’ll automatically be on the five-year track. To graduate in four years, you’ll need to take 15 credit hours each semester.
- Enroll in courses on time. Some students are late to register for courses and end up missing out on prerequisites or crucial classes they need for a degree. This can delay their graduation by a semester or more, especially if certain courses are offered only once per year.
- Look for transfer-friendly colleges. If you plan to transfer, be aware of how your new school treats transfer credits. The National Center for Education Statistics found that students who move to private for-profit and private nonprofit schools are able to transfer fewer credits than students who move to public colleges and universities.
When you’re mapping out your undergraduate career, consider how much additional years in school could cost you.
Article originally posted by Anna Helhoski of NerdWallet (http://www.usatoday.com/story/money/personalfinance/2016/06/21/2-extra-years-college-could-cost-you-almost-300000/86148832/)