Is college education cost effective?
Consider your college education as a sort of program that is designed to produce a desired outcome. Is it cost-effective? This exercise is far from accurate in determining this but may make you feel better about being a poor college student.
- Write down a job that you had prior to entering college, or one that you are working at now.
- Go to the Bureau of Labor Statistics website ( http://www.bls.gov/) and locate the most recent National Compensation Survey (use current wages if you are employed now).
- Look up the hourly wage of the job noted in Step 1 (or job that most closely resembles what you are doing). Multiply the hourly wages by 2080 (40 hours per week x 52 weeks per year) based on the assumption that you are working full time to estimate your annual earnings.
- Write down one or two jobs that you would like to hold once you have completed your education. Look up the hourly wages of one of those jobs. Multiply the hourly wages by 2080 to estimate your annual earnings.
- Using your own bills, or estimates provided by your own school, estimate the cost of a college degree (include four years or more if appropriate, housing, meals, interest on student loans, etc.).
- Subtract the annual income in Step 3 from the annual income in Step 4. In theory, this should be the annual wage benefit of having a college degree.
- Divide the cost of your education by the annual wage benefit found in Step 6. This is an estimate of how many years it will take to make up the cost of your education given the discrepancy in wages.
- Write a brief cost-effectiveness report in which you evaluate the efficiency of your own college education.
