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How to Justify an Investment in Education

Updated on August 7, 2011
Investment in Education
Investment in Education | Source

An investment in education is practically a sure thing as investments go. In the U.S. the College Board has reported on studies that show the payoff in terms of additional income earned for various levels of education completed. Using the incremental earnings generated by different educational achievements is a pretty good way to assess an investment in education.

Calculate the Return on Investment (ROI) of a High School Diploma

High school graduates had median annual earnings of $31,500 in 2005 which was $8,100 more than the earnings of those without a high school diploma. Over a 40-year working life that amounts to a reward of $324,000 for finishing high school. That's a pretty good ROI for getting a diploma. No one should drop out of high school! An individual's investment in education for a public high school diploma is only the time required to get it.

Calculate the ROI of an Associate Degree

The median annual earnings of those with associate degrees were $40,600 in 2005 or $9,100 more than those with only high school diplomas. Added over a 40-year working life, that totals $364,000 more than high school graduates earned. Even taking the costs of the two-year degree plus two years of earnings forgone into consideration, the person with the associate degree surpasses the high school graduate in cumulative net earnings by age 29 according to the College Board.

Calculate the ROI of a Bachelor's Degree

Holders of bachelor's degrees had an average median income in 2005 of $50,900, or $19,400 than high school graduates. In a 40-year working life that difference amounts to $776,000. Taking the costs of four years of college and four years of lost earnings into account, the net total earnings of those with bachelor's degrees surpass those of a high school graduate by age 33 and continue to grow over the following 30 plus years.

Investment in Education for Advanced Degrees Also Pays Off

The information below shows the median earnings in 2005, the difference compared to high school graduates, and the lifetime income advantage for those earning advanced degrees:

  • Master's Degree -- $61,300, $29,800 more per year, $1,192,000 more over 40 years
  • Doctoral Degree -- $79,400, $47,900 more per year, $1,916,000 more over 40 years
  • Professional Degree -- $100,000, $68,500 more per year, $2,740,000 more over 40 years

The bottom line is that the higher the educational attainment, the higher one's expected income is. The advantage is particularly evident with advanced degrees.

Investigate Online Education for Getting a Degree

There are a great many degrees available through online education, allowing a student to continue working while learning. One website to visit to explore choices available is the "College Navigator." This site belongs to the U.S. Department of Education and includes degree programs provided both online and using traditional classroom methods. Here's a link to their web site:

Do Whatever It Takes to Maximize Your or Your Children's Educational Attainment

The evidence is clear that investment in education pays off. The higher incomes that come with more education should be motivating for people to invest in their own education and in their children's. Our nation depends upon the education of our people to remain competitive in the global economy.

Final thoughts:

  • Knowledge matters and degrees matter even more when it comes to opening doors for higher paying careers.
  • Teach children to channel their ambitions through education.
  • College degrees may not be for everyone, but every student should be encouraged to get as much education or as many qualifications as possible.
  • Globalization and the knowledge economy have made investment in education more important than ever.


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