Is It Worth the Money to Get a College Degree? Lets Do the Math and Find Out!

[LevelUP]

At the median, graduates with a bachelor’s degree earn $2.8 million over the course of their careers, according to the Georgetown University Center on Education and the Workforce, compared to $1.6 million for high school graduates.

The correlation between higher earnings can be based on education received and employers' basis for people with degrees.

Bachelor's Degree Students

The median yearly earnings for a 25-34yr with a bachelor's degree is 59.600, while a high school graduate earns 36,600. (+$20,000 premium)

Master's Degree Students

The median yearly earnings for a 25-34yr with a bachelor's degree is $69.700, while a high school graduate earns $59.600. (+$10,000 premium rounded)

How long does it take to break even on your college investment?

How long it would take to catch up to someone not earning a degree would depend on how long your degree program is and how much total debt you accumulated.

For students that hack their degrees in one year, you are literally printing money as you can catch up after only 1 year of working, considering your debt is 20k or less.

For students that do a master's degree in a couple of years for a reasonable price of 20k or less, you may have to wait a few years longer.

Important note about lifetime earnings

If you saved 20k a year (which equals the median of how much a bachelor's degree earns over HS diploma holder) & invested it in the S&P 500 (avg 10% return per year), you would end up with 1 million after 20 years. After 40yrs, it's around 8 million. (Far higher than the $1.2m lifetime  earnings you would have with zero investing)

I do believe there are some limits on how much you can spend on college and you don't want to end up being a Dave Ramsey meme for the total amount of college loans you took.

[ss20ts]

Few people can save $20K a year. The vast majority of the US population lives paycheck to paycheck.

Was earning a college degree worth it? My husband received a 6% raise after he received his degree last year and is now changing jobs at his employer. They are using his newly learned skills. Was it worth it? He thinks so.

[dfrecore]

Few people can save $20K a year.

Most don't save $20k/yr - but some do.  And many are required to put a good chunk in.  If you're a public employee in a state where you have a defined contribution plan, you may be required to put 7%, 9%, 12%, even 15% of your salary into the plan each year.  That's teachers, firefighters, cops, local and state government employees, etc.  For many, that's going to be many thousands each year.

To say that the vast majority lives paycheck to paycheck may be correct, but that does not mean they're not forced to save money in a 401(k) even if they weren't so inclined to.

[ss20ts]

Few people can save $20K a year.

Most don't save $20k/yr - but some do.  And many are required to put a good chunk in.  If you're a public employee in a state where you have a defined contribution plan, you may be required to put 7%, 9%, 12%, even 15% of your salary into the plan each year.  That's teachers, firefighters, cops, local and state government employees, etc.  For many, that's going to be many thousands each year.

To say that the vast majority lives paycheck to paycheck may be correct, but that does not mean they're not forced to save money in a 401(k) even if they weren't so inclined to.

Many states don't require employees to contribute to 401Ks. They just don't have a pension anymore. Comparing state employees to the general population is odd since the entire state population can be millions while there could be a few tens of thousands of employees. 

There are plenty of stats to show that the vast majority of the population of the US lives paycheck to paycheck. It's not possible for most people to save $20K a year while living paycheck to paycheck.

[Alpha]

I know that this is hopelessly out of step with what others are saying in this thread but I'd like to add that a part of what makes a college degree "worth it" extends beyond the numbers in your bank account.

[bjcheung77]

I think of getting a college degree similar to investing.. instead of investing in crypto, funds, or stocks, the investment is on my future and possible financial goals that may become of that investment... I am kind of my own boss so I have time to research things. My advice right now, get an education really cheap, it's the only thing that will help you with gains in the future, unless you have cash for investing in property (not bonds/stocks).

[dfrecore]

Few people can save $20K a year.

Most don't save $20k/yr - but some do.  And many are required to put a good chunk in.  If you're a public employee in a state where you have a defined contribution plan, you may be required to put 7%, 9%, 12%, even 15% of your salary into the plan each year.  That's teachers, firefighters, cops, local and state government employees, etc.  For many, that's going to be many thousands each year.

To say that the vast majority lives paycheck to paycheck may be correct, but that does not mean they're not forced to save money in a 401(k) even if they weren't so inclined to.

Many states don't require employees to contribute to 401Ks. They just don't have a pension anymore. Comparing state employees to the general population is odd since the entire state population can be millions while there could be a few tens of thousands of employees. 

There are plenty of stats to show that the vast majority of the population of the US lives paycheck to paycheck. It's not possible for most people to save $20K a year while living paycheck to paycheck.

Between federal, state, and local government - 15% of the US workforce works for the government in one way or another.

I did not say that it's possible for most people to save $20k per year, but I did just want to say that MANY save a good chunk of change in their 401(k)'s or 403(b), even if they don't want to; and a lot of those get an employer match of some percent as well.  So if I save 10% of my check (even by force) and my employer matches 50% of that, I'm "saving/investing" 15% of my paycheck.

[spohara]

Few people can save $20K a year. The vast majority of the US population lives paycheck to paycheck.

Was earning a college degree worth it? My husband received a 6% raise after he received his degree last year and is now changing jobs at his employer. They are using his newly learned skills. Was it worth it? He thinks so.

I agree that few people DO save, but to say it is NOT POSSIBLE is a bridge too far in my book.  The stats in the OP tell the tale.  People are surviving on $20k less than what college grads get.  If the average college grad lives with the average lifestyle of a non-college grad, they can literally just pocket the extra.  They are slave to their choices (want to live in a nice part of town with fancy cars, blow money on eating out, maybe racked up more student loan debt than was necessary because they didn't visit DegreeForum before going to school).  Have to inoculate against lifestyle creep.  That is for the majority.  Of course there are always rarer exceptions where making more money or spending less has become impossible for other reasons.

[dfrecore]

Few people can save $20K a year. The vast majority of the US population lives paycheck to paycheck.

Was earning a college degree worth it? My husband received a 6% raise after he received his degree last year and is now changing jobs at his employer. They are using his newly learned skills. Was it worth it? He thinks so.

I agree that few people DO save, but to say it is NOT POSSIBLE is a bridge too far in my book.  The stats in the OP tell the tale.  People are surviving on $20k less than what college grads get.  If the average college grad lives with the average lifestyle of a non-college grad, they can literally just pocket the extra.  They are slave to their choices (want to live in a nice part of town with fancy cars, blow money on eating out, maybe racked up more student loan debt than was necessary because they didn't visit DegreeForum before going to school).  Have to inoculate against lifestyle creep.  That is for the majority.  Of course there are always rarer exceptions where making more money or spending less has become impossible for other reasons.

Truth - to say that everyone is living paycheck-to-paycheck based solely on the cost of living - I doubt that.  Many just live on more than they make on a regular basis.

[ss20ts]

Truth - to say that everyone is living paycheck-to-paycheck based solely on the cost of living - I doubt that.  Many just live on more than they make on a regular basis.

Nowhere did I say everyone. I said the majority of the US live paycheck to paycheck which isn't everyone just the majority. There are plenty of stats that back this up.