Does College Make Financial Sense?

Skill Development

The first edition of my career book, Fast Track Your Job Search (and Career!) , contained a chapter that offered ideas for evaluating the advisability of getting an M.B.A.. (I deleted it in later editions because I wanted to reduce my hate mail.) Within the chapter I provided estimated financial paybacks of the top rated business school programs. One example that seemed to get reader attention was a 14+ year payback for a Harvard M.B.A.. These and other poor ROI’s stimulated me to ask the obvious question: “Is it worth it to get an M.B.A.?” In this post, I want to take this topic a step further and question whether college, in general, makes financial sense.

On the positive side, those with at least a bachelor’s degree experience far less unemployment than those without one. According to the U.S. Department of Labor Bureau of Labor Statistics, from 1992 through 2012 the unemployment rate of college grads aged 25 and over never reached 5%. After comparing these results to those of less educated groups, it seems clear that attaining a college degree provides some undetermined value by reducing your odds of unemployment.

It’s nice to know you will have a better chance of staying employed, but it may be even more important to consider whether or not a college degree will earn you more in terms of income. One way to examine this factor is to look at financial payback… how long it will take you to recoup the direct costs (I emphasize direct costs because there are huge indirect costs that few people consider) of the education you may be considering. Considering the Harvard M.B.A. estimate mentioned earlier, I think it is valid to ask “If you invested $150,000 and two years of your life,  would you be OK with a 14 year payback?”

A second way to evaluate college paybacks is by profession. Here are examples from data published by, with the number of years of education required noted in parentheses:

  • Economists (4) – 7 years
  • Civil Engineer (4) – 8.5 years
  • Pharmacist (7) – 11 years
  • Accountant (4) – 11.5 years
  • Attorney (7) – 13 years
  • Public Relations Specialist (4) – 15 years
  • Teacher (4) – 22 years
  • Veterinarian (8) – 28 years

A third way to look at your educational investment is via comparative paybacks of universities. A Smart Money Magazine comparison of university paybacks from 2012 ranked a wide range of schools. Obviously, across-the-board rankings may not be applicable to your situation, such as if you graduate from Georgia Tech with a B.B.A. when their ranking is heavily weighted with higher-income scientific disciplines. With that said, here are a few notable rankings:

  • 1st – Georgia Tech
  • 4th – University of Georgia
  • 10th – University of California – Berkley
  • 15th – Michigan State
  • 24th – Harvard
  • 28th – Columbia
  • 33rd – Yale

So, now you have examples of three ways of evaluating the payback of college: (1) years required to break even for a specific degree, (2) years required to repay based upon occupation pursued, and (3) relative ranking of paybacks by university.

What if you reviewed all of this data in detail? Would it tell you what degree to pursue, what profession to pursue, and what university to attend? Probably not. You would be in the ballpark, but probably not sure whether you were at home plate or in left field.

I don’t want to leave you incapacitated when making this important life decision, but I have reached my allowed word count for this post. Stay tuned. In my next post, I will share other factors worth considering that all these types of studies ignore… but may be critically important to your educational choices.