True Price of Heavy College Loans Is Higher Than You Think

For those of you trying to calculate whether or not you -- or your children or grandchildren -- should attend college, the answer is becoming increasingly clear: You don't have much of a choice if future earning power is a major part of your equation.

According to a survey by the Pew Research Center and released in February, the cost of skipping college is too high to ignore. Among millennials ages 25 to 32, those with a bachelor's degree or more earned a median of $45,500 in 2012 if they worked full-time. By comparison, members of the same age group with only a high school diploma earned a median of $28,000. Furthermore, high school graduates were more than three times more likely to be unemployed or living in poverty than four-year-college graduates.

Data from the National Center for Education Statistics shows that enrollment in postsecondary institutions grew from a modest 11 percent increase between 1991 and 2001 to a hefty 32 percent increase over the following decade. With a college education practically becoming a prerequisite for decent pay and the possibility of corporate advancement, we've witnessed a dramatic shift in Americans' approach to education over an arguably short time period.

But this push for higher education has also come at a steep price.

A Textbook Conundrum

A recent Gallup survey examined the correlation between student debt and overall graduate well-being among more than 11,000 former college students who graduated between 1990 and 2014, through a five-element well-being analysis called the Gallup-Purdue Index. The survey measured the quality of college graduates' lives in five elements -- purpose, social, financial, community and physical -- and allowed researchers to study what role student loans played on graduates' overall well-being. The findings were surprising.

%VIRTUAL-WSSCourseInline-899%With the exception of the "social" element, which measured graduates' ability to have "supportive relationships and love" in their life, those students who graduated with no student debt were considered to be "thriving" in the four remaining categories in a much higher percentage than those graduates who took on $50,000 or more in student debt.

The largest differences that Gallup noted were in the "financial" and "physical" elements, which examined graduates' ability to manage their economic life (i.e., pay their bills and reduce stress) and stay healthy and energetic. Of graduates who had taken on no student debt, 40 percent were considered to be "thriving" financially, with an additional 34 percent thriving physically. Comparatively, just 25 percent of graduates who'd taken on $50,000 or more in student loans were found to be thriving financially, while a mere 24 percent of highly indebted grads were considered to be thriving physically.

Starting a Family Can Be Delayed, Too

A survey conducted by American Student Assistance in 2013 came to a similar conclusion, that "student loans were created to be an engine for social mobility, but they are, in fact, limiting young people's ability to achieve financial success." The nonprofit notes that a majority of respondents in its study delayed saving for retirement, buying a car or buying a home because of their student loans, while 43 percent delayed starting a family because of it.

In other words, a college education may be practically a prerequisite for success, but going too deeply into debt while obtaining your education might make you miserable over the long run. This presents quite the conundrum.

But as Gallup also reminds us in its study, other factors can influence these results, including socioeconomic status, the type of school attended, the chosen field of study and a family's household income, for example.

All Hope Is Not Lost

Thankfully, there's a middle ground that could keep student loan debt down and still give graduates an excellent chance to find a prosperous career.

Based on research by the National Bureau of Economic Research that spanned more than two decades and covered nearly 30,000 students, the long-term earnings benefits of going to a well-renowned four-year university compared to a four-year state college wound up being negligible. Put another way, it often doesn't matter where you go to college, just as long as you do go to college. (Although, keep in mind there were caveats to the nonprofit's research, including the fact that its study only factored in 27 universities, which is hardly representative of the nation.)

To illustrate this point, let's examine two same-state, broad-curriculum colleges: the private University of Richmond and the public University of Virginia. Student could obtain a four-year undergraduate degree at either institution -- with a marked difference in the cost.

A four-year degree at the University of Richmond is going to run an undergraduate an estimated $217,600. By comparison, an in-state four-year degree at the University of Virginia would be approximately $94,300. That's why, according to PayScale's 2014 College Return on Investment Report, which ranked institutions based on the total cost to obtain an undergraduate degree and alumni's net earnings over a 20-year period, University of Virginia graduates saw a better net return on investment than alumni from Richmond.

Your Skills and Your Major

The truth is that while the college you go to may get you an interview, it's the job skills you can bring to a company and not your past academic performance that seemingly matters more to employers today.

A final point worth mentioning is that what you major in can be equally important when it comes to paying off student loans quickly. PayScale's analysis of 130 majors in its 2013-2014 College Salary Report lists 12 majors that average $99,300 by mid-career. Conversely, 20 majors will earn $55,500 or less by mid-career, which could make it difficult for this group to pay back substantial student loan debt.

You can follow Motley Fool contributor Sean Williams on Twitter @TMFUltraLong.