Reconsider the chapter opening story about the return on investment on college education. According to a recent study, attending a university full-time costs the average student more than $17,000 a year. But here’s the magic number that makes it all worthwhile: Over the years, university graduates earn an average of almost $10,000 a year more than high-school graduates do—and that’s an after tax figure. One recent attempt was made to estimate the median future earnings by two groups—high-school graduates and college graduates. Suppose that net incomes after n years from high-school graduation are as follows:
• High-school graduates: Net income = $13,529 ln(n + 17) – $14,788
• College graduates: Net income = $36,529 ln(n + 17) – $64,021, (n > 4)
Here n represents the year after high school graduation. Now estimate your college expenses for four years and determine the rate of return on your college education.
But you would expect that some degrees to lead to more lucrative occupations than others. It is the right time of year to take a fresh look at an old question: Why bother going to college? With all the accompanying fees and debts, is doing so still worth it?
