Are Online College Degrees A Good Investment?

A recent New York Times article reported on the growing number of students taking out loans to pay for their college education. Not only are more students taking out student loans, but these students are borrowing more many than every before. For the first time, student loan debt outpaces credit card debt, to a tune of nearly a trillion dollars a year. That’s a lot of students going into a lot of debt to get a college degree!

More and more of these students are earning their degrees through online and distance education programs. A 2010 study by the Sloan Consortium shows that in 2009 there were over 5.6 million students taking online courses, or nearly thirty percent of all college and university students. In fact, the growth in online student enrollments outpaced enrollment in traditional on-campus degree programs by nearly ten to one.

But are all of those students taking out loans to finance their online college degree programs making a good decision? Is an online college degree a good investment?

Answering this question correctly obviously depends on prior questions about the particular student, the amount being borrowed, and the online degree program. Students who are unable to pay back their loans often end up ruining their credit, making it more difficult to buy a house, rent an apartment, even find employment. Sometimes the inability to pay is solely the students fault, but often the colleges with the highest loan default rates are for-profit schools guilty of overselling their product or pressuring students into taking out more loans than is either necessary or wise. Regardless of who’s to blame, taking out loans to invest in something that won’t give you enough of a return to pay them off is always a bad investment.

But for the vast majority of online college graduates, the superior job prospects and earnings afforded by their degree makes paying off their loans entirely manageable and worthwhile. A recent study by College Board reveals that in most cases an online degree from a reputable, accredited online college or university is an excellent investment. Individuals with college degrees not only make considerably higher incomes over the course of their lives than those without a college degree, but their unemployment rate is substantially lower and their job satisfaction significantly higher. According to the study’s authors, “Compared to a high school graduate, the typical four-year college graduate who enrolled at age 18 has earned enough by age 33 to compensate for being out of the labor force for four years, and for borrowing the full amount required to pay tuition and fees without any grant assistance.” Given that most students pursuing their college degree online are able to remain in the workforce while doing so, the time it takes to recover lost income and pay off student loans will typically be even shorter.

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