5 States Where A Bachelor's Degree Pays Off The Most

Student Loan HeroStudent Loan Hero

When you’re looking at colleges, it’s easy to get sticker shock. The average tuition at a public university is $9,410 a year for in-state students, while a year at a private school will cost you a whopping $32,410, reported the College Board.

With such high prices for school, it can make you second guess whether a bachelor’s degree is really worth it.

However, according to the results of a new survey by Student Loan Hero, a degree is worthwhile when you look at the overall return on investment (ROI). But just how worthwhile it is depends not just on your major, but on your location.

5 States Where College Really Pays Off

To identify the states where a bachelor’s degree is most valuable, our study looked at the ROI of a degree five years after graduation.

We found that despite rising prices, college is still an excellent investment for your future. After 3.7 years, college graduates break even on the cost of college and have a salary that is $19,400 larger than high school graduates, on average.

However, the value of your degree is highly dependent on where you live. Below are the top five states where going to college has a strong ROI.

1. Wyoming

In Wyoming, high school graduates make an average salary of $31,936 per year; those with a bachelor’s degree earn over $13,000 more, with a mean salary of $45,519.

On top of those higher wages, the cost of going to college in Wyoming is more affordable than it is in other states. The average cost for four years at a Wyoming college is $22,422, the lowest in the country.

2. New Mexico

According to the National Center for Education Statistics, the nationwide median earnings for people with only a high school diploma is $30,500. But in New Mexico, the average salary for those without a college degree is well below that number; high school graduates make just $25,747.

If you have a bachelor’s degree, you’ll likely make much more because of it. College graduates earn an average salary of $43,257 per year, a difference of over $17,000. Over time, that means college graduates will make hundreds of thousands more than those with a high school diploma.

3. Arkansas

If you live in Arkansas, going to college could be one of the wisest decisions you make. Having a bachelor’s degree increases your income by 71%. People with a high school diploma make $25,767, while bachelor’s degree recipients earn $44,101.

A four-year degree in Arkansas usually costs $41,629 in total, and you’ll break even on your investment within 2.3 years.

4. Texas

If you’re looking for higher wages, Texas might be a smart choice for you.

While the Social Security Administration reported the national average salary in 2015 was $48,093, college graduates can earn even more. The average starting salary for those with a bachelor’s degree is $51,701.

That income is over $24,000 more than what workers with a high school diploma earn; their average salary is just $27,232.

5. Georgia

The difference between a high school graduate’s salary and that of a college graduate in Georgia is staggering. Those with a bachelor’s degree earn an average salary of $49,989, which is 90% more than the salary of those with a high school diploma.

Research Findings

Surprisingly, the states with the highest ROI were mostly Southern or rural states. That’s likely due to the lower cost of living.

For example, let’s say you lived in Vermont, which has the lowest ROI for attending college in the country. If you moved to Georgia, you could accept a lower salary while maintaining your current standard of living. The cost of living in Georgia is 10.9% lower than that of Vermont, according to estimates using Salary.com's cost-of-living calculator. With cheaper tuition and lower cost of living, Georgia’s ROI is much higher.

While some areas had a higher difference in salary between workers with a bachelor’s degree and those with a high school diploma, the cost of education was more expensive, too. The increased cost of education hurt the ROI for the state.

For example, Rhode Island workers who graduated from college earn over $20,000 more than those with just a high school diploma. While that increase is significant, the average cost of tuition within the state is $139,248, over six times the cost of tuition in states like Wyoming.

Even with a bachelor’s degree, it would take over six years to break even on the cost of going to a university, which gives Rhode Island a negative ROI.

What This Study Means For You

The average 2016 graduate has $37,172 in loans. Many people will take years, if not decades, to pay them off. That debt can keep you from achieving your goals, such as starting a family or getting married. To avoid that burden, doing research before ever going to school is essential.

If you plan to go to college, it’s important to look at the cost of attendance relative to the salary you’ll earn and how much more you’ll likely make if you earn a degree.

If you’re able to relocate to another state where college is cheaper and the cost of living is less, too, you can get more ROI for your money. You’ll take on fewer loans and earn a higher salary, helping you get out of debt faster. Just keep in mind that if you plan to go to a state school, you’ll pay more as an out-of-state attendee than residents who live there.

For those who already graduated and are out in the workforce, where you live can have a large effect on your finances and cost of living. If you have student loan debt and live and work in a low ROI state such as Vermont or Rhode Island, there are still ways to improve your situation:

  • Consider moving: Disrupting your career and family can be difficult, but moving to another state with a lower cost of living and a higher salary for college graduates can give you more disposable income.
  • Compare loan repayment plans: If you have federal student loans, switching to an income-driven repayment (IDR) plan can free up more money in your budget. Under an IDR plan, the government extends your repayment term and caps your payments at a percentage of your discretionary income, giving you more breathing room.
  • Refinance: Another option is to work with a private lender to refinance your loans. You can extend your repayment term, which reduces your monthly bill. That strategy can make the payments more manageable even on an entry-level salary.

Choosing the right college for you can help you succeed in your career and life over the long-term.
