More than 70% of college graduates in the class of 2012 had student loan debt, according to a recent analysis by the Wall Street Journal, and the average debt burden is $US29,400 a student. Some grads owe significantly more, particularly if they attended out-of-state or private school.
Meanwhile, a Gallup study shows that four in 10 college grads end up working jobs that don’t even require a college degree.
With so much money and earning potential on the line, the choice between public and private college — a battle between cost, prestige, and academic rigour — may not be clear cut.
Here, we take a look at the pros and cons of both:
Tuition and fees for a public four-year institution cost $US20,823 for the 2011-12 school year — about $US8,000 less than private institutions.
Hands down, public universities are the better buy by definition alone. Because their funding is subsidized by the state, public schools can pass on those savings to students. Private institutions rely almost entirely on tuition and the generosity of donors, which is why students wind up paying more. However, since private colleges often have good financial aid offerings, it is possible for some students to pay less than they would elsewhere.
STUDENT DEBT LOAD
Tuition is rising at both public and private universities alike, which means more students will be forced to take on student debt to pay their way.
For the 2010-11 school year, 57% of public four-year college students graduated with student loan debt, according to the College Board — an average of $23,800. Private students were worse off, with about two-thirds of alumnus leaving school nearly $US30,000 in debt.
Even if you’ve never set foot on a private campus, just the word alone — private — lends an allure of exclusivity and prestige. The top 20 schools on U.S. News & World Report’s annual Best College rankings consistently go to private institutions for a reason. Class sizes are smaller, admission is selective, individual student attention is valued, and the curriculum is tough enough to attract top talent from around the world.
Still, it’s a myth that all public universities offer subpar education. There are public universities with enough prestige to rival private institutions, and they arguably boast an even higher roster of successful alumni based on the attractiveness of their ubiquity and low cost alone.
Thanks to their affordability and proximity to home for most students, state schools offer a healthy social scene. You can’t argue with the Princeton Review. Public schools are where the party’s at.
But if you’re interested in mingling with students from outside your home state, pursuing a degree at private institutions may be appealing. They often attract a wider variety of students from around the country (and the world). While the party scene may not be as hot as public schools, you’ll get exposure to people who aren’t all from the same geographic background.
While not all private colleges are equal, those that have the chance to attend a super elite, name-brand school may be better off. According to a 2012 analysis by financial site NerdWallet, an Ivy League education is more likely to a catch recruiter’s eye. Additionally, private school grads earn about 20% more than public school grads.
Still, there’s no doubt that college graduates — regardless of their alma mater — fare better in the job world. For the first three months of 2013, the unemployment rate for consumers holding a bachelor’s degree was between 3.7% and 4.1%. High school graduates saw unemployment rates twice as high.
Public is the way to go for most undergraduates.
Public or private, your chances of making it in the job world are higher the minute you graduate from college. But whether you’re willing to shell out tens of thousands more dollars to pay for the prestige of a private four-year degree is the question you’ll have to answer. For undergrads, there isn’t much a private college can offer in the way of curriculum and social life that a public institution can’t. Private college might offer a slight edge in small class sizes and future earnings, but the benefit doesn’t seem to outweigh the price tag of going public.
Our advice: If your state schools offer the area of study and the social vibe you’re looking for, do your future self a favour and cut costs now. Pursue a graduate degree at a private university, where you’ll benefit more from the academic rigour and specialised areas of study.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.