FL101: The Opportunity Cost of Education

photo : daniel blume

The Opportunity Cost of Education Explained
This post is a part of the Financial Literacy 101 series.  You can find an index and introduction to the series here.

If you went to college and earned a 4-year degree, how much more money could you expect to earn than if you only had a high school diploma?
a) A little more; about 20% more.
b) A lot more; about 70% more.
c) About 10 times as much.
d) No more; I would make about the same either way.

A couple of weeks ago Forbes.com released their Best- and Worst-Paying Jobs in America.  Flipping burgers backed up its stereotype, as 4 of the worst-paying jobs were in the food service industry. The 5th? Salon shampooer.  On the opposite side of the spectrum, all 5 of the Top 5 Best Paying Jobs in America were in the medical profession, a career that has an extremely high barrier to entry with the extreme difficulty and cost of medical school.

Above benefits such as being able to get away from home or finding hot guys/girls, one of the best reasons to get an education is cold hard cash.  Sure you have many high-school and college dropout success stories, but you have to ask yourself, “Am I really THAT lucky?”.  According to the US Census, college graduates earning a Bachelor’s degree make $2.1Million over their lifetimes over “just” $1.2M for those with only a high-school diploma.

I realize that for most of my readers, I am preaching to the choir, but the idea has to be engrained in to your cousins and kids as well.  Getting good grades and going to a good school makes it a lot easier to get by in life.  For you numberhounds, in 2006, the average salary with a Bachelor’s degree was $54,689 compared to just $29,448 for those with just a high school education.  That’s a difference of about 86%.

If you answered b) about 70% more, you would be absolutely correct.

Tuesday, May 12, 2009, 14:20 | posted in explained | 1 comment »