A Cost/Benefit Analysis of a Bachelor’s Degree

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Cost Benefit Analysis: Bachelor's Degree
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A Cost/Benefit Analysis of a Bachelor’s Degree

There are many rea­sons peo­ple go to col­lege for a bachelor’s degree: to get a bet­ter job, to fol­low intel­lec­tu­al pur­suits or maybe just to get out of town and try some­thing new. What­ev­er the rea­son, there’s no deny­ing that col­lege is pret­ty expen­sive these days. So, is it real­ly a good invest­ment? That may depend on your major, the col­lege you attend and your ulti­mate career goals.

Public Opinion

Accord­ing to a recent sur­vey done by the Pew Research Center:

  • 57% of Amer­i­cans say high­er edu­ca­tion is not worth the cost.
  • 75% of Amer­i­cans think high­er edu­ca­tion is too expensive.
  • 86% of col­lege grad­u­ates agree that col­lege was a good per­son­al investment.
  • 48% of col­lege grad­u­ates with stu­dent loans say their debt made it hard to pay oth­er bills.
  • 55% of col­lege grad­u­ates say their degree pre­pared them for a career.
  • 48% of the pub­lic think that stu­dents and par­ents should be respon­si­ble for the cost of college.

Tuition vs. Earnings

Annu­al, four-year col­lege costs on the rise (2,3)

Year / Tuition, room and board (pub­lic) / Tuition, room and board (pri­vate)

  • 1973 / $8,416 / $16,979
  • 1978 / $8,000 / $16,000
  • 1983 / $8,400 / $17,100
  • 1988 / $8,900 / $24,000
  • 1993 / $10,100 / $25,900
  • 1998 / $11,000 / $28,100
  • 2003 / $13,750 / $33,900
  • 2008 / $14,900 / $35,100
  • 2013 / $18,391 / $40,917

Medi­an life­time earnings

  • High school diplo­ma: $1,304,000
  • Four-year bachelor’s: $2,268,000

That is a dif­fer­ence of $964,000 over the course of a lifetime.

Aver­age annu­al income by col­lege major

  • Edu­ca­tion: $44,950
  • Visual/performing arts: $49,150
  • Psy­chol­o­gy: $50,025
  • Lib­er­al arts and his­to­ry: $51,150
  • Lit­er­a­ture and lan­guages: $52,075
  • Biol­o­gy and envi­ron­men­tal sci­ences: $57,200
  • Com­mu­ni­ca­tions: $58,325
  • Social sci­ences: $60,150
  • Phys­i­cal sci­ences: $63,425
  • Busi­ness: $64,075
  • Com­put­er sci­ence and math­e­mat­ics: $76,100
  • Engi­neer­ing: $83,725

It Pays to Finish

Annu­al income, ages 25–34

  • Four-year bachelor’s degree: $45,000
  • Some col­lege, no degree: $32,900

Unem­ploy­ment rate, ages 25–34 (2)

  • Four-year bachelor’s degree: 4.1%
  • Some col­lege, no degree: 9.8%

Default rate on stu­dent loans

  • Four-year bachelor’s degree: 3.7%
  • Some col­lege, no degree: 16.8%

The return on invest­ment (ROI) for a col­lege degree is around 15%, which is gen­er­al­ly con­sid­ered to be a good venture.

cost benefit analysis of a BA

Sources:
1. http://www.pewsocialtrends.org
2. https://www.khanacademy.org
3. https://www.washingtonpost.com
4. https://www.newyorkfed.org