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How to Calculate Your Degree’s Return on Investment

Abigail Endsley
Abigail Endsley

December 23, 2017

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Balancing the checkbook

Evaluating return on investment (ROI) is a fancy way of saying “get what you pay for.” While this concept is well-known to fancy folks in the business world, it’s useful to apply the concept to any large investment, including college.

Calculating your ROI on a degree means asking yourself “is a BA in Elementary Education from a well-known private school worth the $150,000 I’m spending it?”

Alice didn’t ask herself that question. That expensive private school was her dream, so she enrolled fresh out of high school (borrowing more than her weight in loans to do so).

Upon graduating, she was hired as a 4th grade teacher at a public school, making just over $37,400.

As an 18-year-old fresh out of high school, this number would have seemed a fortune to Alice. Now that she’s been living on her own for a few years and does all her own grocery shopping… let’s just say she understands why teachers are often unhappy with their salaries.

After taxes and the regular costs of living, Alice is lucky to have $670 of discretionary income each month. She would love to tuck part of that away in a savings account and use the other for dates, Christmas gifts, and car repairs, but… how big are those monthly student loan payments again?

Alice failed to calculate the ROI on her teaching degree before it was too late. Had she done so, she may have realized that spending $150,000 to begin a $30,000/year profession wasn’t the best use of her hard-earned dollars.

If you want to actually afford things out of college, rather than throwing money into what feels like a never ending black hole of debt, start by calculating your degree’s return on investment.

Understand Your Degree’s ROI

It’s not hard. Calculating return on investment is as simple as researching how much money your desired career is likely to bring in and deciding for yourself how much you’re willing to spend preparing for it.

But, since lists are such nice, helpful things, let’s walk through the process step by step:

1. Evaluate whether a degree is even needed.

I know this will sound shocking, so hold your breath:

Not everyone needs a degree.

I know this goes against every brochure you’ve received in the mail, but it’s true. For some reason, modern society thinks “educated” and “credentialed” mean the same thing. They don’t.

There are three million jobs in the United States that don’t require any kind of higher education. Many of them pay really well, and any of them can provide a sense of accomplishment and satisfaction if it’s a good vocational fit for you.

Alternatively, there are some degrees offered for professions (for example, cinematography) that would be best pursued outside of a classroom. If you want to learn how to make a movie, don’t spend your time consuming outdated material and using outdated technology. Buy a camera and just get started. Intern or volunteer on sets and at film festivals. Connect with people who are making movies and learn from them.

If you think a career like this (one that doesn’t require a college education) may be your path, skip the degree for now. Save thousands of dollars and invest your time and money launching your career instead!

Skipping the classroom is a relatively low-risk way for you to explore whatever opportunity you think is most satisfying, especially if you’re young and single. And if you find out that career option isn’t actually a good fit, college will still be there in a few years.

2. Research starting salaries for career opportunities.

If the career path you’re interested in would be aided by a college degree, start digging into the numbers. What kind of money will this career actually earn?

Payscale.com is a great way to do that.

This website gives you an estimation of how much money various fields of work earn. And it doesn’t just give you median estimates, but beginning and advanced estimates too. There are plenty of resources like this on the internet, so log on and see what you see.

Thinking of going into a profession that doesn’t churn out a lot of dough? Don’t let that hold you back. That’s why you’re doing this exercise in the first place. It’s a lot easier to get into a low-income profession that you’re passionate about if you’re sure that income will still cover your basic needs.

3. Compare your starting salary to your college costs.

Once you know what career you want and approximately how much you’ll be making from that at the start, it’s time to find an affordable way to get there.

Start by deciding how much money you’re willing to spend on your education. Considering how much she brought home upon graduation, Alice probably should have spent closer to $40,000 for her degree, not $150,000. Not only is $40,000 paid over 4 years much less likely to send Alice into debt, but with her starting salary near $30,000, she’ll earning her college money back after just a few years in her new career field.

I know you were probably hoping for an exact formula to calculate the ROI on your degree, but the harsh truth is: there isn’t one. No one can tell you what your education should be worth to you. And no one besides you knows what you can really afford.

The purpose of this exercise is to open your eyes to the big picture so you don’t end up like Alice and take on mile-high student loans your future career will have no hope of ever paying off.

4. Find the most affordable way to earn your degree.

Fortunately, comparing the return on investment of college isn’t simply an exercise in reading labels. You have a lot more control over your college costs than you may realize.

This country houses over 5,000 colleges, offering very similar degrees at various price points. It’s likely with a little research, you can find exactly the degree you want at exactly the price you’re willing to pay.

Granted, sorting through 5,000 schools by hand can be a pain (especially when many offer over 100 degree choices), so here are some basic tips:

  • Public schools are almost always cheaper than private schools
  • In-state tuition is almost always cheaper than out-of-state
  • General degrees (like English, Communication, General Management) are almost always cheaper (and more useful) than highly specialized choices
  • Transfer credit is almost always cheaper than earning credit on campus

Take time to compare school prices, especially of the smaller schools you may have overlooked. Don’t just blindly enroll in your parent’s alma mater.

College and Planning for Debt

Sooner or later, all this pre-college financial planning begs the question: “how much debt is worth it?”

On behalf of my own conscience (and the beliefs of this company), let me be perfectly clear.

No amount of debt is “worth it.” Not one cent. College should be an exciting opportunity that propels you into your future at lightning speed! It shouldn’t be a debt sentence. That’s why we work so hard to help our students lower the cost of college and graduate 100% debt free.

So as you’re performing this research, looking for a way to get the best ROI on your college degree, don’t be fooled into asking “how much debt is worth it?” It’s not.

Just keep your eyes open for every way to save money on your degree. Live at home. Work during college. Take transfer credit so you can pay for one class at a time. There are a million and one ways to make college an affordable endeavour so that every dollar you spend is actually an investment in your future. You may need to put in a little extra effort to find them, but isn’t a debt-free future worth it?


If you want a little help figuring out exactly how much you should spend on college, what college will give you the most value, and creative ways to save on your degree, one of our Academic Advisors will be happy to assist you. Click here to get a free College Cost Comparison.

Abigail Endsley
Abigail Endsley

A former student counselor and Unbound student, Abigail is passionate about empowering others to achieve their goals. When she’s not dreaming with her friends, you can find her reading or singing Broadway songs. Loudly.

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