How To Calculate The ROI On Your College Degree

Posted on 17. Dec, 2012 by in Your Wealthy Life

College ROI

Your college degree is one of the most important investments you will ever make, or so you are always told. The average undergraduate student will have around $25,000 in student loans after four years at a public university, but is it worth it?

Because of the high cost of education, many recent and future graduates are concerned about the value of their degree after graduation. Choosing a college degree is the first step. To find the value of your degree you should research the ROI (Return of Investment) of your chosen college major.

Advantages of a college degree

Earning a college degree is time consuming and expensive. However, there are many advantages and long-term financial stability benefits of a college degree, such as

higher salaries;

  • College graduates usually begin at a higher rate of pay than those without a degree. For example, elementary school teachers usually receive raises based on the number of college hours they have over their initial bachelor’s degree. The more hours a teacher earns, the higher his or her salary will be.

increased access to health insurance and other benefits;

  • College graduates are more able to find positions with employers who offer employer-paid health insurance and other benefits such as pension plans, dental coverage, 401 (k), paid vacation and more.

more job opportunities.

  • Employers value employees who are reliable, dependable, effective communicators, good decision makers and team players. College graduates have already proven that they can stick with a long-term goal. Plus, college students have practice working in teams and communicating with other students and professors.

How to calculate the ROI of your college degree

Many factors go into figuring the ROI of a college major. Research possible career paths of your major and keep an eye on the job growth. You should also consider the cost of the degree and your possible salary after graduation.

Are you going to use student loans to complete your degree? Will you be able to make enough money to pay back your student loans?

In the infographic shown below from data CitiBank collected, it shows some of the most popular college majors along with their ROI. They list the cost of each degree, the average starting salary, ROI after 1 year and 5 years and the length of time it will take to break even.

Student Loan ROI
Infographic From CitiBank

A biochemist may break even in about 2.5 years, while a public defender is looking at over 6 years. A licensed practical nurse has the best ROI at less than 1 year. A nursing certificate costs around $20,000, and nurses are projected to make over $27,000 as a starting annual salary.

Another way to calculate the return on investment is to use a student loan ROI calculator available here. The video below shows how to calculate the expected return on investment of your education.

A college degree usually pays off

Throughout history, a higher education has usually paid off. It may take time to break even, but most college graduates see advantages to having a college degree. Make sure you research possible degrees and career paths. Pay attention to average starting salary, job growth and demand and the cost of the degree.

This post is by Jon Haver who writes at PayMyStudentLoans.com about how to get out of student loan debt fast.

Image by Tax Credits

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