How much is a college degree worth? Business Tips by Donald Burleson

How much is a college degree worth?  Let's face it, college has become very expensive and the savvy student will carefully weigh the net present value of the college costs with the expected increase in lifetime earnings, not to mention the benefits of a professional lifestyle.

I have several employees who have asked me this question and it deserves a thoughtful answer.  In my research Increased earning income from bachelors, masters and doctoral (PhD) degrees, I discovered some interesting facts:

A Bachelors degree is worth a million bucks!

High school graduates can expect, on average, to earn about $1.2 million dollars in lifetime income, while those with a bachelor's degree earn an average of $2.1 million over a 40 year working lifetime.  In sum, a college degree is worth a million dollars of extra cash, but it's amortized over a 40 year period, and we must account for inflation and the time value of money.  At the same time, the cost of a state college for four years is about $100k.

Win your Oracle Dream Job! Colleges don't teach the expert tips and secrets for getting an Oracle job and acing your Oracle job interview with The Oracle Job Interview Handbook.  Order directly from Rampant and save 30%.     Net present value of a college Bachelors degree To compare apples-to-apples, we need to convert these costs and rewards into today's dollars, figured on graduation day.  Note that the million dollars in increased earning power is the same as about $400k today: NPV college costs = $150k NPV income gain   = $400k So, what's a Bachelors degree worth?  It's about a quarter of a million dollars, not too shabby. Income and College Major Lifetime income increase depends heavily on your college major, with this hierarchy (expressed in net present value dollars).  It's interesting that college students fall down this hierarchy using the Peter Principle, changing majors until they find one that they master: Major NPV worth Engineering $497,930 Computer science or Info. Tech $443,180 Business $349,028 Science $283,286 Liberal arts $243,883 Social science $210,080 Education $108,461 Note that engineers earn 4x as much as Education majors, followed closely by computer science and business administration. What's a Masters or Law Degree worth? When we look at the increased earnings for MBA's and lawyers, we see a huge increase in lifetime earnings: Attorneys can expect to earn  $3.2 million dollars more than a High School graduate. (Today's NPV worth is about 1.5 million dollars, about $500k payback per year)   MBA's can expect to earn 1.3 million dollars more than a high school graduate. (Today's NPV worth ~= $800k dollars, about $400k payback per year) Of course, these are all averages and your mileage will vary.  But it's clear that a Law School diploma (J.D.) is worth about 1.5 million dollars, and an MBA is worth about $800k. College earnings references: "Lifetime Earnings Soar with Education: Masters degree worth $2.5 million income over a lifetime"   MSN study   US government study