Is A College Degree A Good Investment?

Men and women with Bachelor's degrees earn more than those with just a high school diploma. People with Advanced degrees earn more than Bachelor's degrees. Is the extra income that comes with the degrees worth the investment of time?

This analysis assumes room and board costs are equal for those working or attending school. The cost of attending school averages $34,730 per year for tuition and fees at private colleges versus $10,880 per year for tuition and fees at public colleges(1). Additionally, the hours worked per year average 1790 hours(2).

Individuals with Bachelor's degrees net earnings pass those with just a high school education between 10 year (public college) and 14 years (private college). Those with advanced degrees pass those with high school diplomas between 12 years (public college) and 16 years (private college). Individuals with advanced degrees from a public or private college pass the earnings of those with Bachelor's degrees from the same type of college between 15 years (public) to 18 years (private).

In reality, people in debt pay interest and people with assets get a return on their assets. We can add a 6% interest component which works against people in debt and works for those with assets.

When interest effects are added, individuals with Bachelor's degrees net earnings pass those with just a high school education between 14 years (public college) and 23 years (private college). Those with advanced degrees pass those with high school diplomas between 16 years (public college) and 24 years (private college). Individuals with advanced degrees from a public or private college pass the earnings of those with Bachelor's degrees from the same type of college between 19 years (public) to 27 years (private).

Strictly from a monetary point of view, the longer amount of time the extra income from higher education can effect net earnings, the more it makes sense to pursue Bachelor's and/or advanced degrees. 1) http://www.collegedata.com/cs/content/content_payarticle_tmpl.jhtml?articleId=10064 2) https://data.oecd.org/emp/hours-worked.htm

 

Disclosure:

The information presented here is the opinion of the author and may quickly become outdated and is subject to change without notice. All material presented in this article are compiled from sources believed to be reliable, however accuracy cannot be guaranteed. No person should make an investment decision in reliance on the information presented here.

The information presented here is distributed for education purposes only and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or participate in any particular trading strategy.

Performance data showing past performance results is no guarantee of future returns.

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