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College Costs Far Outpace Wages Many Students Could Earn
Working can help cover college costs, but avoiding student loan debt with a part-time job is nearly impossible.
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As NerdWallet’s Senior Economist, Elizabeth Renter spends her time analyzing economic trends and data to help people make more informed decisions about their personal finances. Her work has been cited by The New York Times, The Washington Post, the "Today" show, CNBC and elsewhere. Prior to joining NerdWallet in 2014, she was a freelance journalist. She received a Masters of Science in Finance and Economics from West Texas A&M University, and focused her elective coursework on macroeconomics and analytics. When she’s not at work, Elizabeth enjoys college football, old houses, traveling to old cities and powerlifting. She is based in Durham, North Carolina.
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Kathy Hinson is a former Lead Assigning Editor for the Core Personal Finance team at NerdWallet. Previously, she spent 18 years at The Oregonian in Portland in roles including copy desk chief and team leader for design and editing. Prior experience includes news and copy editing for several Southern California newspapers, including the Los Angeles Times. She earned a bachelor’s degree in journalism and mass communications from the University of Iowa.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula for student loan products takes into account more than 50 data points across multiple categories, including repayment options, customer service, lender transparency, loan eligibility and underwriting criteria.
Fixed APR
3.59-17.99%
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1)All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation. (2)As certified by your school and less any other financial aid you might receive. Minimum $1,000. (3)This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 11/1/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
Variable APR
5.34-17.99%
College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1)All rates include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation. (2)As certified by your school and less any other financial aid you might receive. Minimum $1,000. (3)This informational repayment example uses typical loan terms for a freshman borrower who selects the Flat Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.78% fixed Annual Percentage Rate (“APR”): 54 monthly payments of $25 while in school, followed by 96 monthly payments of $176.21 while in the repayment period, for a total amount of payments of $18,266.38. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 11/1/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of the Flat Repayment Option with the shortest available loan term.
NerdWallet ratingNerdWallet's ratings are determined by our editorial team. The scoring formula for student loan products takes into account more than 50 data points across multiple categories, including repayment options, customer service, lender transparency, loan eligibility and underwriting criteria.
Fixed APR
3.49-15.49%
Lowest rates shown include the auto debit. Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment. Advertised APRs are valid as of 10/25/2024. Loan amounts: For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website will be subject to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time. Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. A variable APR may increase over the life of the loan. A fixed APR will not.
Variable APR
5.04-15.21%
Lowest rates shown include the auto debit. Advertised APRs for undergraduate students assume a $10,000 loan to a student who attends school for 4 years and has no prior Sallie Mae-serviced loans. Interest rates for variable rate loans may increase or decrease over the life of the loan based on changes to the 30-day Average Secured Overnight Financing Rate (SOFR) rounded up to the nearest one-eighth of one percent. Advertised variable rates are the starting range of rates and may vary outside of that range over the life of the loan. Interest is charged starting when funds are sent to the school. With the Fixed and Deferred Repayment Options, the interest rate is higher than with the Interest Repayment Option and Unpaid Interest is added to the loan’s Current Principal at the end of the grace/separation period. To receive a 0.25 percentage point interest rate discount, the borrower or cosigner must enroll in auto debit through Sallie Mae. The discount applies only during active repayment for as long as the Current Amount Due or Designated Amount is successfully withdrawn from the authorized bank account each month. It may be suspended during forbearance or deferment. Advertised APRs are valid as of 10/25/2024. Loan amounts: For applications submitted directly to Sallie Mae, loan amount cannot exceed the cost of attendance less financial aid received, as certified by the school. Applications submitted to Sallie Mae through a partner website will be subject to a lower maximum loan request amount. Miscellaneous personal expenses (such as a laptop) may be included in the cost of attendance for students enrolled at least half-time. Examples of typical costs for a $10,000 Smart Option Student Loan with the most common fixed rate, fixed repayment option, 6-month separation period, and two disbursements: For a borrower with no prior loans and a 4-year in-school period, it works out to a 10.28% fixed APR, 51 payments of $25.00, 119 payments of $182.67 and one payment of $121.71, for a Total Loan Cost of $23,134.44. For a borrower with $20,000 in prior loans and a 2-year in-school period, it works out to a 10.78% fixed APR, 27 payments of $25.00, 179 payments of $132.53 and one payment of $40.35 for a total loan cost of $24,438.22. Loans that are subject to a $50 minimum principal and interest payment amount may receive a loan term that is less than 10 years. A variable APR may increase over the life of the loan. A fixed APR will not.
Credible lets you check with multiple student loan lenders to get rates with no impact to your credit score. Visit their website to take the next steps.
There was a time when college students could work their way to an undergraduate degree with a part-time job and a little help from Mom and Dad. But the cost of a college education has grown dramatically, while wages and the hours in a day have not.
In 1971, tuition and fees plus room and board at a four-year public institution of higher learning was $1,410, on average, according to the College Board. By the 2020-21 school year, it was $22,180. That’s an increase of 1,473%. During that same period, the federal minimum wage grew from $1.60 to $7.25, or 353%, according to the Department of Labor.
Reliance on student loans has been increasing since their creation in the 1960s. Today, college graduates who borrow can expect to leave school with close to $30,000 in student loan debt, according to The Institute for College Access and Success. And while working a part-time job may help reduce that burden, it’s unlikely — if not impossible — that it would entirely eliminate it. In fact, in order to cover the price of their education, they’d need to either find a job paying well over the national minimum wage or put in an unrealistic number of hours.
How many work hours would cover college costs?
College students aren’t generally working high-paying jobs. For many, it’s their first. Assuming they make $9.40 an hour — the average of states’ minimum wages and more than the current federal minimum of $7.25 — they’d need to work a full-time job at 40 hours per week throughout the entire year to cover the cost of attendance. If they made the federal minimum wage, their workweek would need to be 52 hours long.
“Cost of attendance,” in this case, is the average tuition, fees, room and board, and books and supplies for public four-year institutions, roughly $19,500 in the 2020-21 school year, according to the College Board. Of course, if they attended a private school or one where the costs were higher than average, they’d need to work some additional hours.
This net average cost of attendance is after grant aid, which roughly three-fourths of first-time full-time students in this sector qualify for. If they didn’t qualify for grants, they’d have to pick up more work hours. And their wages would be taxed; for simplicity’s sake, these calculations assume before-tax income.
For the average nonstudent, working 40 hours per week is par for the course — it’s “adulting.” But for a full-time college student, it’s not just an advanced-level exercise in time management, it also could be detrimental to their grades.
Fifteen credit hours is the typical course load for a full-time student. That means 15 hours of class time each week. Add outside study and prep time to that, and full-time students generally spend 30-45 hours each week on learning endeavors. In essence, the time spent on academics equates to the time typically spent on a full-time job, which makes it difficult to fit in another, paying full-time job.
But what if a student earned more? Maybe they live in Washington, D.C., where the minimum wage is $15 per hour, for example. At that hourly rate, they’d need to work 25 hours per week, year-round to cover the cost of attendance. Possible? Yes. But maybe only recommended with a light course load and good time management skills.
Student loans are often necessary
Grants, scholarships, savings, parents’ and student’s paychecks, and, yes, student loans are all part of the pot that funds a degree. Students generally exhaust all others before turning to loans. Only loans require repayment. Still, more than 60% of college graduates leave school with student loan debt, according to The Institute of College Access and Success. With college prices as high as they are, student loans are often necessary.
Students have little say in the sticker price of their higher education or the wages they command as young adults. So when they have to rely on loans, minimizing the impact is key in protecting long-term financial health. To manage student loan debt, students can:
Prioritize federal student loans before private student loans, for lower interest rates and features like income-driven repayment and student loan forgiveness.
Apply for any and all scholarships they qualify for.
Find a work-study job, if eligible.
Take on a part-time job only if their course load allows.
Student loans are there for the taking and generally considered a package deal with a college degree. Federal student loans in particular have relatively low interest rates and income-based repayment plans to make paying them back manageable. Take steps to minimize your debt, but stop short of putting your grades and mental or physical health in jeopardy. An unsustainable work-study-life balance can jeopardize earning a degree and reaping its financial benefits — the primary purpose of paying for this education in the first place.