Craig Roggow

Is College or a Professional Degree Worth the Investment?

Questions to Ask:• How do you compare costs vs. benefits, at

the same time, and at the same date?• If so, how will you determine the “real”

average value of college or post graduate education on your investment?

• Will going to college or graduate school payoff as an investment for you?

Six Steps in Determining Value (1-3)

• Step 1– Identify a rough per month cost for attending a

specific college or a professional degree.• Step 2– Be able to calculate FV of college or

professional degree costs. • Step 3– Obtain data showing educational attainment in

relationship to lifetime earnings.

Six Steps in Determining Value (4-6)

• Step 4– Determine potential average lifetime gains

related to career level evaluating.• Step 5– Be able to calculate the Net Present Value

(NPV) of increase earnings due to college. • Step 6– Determine the “real” average investment value

of college or a post graduate degree.

Step 1

• Rough per month cost for attending a specific college or a professional degree.

– Public 4-Year College– Tuition for 4 yrs. (8 semesters) at $9k/yr.    = $750/mo.– Rent for 4 yrs. (48 months) at $500/mo.   = $500/mo.– Books, labs and supplies $600/semester   = $100/mo.– Food, utilities, cellphone, gas, etc.             = $600/mo.– Transportation, airfare back home             = $400/mo.

• Estimate Total: $112,800 or $2,350/mo.

Step 2

• Now we will calculate the future value cost of attending college.– To compare your specific costs, simply use your data values

and our formula (This finance calculator will assist you in this calculation).

– FV = Future Value, P = Pmt, i = Interest rate per, period (month), n = Number of compounding periods (month).

• FV Public 4-Year College Formula:

– PV=0, i=1%, n=48, Pmt= $2,350, FV= $143,873 (payment at end).

Step 3

• Obtain data of lifetime earnings full-time employee working for 40 years within that area (U.S. Census Bureau).

» Table 1

Professional Degree $4,400,000

Doctoral Degree $3,400,000

Master's Degree $2,500,000

Bachelor's Degree $2,100,000

Associates Degree $1,600,000

High School Diploma $1,200,000

Not High School Graduate $1,000,000

Step 4

• Determine potential average lifetime gains related to college level.

• For our demonstration purposes, I chose the Bachelor's Degree College level at $2,100,000.).

» Table 1

Professional Degree $4,400,000

Doctoral Degree $3,400,000

Master's Degree $2,500,000

Bachelor's Degree $2,100,000

Associates Degree $1,600,000

High School Diploma $1,200,000

Not High School Graduate $1,000,000

Step 5

•  

Step 6

• Determine value of college or a post graduate degree. Compare FV of college costs at the time of graduation, with the NPV of increase earnings over one’s lifetime.

– Public 4-Year College PV=$185,920 - FV= $143,873 = $42,047 (Beneficial)

Summary

• In calculating the true value of college or a professional degree, you need to incorporate costs vs. benefits, at the same time, at the same date, which includes present and future values.

• This review shows that investing in education from a public 4-year college is a good value with our data.

Is College or a Professional Degree Worth the Investment?

Craig Roggow

http://mergerandacquisitionstrategies.org/is-college-or-a-professional-degree-worth-the-investment