Why college is a huge expense that's still worth it — for now

College costs have notably increased from a decade or so ago — after adjusting for inflation the cost of an average year of undergraduate study has risen by more than $5,000 since 2007. And as higher education expenses have gone up, student loan debt has followed suit — the average Federal student loan balance has doubled over that same period.

But even though pursuing a degree often means taking on a major financial burden, recent research shows that for many Americans, it's worth the cost.

College graduates tend to earn more money. The income gap between those with a college degree and those with only a high school education is growing and increases with age. Whatever you spend on college, you're likely to end up making that back and more, says Sandy Baum, a nonresident senior fellow at the Urban Institute's Center on Education Data and Policy.

Below CNBC Select looks at the evidence for why, more often than not, a college degree provides you with better financial opportunities even as costs for attending rise.

The price of college tuition varies dramatically depending on what type of school you go to. Tuition for an average four-year in-state program is just under $11,000, while the average four-year private nonprofit school charges just over $39,000 — and that doesn't include room and board — according to the CollegeBoard 2022 Trends in College Pricing and Student Aid report.

Those prices may look like they're way above your budget, but that doesn't take financial aid into account, and, "most students are not paying [the sticker] price," Baum says. Financial aid is available from federal and state governments and universities. Once you adjust for inflation and factor in the financial aid students receive, the net cost of tuition and fees for four-year programs at in-state and private universities has been declining for five to six years, and over 75% of first-time students received grant aid.

Before you decide to further your education, see what financial aid you'll qualify for. For Federal aid, complete a Free Application for Federal Student Aid (FAFSA) form. States have different guidelines for their college financial aid programs, although some states may only require you to fill out a FAFSA form. Once you know what aid you're eligible for, then you'll have a better idea of what your true out-of-pocket cost will be.

Without factoring in scholarships or other financial aid, the return of a college degree tends to outweigh the investment. On average, college graduates earn 1.2 million dollars more over their lifetime and are less likely to be unemployed. Even at the most expensive school in the country, and assuming you have to pay every dollar, you got no scholarship, you'd be getting an amazing return, says Matt Sigelman, president of The Burning Glass Institute, a nonprofit research center.

And for parents worried about how expensive college might get in the future, there are a handful of tax-advantaged options for saving for college expenses. States offer 529 plans which allow your investments to grow tax-free and you can open a 529 plan with any state regardless of where you live. So you can cherry-pick the best 529 plan for you, such as the Michigan Education Savings Program or Ohio's CollegeAdvantage plan, both feature relatively low fees.

Going to college is a tradeoff. You're likely to be taking on student debt and missing out on four years of earning and work experience. On top of that, roughly 43% of graduates end up starting their careers underemployed, at a job for which they are overqualified.

However, despite all that, college degrees pay off for most people in the long run. By the time the average college graduate hits their early 30s, they've already earned enough to offset the cost of a degree and to make up for the lost earnings while attending college.

Certain fields of study tend to be much more lucrative. STEM (Science, Technology, Engineering and Math) degrees have 10X higher return on investment compared to the lowest performing degrees, according to forthcoming research by The Burning Glass Institute. This finding complements May 2021 data from the Bureau of Labor Statistics (BLS), which found the average annual wage for all STEM occupations to be $109,000 (compared to the $58,260 that was the average annual wage for all occupations surveyed).

Even if you don't start in a career that requires a degree or that is in your field of study, your diploma can greatly expand the scope of your future opportunities to earn. People who have a degree and take a job that doesn't require one have better career mobility than their peers in the same job who don't have a degree, Sigelman says. His research shows that within five years after graduating, degree holders are twice as likely as non-degree holders to advance to a job with stricter education requirements, which also tends to increase earnings. And graduates who stay at jobs that don't require a degree still tend to earn more than their degreeless co-workers.

As the cost of attending college increases, many wonder if a degree is still worth it. But the list price of tuition doesn't tell the whole story. An overwhelming majority of first-time college students qualify for financial aid, which has decreased the cost of tuition and fees for many students in recent years (once you account for inflation). At the same time, college graduates continue to have higher incomes, on average, than those with only a high school degree and that gap is growing.

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