8/12/2019 5en Winter 2014

1/4ALSO INSIDE: Avoiding the black hole of noncompletion

N AV I G AT O R

Higher

EducationAre you ready forthe next frontier?

Inside: Constellations to guide

your decision Preparing for your

deep space voyage

WINTER 2014

FEDERAL RESERVE BANK OF RICHMOND

8/12/2019 5en Winter 2014

2/4

Unemployment Rate

11.0%

$472

7.5% 7.0% 5.4% 4.0%

Data Source: Bureau of Labor Statistics, U.S. Department of Labor, Earnings and Unemployment Rates by Educational Attainment, 2013 (accessed April 2014).

No highschool

diploma

Highschool

diplomaSome college,

no degreeAssociates

degreeBachelors

degree

Weekly Median Earnings

$651$727

$777 $1,108

THREE, TWO, ONE, IGNITION AND LIFTOFF:

LAUNCH INTO THE HIGHER EDUCATION DECISION

FLIGHT PATH:

CHARTING YOUR EDUCATION OPTIONS Before you lift off, here are a few things to consider when choosing your ight path. A higher degreetypically results in higher earnings and a lower likelihood of unemployment. However, it alsorequires more time to complete and is often more expensive.

Put on your space suit as we navigate the next frontier. In this space exploringedition of 5E Navigator, our mission is to analyze a major nancial decision on theorder of the Big Bang what path to pursue after high school. Inside, youll ndinformation on education options and their potential returns, and tips on howto prepare for the path you choose.

Begin by charting your Flight Path to enter orbit around several educationoptions so that you can study their costs and benets. Be careful to avoidany Asteroid Fields that can knock you off course. Use the Constellations toadjust your heading. Fire your thrusters as you pass the Black Hole ofNoncompletion , which can leave you with much of the cost of your journey but few of the benets. Then, dock with the Space Station to restock your supplies and make nal preparations for yourvoyage into deep space. This is mission control, signing off.

8/12/2019 5en Winter 2014

3/4

8/12/2019 5en Winter 2014

4/4

SPACE STATION:

PREPARATION FOR THE VOYAGE ONWARD

1. If youre in high school, meet withyour guidance counselor as earlyas possible to set a plan for your

future.

2. Work to improve your grades asmuch as possible. Your GPA is astrong indicator of how well youreprepared for future education.

3. Consider taking some advancedcourses in high school to get aglimpse of what college-levelcoursework entails.

4. If youre considering working tohelp pay for your education, weighthe costs and benets of workingwhile in school against nancingyour education.

5. If youre unsure if college is right foryou and want more time to exploreyour interests, consider community

college as a relatively low costoption.

THE BLACK HOLE OF NONCOMPLETION:

CAUSES AND CONSEQUENCESOF DROPPING OUT

Preparedness for higher education is critical to success in school and completionof a degree. Dock your ship at the space station and load up supplies to increaseyour level of preparedness for your voyage into deep space. MISSION

5E Navigator provides reliableinformation and tools to helppeople make informed choicesabout important personal nancialdecisions. The information in 5ENavigator is collected and developedby the Economic Education teamat the Federal Reserve Bank ofRichmond to serve as a topicalnancial education resource fornancial literacy practitioners,educators and the public. The publication is publishedonline twice a year.

www.richmondfed.org/publications

Feedback? Mail to:investinwhatsnext@rich.frb.org

The payoffs from higher education depend on nishing your degree. Withoutnishing, you could get sucked into the black hole of noncompletion. A recent studyshowed that over a third of students pursuing a bachelors degree failed to get anydegree within six years of high school graduation. That number climbs to more than

half for students pursuing an associates degree.

Completing some college provides only a slight increase in earning potentialcompared to high school graduates. Moreover, recent noncompleters who havestudent loans drop out of school with average debt burdens of more than $10,000.Academic unpreparedness, the competing demands of school, work and family,and cost are commonly cited reasons for noncompletion.

NEXT ISSUE:Renting versus buying a home

For more preparation tips, visitstudentaid.gov/prepare-for-college .

ORBITING SATELLITES:THE FEDERAL RESERVEAND HIGHER EDUCATION

Higher education is an option that canprovide greater job security and earningpotential to those who complete it.However, earning a degree does notguarantee these returns and enrolling in

college carries the risk of noncompletio The benets of postsecondary educationdepend on a number of factors includin job market conditions and personalskills. Through its nancial educationefforts, the Fed provides information thenables individuals to make informedchoices about major nancial decisionssuch as pursuing higher education.

For more information, visit:

www.majornancialdecisions.orgwww.richmondfed.org/educationwww.federalreserveeducation.org

Data Source : Avery, Christopher, and Sarah Turner. Student Loans: Do College Students Borrow TooMuch Or Not Enough? Journal of Economic Perspectives , Winter 2012, vol. 26, no. 1, pp. 165-192.

http://www.richmondfed.org/publicationshttps://studentaid.ed.gov/prepare-for-collegehttps://studentaid.ed.gov/prepare-for-collegehttp://www.richmondfed.org/publications