What monetary value has your education provided you?

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miamivice
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What monetary value has your education provided you?

Post by miamivice » Fri Jan 06, 2017 6:30 pm

Often, we read articles (at least headlines) about "is a college education worth it?". The articles imply that the lost opportunity cost from being out of the workforce + the cost of college > return on investment from having a degree.

Out of curiosity, I looked up my lifetime earnings that are attributable to my degree and divided it by the cost of my degree. Came out with a number of 33x*. So for every dollar that I invested in my education, I have received $33 in return from employers who required me to have my college degree. Clearly, it's worth it.

For those who have the numbers handy, what kind of multipliers are you seeing when you divide lifetime earnings by the cost of your degree?

* For the purpose of this calculation I am INCLUDING the cost of room & board and EXCLUDING the wages earned during college years. Technically, one could argue that you exclude room & board since you pay that regardless of being in college, and to reduce the cost of college by wages earned. But that is not how I did my calculation.
Last edited by miamivice on Fri Jan 06, 2017 6:40 pm, edited 1 time in total.

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Re: What monetary value has your education provided you?

Post by tacster » Fri Jan 06, 2017 6:38 pm

Mine works out to around 100x or thereabouts. Engineering degree.
INSERT PITHY QUOTE HERE

miamivice
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Re: What monetary value has your education provided you?

Post by miamivice » Fri Jan 06, 2017 6:39 pm

tacster wrote:Mine works out to around 100x or thereabouts. Engineering degree.
Defintely worth it!

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Re: What monetary value has your education provided you?

Post by NoGambleNoFuture » Fri Jan 06, 2017 6:43 pm

Received MBA in 2009. This year salary is 9x what my MBA cost. On the fence, got my foot in the door because I had an MBA but I think college degrees are getting increasingly less important and knowledge/experience way more important.

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Re: What monetary value has your education provided you?

Post by boglephreak » Fri Jan 06, 2017 6:44 pm

assuming i work for forty years (25-65) and my pay stays around my current rate (it will likely increase in the future and has been lower in the past, but for simplicity sake), it is 80x. it is a law degree and i work in California, so salaries are much higher than the norm. education expenses are also reduced due to scholarship, and i havent accounted for interest on student loans.

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Re: What monetary value has your education provided you?

Post by JeepDaze » Fri Jan 06, 2017 6:53 pm

My current year annual salary is 15x the total cost of my 4 year undergraduate degree. However, I did get a Masters degree that my employer paid for, so that definitely adds to multiplier. However, I would have never gotten my job if I didn't get my undergraduate degree, so I add that benefit to the multiplier.

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Re: What monetary value has your education provided you?

Post by Sandtrap » Fri Jan 06, 2017 6:53 pm

Also, what monetary value has been lost by an education path not taken?

Pre-Med scholarship not taken ? Maybe huge loss$$

Finance - economics degree/double major literature instead. Comparative gain? Unknown.

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Re: What monetary value has your education provided you?

Post by tacster » Fri Jan 06, 2017 6:59 pm

miamivice wrote:
tacster wrote:Mine works out to around 100x or thereabouts. Engineering degree.
Defintely worth it!
Absolutely. For myself this represents total lifetime earnings from start of career to retirement. It helps that college was very inexpensive by today's standards (though it didn't seem like it at the time).
INSERT PITHY QUOTE HERE

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Re: What monetary value has your education provided you?

Post by stoptothink » Fri Jan 06, 2017 7:10 pm

Honestly, I thought that my PhD was going to be a net negative financially; what exactly is someone with a PhD in obesity studies qualified to do? But, there is no way I would have even been considered for my current job without it. I'm very early into my career (35, finished PhD 4yrs ago), but my current salary is more than the total cost (to me) of all 11yrs of my university education (due a lot in part to athletic scholarship for undergrad, some research grants for MS, and PhD stipend). I can't quantify it, but it has definitely been worth it personally and financially.

Now my wife, who is in tech sales and randomly decided she wanted to return to complete her undergrad at 30 (with all of 12 credit hours to her name from 12 years ago)? I'd bet a lot that the monetary value of her education will be $0. But, it is something she wanted to do and we can certainly afford it.

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Re: What monetary value has your education provided you?

Post by MikeWillRetire » Fri Jan 06, 2017 7:20 pm

I don't know what the monetary value is. But I am doing much better than my parents did, due to my degree. I have had a solid 32-year career so far. My dad didn't.

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Re: What monetary value has your education provided you?

Post by metacritic » Fri Jan 06, 2017 7:21 pm

DS, who did phd in English and went to big 3 consulting firm, is around 300 x. I'm around 60 x w/ ba and phd in very soft social science.

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Re: What monetary value has your education provided you?

Post by Trader/Investor » Fri Jan 06, 2017 7:34 pm

Zero! College was the worst four years of my life. I was 13 when I read Nicholas Darvas in 1960 and thought being a trader sounded like my kind of thing. I was already into buying and selling of coins so why not stocks. The appeal was no boss and the freedom to live wherever the wind blew. Little did I know that in my 20s and 30s I would be dead broke trying to find my way. Living in bug infested apartments and even worse boarding houses where you shared the bathroom with others. But it all worked out in the end and with no regrets. An interesting life to say the least. Other than of course the four years wasted getting a college degree.

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Re: What monetary value has your education provided you?

Post by Ged » Fri Jan 06, 2017 8:02 pm

tacster wrote:
miamivice wrote:
tacster wrote:Mine works out to around 100x or thereabouts. Engineering degree.
Defintely worth it!
Absolutely. For myself this represents total lifetime earnings from start of career to retirement. It helps that college was very inexpensive by today's standards (though it didn't seem like it at the time).
If I just look at my out of pocket cost vs my current net worth in retirement it's about 150x. However there was some incalculable opportunity cost associated with attending graduate school and the time value of money. This is an engineering degree as well.

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Re: What monetary value has your education provided you?

Post by student » Fri Jan 06, 2017 8:37 pm

I cannot put a monetary value on it but my job lets me do what I enjoy doing (teaching and research) in a relatively low stress environment. (Yes, getting grant is a high stress process but I imagine that it is not at the level of those who are in sales.) However, using the formula (Total Earning since graduation/Total Tuition) gives about 150x as I do not remember how much I paid for college (assuming all my earnings are due to my education). I stayed at home and went to an extremely low cost local school (not this country). Graduate school is of course free and they paid me.

Edited.
Last edited by student on Sat Jan 07, 2017 8:35 am, edited 5 times in total.

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Re: What monetary value has your education provided you?

Post by barnaclebob » Fri Jan 06, 2017 8:41 pm

Man, most of you with these high multiples must have paid less than 5 figures a year for your degrees. I'll need a 50 to 60 year career to get a 100x multiple on my engineering degree, just in salary, not increased salary...

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Re: What monetary value has your education provided you?

Post by nisiprius » Fri Jan 06, 2017 8:44 pm

It never occurred to me that it was supposed to have a monetary value. I thought it was supposed to develop ("e-duc", draw out) my mental abilities, provide me with knowledge, and enhance my ability to do critical thinking.
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Re: What monetary value has your education provided you?

Post by student » Fri Jan 06, 2017 8:45 pm

barnaclebob wrote:Man, most of you with these high multiples must have paid less than 5 figures a year for your degrees. I'll need a 50 to 60 year career to get a 100x multiple on my engineering degree, just in salary, not increased salary...
I believe my tuition was about $1000 a year. (Not in the United States.) But it was long time ago in the last millennium.

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Re: What monetary value has your education provided you?

Post by MathWizard » Fri Jan 06, 2017 8:47 pm

By your calculation, about 40x so far.

Of course, tuition inflation was huge in the 80's.

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Re: What monetary value has your education provided you?

Post by barnaclebob » Fri Jan 06, 2017 9:03 pm

nisiprius wrote:It never occurred to me that it was supposed to have a monetary value. I thought it was supposed to develop ("e-duc", draw out) my mental abilities, provide me with knowledge, and enhance my ability to do critical thinking.

This is the kind of thinking that has kids today near 6 figures or more in debt for liberal arts degrees.

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Re: What monetary value has your education provided you?

Post by travellight » Fri Jan 06, 2017 9:06 pm

this is not an apples to apples comparison as the numerator (total earnings) varies based on age and length of work years and denominator stays fixed so those who are older with more years of work will have a higher number. Perhaps we should also divide by number of years.

net earnings divided by cost of education divided by number of years?

It is also hard to know exactly my net earnings over a 30 year period. Another metric could be net worth divided by cost of education; again divide this by number of years of earnings?

My best estimate of the original value of total earnings divided by cost of education is about 400.
My net worth divided by cost of education is the same, 400. Time controlled by dividing by number of years (30) yields 13.3.

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Re: What monetary value has your education provided you?

Post by quantAndHold » Fri Jan 06, 2017 9:12 pm

Probably 100x for me too. My income jumped 5x the day after I graduated.

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Re: What monetary value has your education provided you?

Post by MoonOrb » Fri Jan 06, 2017 9:13 pm

travellight wrote:this is not an apples to apples comparison as the numerator (total earnings) varies based on age and length of work years and denominator stays fixed so those who are older with more years of work will have a higher number. Perhaps we should also divide by number of years.

net earnings divided by cost of education divided by number of years?

It is also hard to know exactly my net earnings over a 30 year period. Another metric could be net worth divided by cost of education; again divide this by number of years of earnings?

My best estimate of the original value of total earnings divided by cost of education is about 400.
My net worth divided by cost of education is the same, 400. Time controlled by dividing by number of years (30) yields 13.3.
Yes, this. People who earned their degrees more recently are (a) not into their peak earnings years and (b) more likely to have paid inflated amounts for their degrees compared to those who went to school pre-1990s.

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Re: What monetary value has your education provided you?

Post by jfn111 » Fri Jan 06, 2017 9:15 pm

If I take my cost of college,divided by gross earnings plus 401K (2/3rds company contributed) and an approx. value of my pension it would be about 400X

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Re: What monetary value has your education provided you?

Post by flyingbison » Fri Jan 06, 2017 9:20 pm

barnaclebob wrote:
nisiprius wrote:It never occurred to me that it was supposed to have a monetary value. I thought it was supposed to develop ("e-duc", draw out) my mental abilities, provide me with knowledge, and enhance my ability to do critical thinking.

This is the kind of thinking that has kids today near 6 figures or more in debt for liberal arts degrees.
Seems to me that critical thinking would help prevent that.

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Re: What monetary value has your education provided you?

Post by mdrinkard » Fri Jan 06, 2017 9:27 pm

750KX BA Literature/Classics

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Re: What monetary value has your education provided you?

Post by rnitz » Fri Jan 06, 2017 10:12 pm

My gut feel is $0 (this is with a lot of discussions, analysis, and reflection).

This may be controversial in that I have excessive education credentials: several degrees from Stanford (AB in Mathematics, BS in EE, MS in EE) and a Harvard MBA. In my Engineering career (chip designer, satellite modem designer, engineering manager and director) I never had to use more math than I learned in High School. Everything useful I learned at work. If I could have got my job with an IQ test, both me and my employer would have been much better off financially. As to my Harvard MBA, I ended up starting my own company (self funded). Perhaps there was value I don't appreciate, but it isn't financial.

To be clear, I had a fantastic time in college and it was immensely rewarding to me (just not financially). Also, when I went back to get an MBA I cherish and value my time there, the friends I made, and the value it gave to my life. The rewards were personal, and not financial.

Anyway, just a contrary point of view.

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Re: What monetary value has your education provided you?

Post by JWooden10 » Fri Jan 06, 2017 10:15 pm

80-100x range. Worth it for me as I like my job most days and the payback is there.

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Re: What monetary value has your education provided you?

Post by MichaelRpdx » Fri Jan 06, 2017 10:17 pm

The records for what my education cost no longer exist. However, I've been working since 1972 and in 1993 I was hired into a Fortune 500 company in a position that required a bachelor's degree. The area of the degree was not important, but for that job you were required to have a degree to be considered. That marked a turning point in life. Before I was living pay check to pay check; after I had a reasonable income, actually saved money, bought a house, etc.

Lifetime earnings after 1993 are 10 times greater than those before. For a more accurate comparison, I've calculated the Social Security Factored income for both date ranges. The post-1993 SSA Factored income is 5x greater than that pre-1993. Average earning for the five years after getting the job were 3x the average of the five years before, or 2.5 times greater for SSA Factored income. The difference is extreme.

So was that Bachelor of Fine Arts worth it financially? You bet.
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Re: What monetary value has your education provided you?

Post by ClevrChico » Fri Jan 06, 2017 10:18 pm

The non-monetary benefits are huge too. It was my ticket in the door to my current job at Megacorp with lots of intangible benefits and nice life-work balance. No degree = no job, regardless of qualifications.

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Re: What monetary value has your education provided you?

Post by BolderBoy » Fri Jan 06, 2017 10:41 pm

miamivice wrote:For those who have the numbers handy, what kind of multipliers are you seeing when you divide lifetime earnings by the cost of your degree?
What a very interesting thread you started.

My "return on education" came out to 403x. I knew that it would be good, but until I took the time to actually add it all up, I had no idea.

I did not include cost of books or living expenses during school.
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Re: What monetary value has your education provided you?

Post by hadron » Fri Jan 06, 2017 11:07 pm

I was fortunate to have had an upbringing that placed immense value on education.
When I came to US to attend grad school, I had scholarships/assistantships that covered tuition + payed a handsome 1700 pm stipend.
I now make 600k pa.
So in my case the cost was negative. The payoff was huge.

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Re: What monetary value has your education provided you?

Post by Uncle Pennybags » Fri Jan 06, 2017 11:16 pm

I don't have a degree so I can't calculate how much. I know what I spent on my children's education so far hasn't paid off. A bachelor degree is genetic engineering isn't worth the paper it's printed on. A degree in meteorology isn't worth much ether.
Enjoy :beer

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Re: What monetary value has your education provided you?

Post by ghudson » Fri Jan 06, 2017 11:21 pm

I'm a computer programmer. The monetary value of my education is pretty high. But if I was a self-starter at a young age, perhaps if I was raised in a home-schooling environment or had the right direction to learn what i needed to know --- then I could have the same career without my college degree. In software development it's one of the best fields in terms of raw meritocracy -- either you can program or you can't.

That said in practice school gave me the foundation to know what I didn't know. They didn't have the same knowledge availability via the internet back when I got my degree circa year 2000.

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Re: What monetary value has your education provided you?

Post by ghudson » Fri Jan 06, 2017 11:22 pm

Uncle Pennybags wrote:I don't have a degree so I can't calculate how much. I know what I spent on my children's education so far hasn't paid off. A bachelor degree is genetic engineering isn't worth the paper it's printed on. A degree in meteorology isn't worth much ether.
Enjoy :beer
Interesting. I would've thought an engineering degree like that would translate to jobs. Meteorology -- how many meteorologists are there in the world? Seems like a hard field to get into -- a lot of competition for the jobs.

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Re: What monetary value has your education provided you?

Post by OutInThirteen » Fri Jan 06, 2017 11:51 pm

Two engineering degrees, BS and MS, mid-'70s. Total cost of education (five years), including room and board, books, tuition <$10,000. First year's salary (big oil) recouped twice that much alone. Ending salary after 35 years in the workforce was eight times higher than starting. Total W-2 earnings >$3,000,000. Multiplier: >300.

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Re: What monetary value has your education provided you?

Post by whodidntante » Sat Jan 07, 2017 12:10 am

I think I would have made a good income as an entrepreneur, but working for the man is so convenient.

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Re: What monetary value has your education provided you?

Post by Cruise » Sat Jan 07, 2017 1:28 am

travellight wrote:this is not an apples to apples comparison as the numerator (total earnings) varies based on age and length of work years and denominator stays fixed so those who are older with more years of work will have a higher number. Perhaps we should also divide by number of years.

net earnings divided by cost of education divided by number of years?

It is also hard to know exactly my net earnings over a 30 year period. Another metric could be net worth divided by cost of education; again divide this by number of years of earnings?

My best estimate of the original value of total earnings divided by cost of education is about 400.
My net worth divided by cost of education is the same, 400. Time controlled by dividing by number of years (30) yields 13.3.
My numbers are 1,000 and 28.5. However this is a very rough estimate. It is probably a lot higher since I got State and Federal funding for much of my education.

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Re: What monetary value has your education provided you?

Post by White Coat Investor » Sat Jan 07, 2017 1:34 am

miamivice wrote:Often, we read articles (at least headlines) about "is a college education worth it?". The articles imply that the lost opportunity cost from being out of the workforce + the cost of college > return on investment from having a degree.

Out of curiosity, I looked up my lifetime earnings that are attributable to my degree and divided it by the cost of my degree. Came out with a number of 33x*. So for every dollar that I invested in my education, I have received $33 in return from employers who required me to have my college degree. Clearly, it's worth it.

For those who have the numbers handy, what kind of multipliers are you seeing when you divide lifetime earnings by the cost of your degree?

* For the purpose of this calculation I am INCLUDING the cost of room & board and EXCLUDING the wages earned during college years. Technically, one could argue that you exclude room & board since you pay that regardless of being in college, and to reduce the cost of college by wages earned. But that is not how I did my calculation.
Mine is almost infinite as I had a scholarship for undergrad and a "scholarship" for med school. I might make 33X every year if you include room and board.
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Re: What monetary value has your education provided you?

Post by Uncle Pennybags » Sat Jan 07, 2017 1:51 am

So there are no losers posting? Figures, it's like nobody loses day trading or at the casinos ether. BTW, the biggest thieves I ever had the displeasure of employing all had advanced degrees.

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Re: What monetary value has your education provided you?

Post by ghudson » Sat Jan 07, 2017 2:47 am

Uncle Pennybags wrote:So there are no losers posting? Figures, it's like nobody loses day trading or at the casinos ether. BTW, the biggest thieves I ever had the displeasure of employing all had advanced degrees.
You employed thieves? They stole from you?

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Re: What monetary value has your education provided you?

Post by McGilicutty » Sat Jan 07, 2017 3:39 am

I have a BS and an MS in Computer Science. I went to school in the 90's at a fairly cheap state school and my MS was paid for by a research assistantship. I'm an introvert and couldn't imagine trying to do anything other than computer programming, so the value of my degrees is incalculable. In any event, my degrees allowed me to get jobs that enabled me to retire in my mid-40's with 25x in living expenses.

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Re: What monetary value has your education provided you?

Post by Sheepdog » Sat Jan 07, 2017 4:16 am

You can't use my earning and education cost history because my education cost was almost nothing. In the 1950s I went to the Univ. of Florida. If you were a Florida resident who passed the high school graduation examination with an appropriate score, you could attend a state university tuition free (there were only 2 state universities). So, I went tuition free with only a $150 per semester fee which included tickets to the U of F football and basketball games. My total annual cost to go to the university including every thing else was under $1700, or $6800 for 4 years. The federal minimum wage then was $0.75 to $1.00 per hour. My first year employed as a chemical engineer earned me $6800. Monetary (and social) value of my education? I can't quantify it. Both were huge.
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Re: What monetary value has your education provided you?

Post by Uncle Pennybags » Sat Jan 07, 2017 4:22 am

ghudson wrote:
Uncle Pennybags wrote:So there are no losers posting? Figures, it's like nobody loses day trading or at the casinos ether. BTW, the biggest thieves I ever had the displeasure of employing all had advanced degrees.
You employed thieves? They stole from you?
One word; lawyers.

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Re: What monetary value has your education provided you?

Post by Alchemist » Sat Jan 07, 2017 4:51 am

nisiprius wrote:It never occurred to me that it was supposed to have a monetary value. I thought it was supposed to develop ("e-duc", draw out) my mental abilities, provide me with knowledge, and enhance my ability to do critical thinking.
It certainly could be both. A more well rounded and intellectually fulfilled person is likely to be more productive, no?*

I'm in the 'infinite' category as well. My undergrad was paid for with scholarships and my graduate degree was paid for by my employer. I paid for my rent and other costs during University by working part time.


*I say this as someone who has a Political Science undergrad and International Relations graduate degree and makes about $100k per year. Liberal arts can pay, if properly applied. Everyone doesn't have to be an Engineer or Doctor to make a decent living.

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Re: What monetary value has your education provided you?

Post by LibertyLover » Sat Jan 07, 2017 7:31 am

Your earnings compared to what you paid for school and lost in income during college years does not bring you to an accurate eturn on investment calculation. What about what your returns without the investment?

A very simplified example:
You paid $100,000 for schooling.
You made $80,000/yr for 20 years ($1,600,000)
The calculations from other post would say a 16X return on investment. What you are doing is saying you would have made ZERO $ without the schooling. It's hard to say what you would have earned without schooling but for the purpose of the example let's say $40,000/yr for the same 20 years.

That would change the return on investment from 16X to 8X.

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Re: What monetary value has your education provided you?

Post by kelway » Sat Jan 07, 2017 7:36 am

My employer paid for the degree and I doubt HR even has the credential linked to my file. So, 0x. I was making basically the same money before as after, and the promotion would have been granted regardless. But I do think college will remain a great place to drink with friends.

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Re: What monetary value has your education provided you?

Post by carolinaman » Sat Jan 07, 2017 9:05 am

LibertyLover wrote:Your earnings compared to what you paid for school and lost in income during college years does not bring you to an accurate eturn on investment calculation. What about what your returns without the investment?

A very simplified example:
You paid $100,000 for schooling.
You made $80,000/yr for 20 years ($1,600,000)
The calculations from other post would say a 16X return on investment. What you are doing is saying you would have made ZERO $ without the schooling. It's hard to say what you would have earned without schooling but for the purpose of the example let's say $40,000/yr for the same 20 years.

That would change the return on investment from 16X to 8X.
Putting a monetary value on a degree seems like a fool's errand. Although there is clearly value there and possibly high value in many instances, it forces one to speculate on what their career earnings would be without a degree. That seems unknowable in many instances. For example, I started my career without a degree and went back to school at night to get my degree. I had a successful career in IT management. I know that my degree and GPA opened doors I would not have had otherwise. However, i had colleagues in similar positions who did not have 4 year degrees that also had comparable success in their careers, and in some instances better success. So it is really not possible to determine what my non degree career earnings would have been.

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Re: What monetary value has your education provided you?

Post by Texas Radio » Sat Jan 07, 2017 9:14 am

I earn on average 10x what my education cost - each year. I am a litigation attorney.
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Re: What monetary value has your education provided you?

Post by lazydavid » Sat Jan 07, 2017 9:22 am

Depends on how I define "education". The return on my Bachelor's degree is negative, in exactly the amount of the tuition I paid. I started with my current employer before I had the degree, so it played no role in my hiring. I also believe that it had no bearing on my promotion into management. My predecessor did not have a degree of any kind.

I'm currently enrolled in an MBA program, which I also expect to have negative return--albeit a small one, since my employer is paying for roughly 2/3 of it--for the foreseeable future. I'm only going through with it to ensure that not having it is not used as an exclusionary factor at any time in the future. If I switch employers, for example, or apply for a Director/VP position where a Master's degree is "required".

But using "education" in the broader sense, the results are much more positive. I've taken numerous training courses on various technologies, and used them to prepare for a variety of certifications. Some of the courses even got college credit, which I was able to apply to my Bachelor's program to avoid taking additional electives, which saved some money there. These certifications DID play a role in securing my first role with my current employer. Returns on that are almost infinite because my prior employer reimbursed almost all of my costs (which were very low anyway). Since my Box 5 income for 2016 is approximately 3x what it was my last year there (2007), I'd say these have paid off handsomely. I still do some sort of external technical training at least once a year, though it's now more advanced and less tactical than before.

I've also done some internal training that I feel has had a positive payback. A few years ago I was part of a selective leadership training program for top talent managers being prepped for Director roles. Some of the things I learned there have made me much more effective in my current role, and participation in that program (which accepts about 20 participants/year from a pool of about 1,400 eligible managers) puts one on the short list for later promotion. That cost me nothing, but I imagine the actual total cost per attendee is probably somewhere in the $20k range.

afan
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Joined: Sun Jul 25, 2010 4:01 pm

Re: What monetary value has your education provided you?

Post by afan » Sat Jan 07, 2017 9:59 am

Hard to frame the question.
What would be the counterfactual income?
College was a requirement for my graduate degree. Overall I have done much better than the median high school graduate, if that is the comparison.

I went into a high paying career that requires the grad degree, so I cannot attribute that all to the college degree. On the other hand, my alma mater produces high income alumni across the board, even among the minority who do not get advanced degrees.

None of these careers is open to people without college.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

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