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The Financial Implications of Taking a Gap Year Before or During Post-Secondary Studies

The ongoing COVID-19 pandemic has led many students to consider delaying or interrupting their post-secondary studies until life returns to normal.*

The reasons for this are understandable. Some students are reluctant to study online, fearing that it won’t measure up to in-person instruction. Others don’t want to miss out on the traditional college or university experience, which is especially important to international students. Instead of moving forward with their dreams of studying abroad, some students are opting to take a gap year.

However, doing so can have a financial ripple effect that will be felt for a lifetime.

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What Is a Gap Year?

The idea of a gap year is nothing new. Many students take a year off before embarking on their post-secondary studies to travel, work, volunteer, or take a breather before hitting the books again. However, the pandemic has also upended the gap year experience. Many borders remain closed to all but essential travel and student jobs are hard to come by. Rather than backpack through exotic locales or gain volunteer experience abroad, students are stuck at home.

While this alone may be enough to discourage students from taking a gap year, there are other factors to consider. Taking a gap year or a break in your studies comes at a significant cost—both financial and otherwise. In this article, we’ll explore how:

  • Deferring your studies by even a year can result in a loss of US$90,000 in lifetime earnings.
  • Tuition fees increase year to year.
  • College students studying in the US who put their studies on hold have only a 13% chance of resuming their degree within five years.
  • Students aren’t guaranteed the option of simply deferring their studies and could face stiff competition when it comes time to reapply.

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A Loss of US$90,000 in Lifetime Earnings

Unfortunately, the reality is that students who decide to take a gap year will feel the financial reverberations of their decision on their earning power for the rest of their lives. They miss out on an entire year of income they could have earned with a college degree and create an income wedge from which they will never recover. A study by the Federal Reserve Bank of New York estimates that deferring your studies by just one year can cost you in excess of US$90,000 in lifetime earnings.

The study indicates that a 22-year-old graduate of a US college makes an average salary of US$43,000 straight out of school, and will be on track to earn approximately US$52,000 by the time they reach the age of 25. However, students who defer their studies by a year will make US$49,000 by the time they reach the same age, a full US$3,000 less. While that may not sound like a significant amount of money, it’s important to keep in mind that figure will continue to snowball over time.

“Being a year behind, these differences add up each and every year, so that those graduating later never catch up to those who graduated earlier,” the report says. “Together, these costs add up to more than $90,000 over one’s working life, which erodes the value of a college degree.”

Delaying your studies by just one year can have even stronger implications for students pursuing a future in high-earning fields with the promise of regular promotions, such as accounting and engineering. One estimate suggests that an accounting student could stand to lose an astonishing US$225,591 in net lifetime earnings after taxes by taking a gap year.

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Tuition May Be More Expensive Next Year

With some institutions freezing tuition again for the 2021–2022 academic year, now is a great time to be studying. College tuition fees in the United States typically increase each year at approximately two times the general rate of inflation. That means that tuition goes up approximately 8% every single year. To put it another way, you can expect the cost of college to double every nine years.

Students can anticipate tuition fees to increase for other reasons as well. Many institutions had to scramble to put the infrastructure in place to enable students to study online during the COVID-19 pandemic. According to the EDUCAUSE Core Data Service (CDS) Benchmarking Report, less than 5% of college budgets are earmarked for information technology (IT). It’s no surprise that post-secondary educational institutions are well behind other industries in terms of digital adoption. The pandemic forced them to play catchup—fast, and so many of them did it exceptionally well. This came at a tremendous expense and may result in higher fees in the future.

For international students who may be considering deferring their studies for financial reasons, it’s important to keep in mind that they may also qualify for financial aid—such as a scholarship, award, or bursary—which can help offset the costs of studies. Students can sometimes overlook this type of support. While students may be automatically considered for financial aid, such as an entrance scholarship, typically they will have to research the options available to them independently.

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Students Who Interrupt Their Studies Are Unlikely to Return

There is also the very real possibility that students who decide to interrupt their studies, even with graduation in sight, might not return to complete their degree following their hiatus.

A sobering report from the National Student Clearinghouse reveals that only 13% of students studying in the United States who take a break from their studies complete their degree within five years.

A student will feel the ramifications of not obtaining their degree in their earning potential. The U.S. Bureau of Labor Statistics reveals that the median weekly income for an individual with an incomplete college education is a startling US$415 less than that of a bachelor’s degree holder. That’s more than US$21,000 a year. This is even more significant when you take into consideration that this amount will compound over time.

If you opt to take a hiatus from your studies, be sure to have a solid plan to ensure you see your degree through to completion.

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Increased Competition

Not all of the costs of delaying your studies are financial. 

While some institutions are being flexible by allowing incoming students to delay their studies, deferrals aren’t guaranteed. Many students will have to start from scratch and reapply, which will require submitting transcripts, a study plan, and other documents all over again. As outlined in a recent ApplyInsights, the QS International Student Survey indicates that 54% of students say they have deferred their studies until 2022 due to COVID-19. Consider the implications. These students will not only compete with others who are also deferring their studies, but will also be vying for spots with students who are a year younger. 


Ultimately, students need to weigh the pros and cons of delaying or taking a break from their studies—and make the decision that feels right for them. While financial implications are an important factor to consider, they’re not the only ones. We hope that the information provided here will help make this important decision a little easier for you.

*In case you missed it, a recent ApplyInsights article explored what students had to say in the QS International Student Survey about what it would take to feel comfortable travelling overseas again.