How to Go to College Without Going Broke (and Yes, You Still Should)

Between rising tuition and a stagnant job market, some pundits have argued that higher education isn't worth the money anymore. But surveys show that college graduates on average earn more than twice as much as workers with only a high school diploma. So how can you get a college education without spending the rest of your life in debt?

For the 2009-2010 school year, the average cost of tuition and fees at a four-year college or university was $12,467 -- 60% more than it was 10 years ago, and almost three times as much as it was in the early 1990s. Factor in the cost of room and board -- which has risen more slowly -- and total average college costs are still about 60% higher than they were in 1991.

To cover these hefty bills, the average undergrad takes out loans, and graduates with approximately $25,250 in student debt. As an ever-higher percentage of students take on loans, the problem has reached epic proportions: In 2010, the total amount of student loans outstanding surpassed the total amount of credit card debt for the first time. This year, it is on track to cross the $1 trillion barrier.

Worth the Money?

So is a college degree is actually worth the price? James Altucher, a finance writer and hedge fund analyst, has made headlines with his claim that people of college age would be better served by taking those four years to start businesses, travel the world, and generally discover themselves. Peter Thiel, co-founder of PayPal, agrees, and has put a bit of his money where his mouth is: The Thiel Fellowship is giving a small number of young people grants of up to $100,000 that they will use to start businesses. The only catch is that they have to agree to stay out of college for two years.

Thiel and Altucher aside, however, the truth is that, for most young people, a college degree has become more necessary -- and valuable -- than ever. According to a recent Pew survey, the average lifetime earnings for a college graduate are $1.42 million, almost double the $770,000 of a worker with only a high school diploma. Even given the cost of tuition and the loss of earnings during one's college years -- which Pew estimates at $100,000 overall -- a bachelor's degree is still very profitable.

Saving on Tuition

In the short run, college is extremely expensive, but there are many ways to cut the costs. One smart move is to start off at a community college. Since many universities accept up to 60 units of transfer credits, it's possible to take your freshman and sophomore years at a two-year school, then finish up and get your sheepskin at a more expensive and prestigious institution.

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The numbers are pretty clear: Based on the 2009-2010 figures, two years of tuition and fees at a four-year college average $24,934, plus an added $17,038 for room and board. At a community college, those students can expect to pay an average of $5,426 for the same two years. Additionally, given that most community college students commute from home, room and board costs may be negligible. Overall savings: between $19,508 and $36,546.

As for the junior and senior years, prices vary greatly depending upon the school, but public colleges and universities tend to be a wise bet. Tuitions at state schools are rising -- they went up more than 8% over the last year -- but are still far cheaper than private institutions. The tuition and fees at a four-year public school averaged $6,695, compared to $25,552 at a nonprofit private four-year school. At those rates, students who opt for a public university would save $37,714 over two years.

Saving After Graduation

Saving on tuition won't help all that much if your degree doesn't get you a job. This isn't much of a problem for engineering majors: Seven of the 10 most lucrative majors are in engineering, and the other three -- physics, computer science, and applied mathematics -- are also highly math-dependent. Students with degrees in these majors can look forward to average starting salaries of $63,070.

Even if you're more inclined to the liberal arts, all hope is not lost: Graduates in less in-demand majors can still expect to vastly out-earn workers with only a high school diploma. English majors, for example, make an average of $1.92 million over a 40-year work life, as do philosophy majors. What's more, according to the Princeton Review, majors like psychology, business administration and communications can prepare students for a variety of careers in a host of industries.

Another thing that can give students a step up is a solid career placement program. While many of the top placement offices are at private schools, some public schools also have great programs. According to the Princeton Review, the University of Florida, Penn State, UT-Austin, Clemson, and Missouri S&T are particularly outstanding.

Internships can also be a big help: A 2010 survey by the National Association of Colleges and Employers revealed that students who had completed at least one internship while in college were almost 38% more likely to get a job offer after graduation. They were also likely to be paid more: The average starting salary of graduates with at least one internship was 31% higher than those who had never undertaken one. In other words, when it comes to getting a job after college, the best move might be to get a job while in college.

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.