How would you like to invest $22,000 and have it turn into $2 million? Thousands of people do it. But how? The answer is simple. Their investment strategy involves a four-year commitment to education. The payoff begins by earning a college degree, which opens the door to a lifetime of earnings that may not have otherwise been possible to obtain. In this article, we'll show you the million-dollar benefits of choosing to pursue an education.
- People with college degrees tend to earn more money than those with a high school diploma.
- Earning a higher degree is more likely to earn you a greater salary.
- Consider how much you'll spend on college—tuition at an in-state public school is a lot less than a private institution.
- The benefits of having a college degree go well beyond finances—a comfortable lifestyle, the possibility of a secure retirement, and other benefits are possible.
The Math Is Simple
If you want to know whether there's a payoff to staying in school, just take a look at some of the data published by the U.S. government. According to the Bureau of Labor Statistics (BLS), people with an undergraduate degree earn nearly twice as much as those with a high school diploma. High school graduates can make as much as $746 per week or $38,792 per year. The average salary of someone with a bachelor's degree was $1,248 per week or $64,896. If we don't account for inflation and salary increases, a 40-year career span would net roughly $1.5 million for a high school graduate and $2.6 million for a college graduate. Of course, these figures increase with every degree you earn.
Watch Wages Increase by Degrees
While just about any degree will help your earnings prospects, more education generally equates to more money. Over the course of a working career across all persons, an associate's degree is worth about $1.8 million, a bachelor's degree is worth $2.6 million, a master's degree is worth $3.1 million, a doctorate is worth $3.9 million, and a professional degree is worth about $4.0 million.
Of course, like any investment, some are better than others. A degree in basket weaving, Renaissance art, or golf is likely to result in significantly lower earnings than a degree in information technology, business, or health sciences. Choosing your major wisely is a lot like selecting an appropriate investment for your long-term portfolio. In other words, you need to choose something that dovetails with your goals and has a realistic opportunity to provide the return on investment that you are anticipating.
See the True Cost of College
Getting a degree is easier said than done. The cost of a college education is high, and it's only getting higher. In fact, education expenses have risen faster than inflation over the past decade. Tuition at a four-year public university is estimated at $9,410 per year, according to the College Board, a non-profit higher education association. Tuition at a private school costs even more—about $32,410 each year.
The costs increase if you choose to live away from home. How much you pay in addition to your tuition depends on whether you live on or off-campus. Because learning financial responsibility is just one of the many lessons that we all must face, choosing to commute rather than live on campus is a financially prudent decision that can save tens of thousands of dollars.
According to the data from the College Board, the average budget per year for in-state students attending a public school was $26,590 during the 2019-2020 academic year. That's compared to almost $54,000 per year if you attend a private, nonprofit postsecondary institution. These figures include tuition, the average cost of room and board, books, supplies, transportation, and other expenses.
Tuition costs at a private, nonprofit school far exceed those required by public institutions even if you choose to go out-of-state.
Learn to Look Beyond the Money
A college graduate's earnings can provide them with the opportunity to enjoy a number of material comforts. A nice car, a nice home, and some spending money in your pocket are the traditional rewards for financial success. Likewise, increased earnings provide an opportunity to save and invest. College graduates have the opportunity to enjoy a comfortable lifestyle during their working years as well as the chance to save and invest to ensure a financially secure retirement.
While there's no doubt that the paychecks are nice, attending college has additional financial and intangible benefits too. A number of studies suggest that higher education leads to better health consciousness, which translates into time spent at the gym or engaging in other forms of exercise. Healthier eating habits often go hand-in-hand with a good exercise regimen, and exercise and healthy eating habits lead to healthier lifestyles, overall.
A college education also provides greater opportunities for promotion and upward social mobility, not only for the recipient of the degree but for non-working spouses and children, as well. An increase in job security and a decrease in unemployment are also associated with a college education, as college graduates tend to have transferable skills. Therefore, if the widget factory closes down, a college-educated accountant or human resources professional can often transfer their skills to another employer with relative ease.
The Bottom Line
The focus on the cost of college is often misplaced. But while the cost of a single year, particularly at a private school, can be significant, most college graduates will earn back the amount spent in a single year of working. In some cases, such as graduates from public education institutions, their first year's salary will cover the cost of all four years in college.