Many students wonder whether it is worth pursuing or finishing their college degree or graduate degree. After all, there is a lot of time, effort, and money invested in getting your diploma. Wouldn’t it be easier to spend the money on things you need now? Or even find a degree or diploma program that is quick and easy, even if you suspect it might be a fake degree program?

Once you run the numbers, you will see that in most cases your return on investment in a college degree or graduate degree is very high; in other words, the benefits of a degree far outweigh the costs. As the chart below illustrates, earnings at every successive level of education keep going up.

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Avoid fake diplomas and fake degrees

When evaluating potential universities, first make sure your school is accredited through a respected accreditation association. If it is not, there is a chance you will end up with a worthless or even fake diploma or degree. You may believe fake degree advertisements only show up in your email spam folder (“Be nominated for an MBA!”) but they can show up in legitimate arenas as well. Keep in mind that anyone can throw up a website or even a billboard and advertise online degrees and diplomas that are fake. A common tactic is using names similar to other well known colleges, like Hamilton College versus Hamilton University.

Steps in calculating the ROI on your degree

Now that you’ve established your university is legitimate, let’s figure out your return on investment in achieving your degree.

1.    What is the total cost of the degree you are seeking? Add up the cost of the credits you will need to graduate, and don’t forget you may be able to transfer previous earned credits. Add in the cost of books and supplies, including a computer and internet service if applicable.

2.    What is the amount of income you will forego by pursuing your degree? If you are attending school full time and don’t plan on working, this number will be the full amount of the income you would have otherwise earned, multiplied by the number of years you will be in school.

One great advantage of online universities is they allow you to continue working while getting your degree, meaning there would be no foregone income. Also, taking classes online means you don’t have to move to an expensive apartment near campus; you can stay at home.

3.    What amount of loans will you take out to finance your degree? You will be paying interest on those loans based on the rate, the repayment period, and monthly payment amount. Use calculators such as http://www.finaid.org/calculators/loanpayments.phtml to see how much cumulative interest you will be paying.

4.    Add up 1,2 and 3. These are your total costs to get your degree. This is a big number, but don’t worry.

5.    What are the benefits to getting a degree? Higher salary, lower unemployment, increased mobility, a higher savings rate and even better health for you and your children. While many of these factors are difficult to quantify, let’s look at the higher salary assumption. A quick way to calculate how much more money you will earn is to take the annual difference in salary and multiply by the number of years you will work in the future.

Source: Bureau of Labor Statistics

These numbers do not even take into account inflation or the time value of money. If we were to add in those assumptions the results would be even more dramatic.

Do the numbers work?

Most of the time, your higher income potential far outweighs any costs you incur to attend school. However, there may be some instances where the numbers do not work.

Let’s say you are a lawyer making $200,000 per year and want to quit work, get a PhD in art history at an elite private university, and then teach high school. You would be taking a significant pay cut and incurring a high amount of debt. But perhaps it would allow you to find true joy and satisfaction in your career.

Let’s say you are 60 years old and also want to quit work to pursue a degree. Be aware that it may be difficult to re-enter the work force since you will command a higher salary due to your previous work experience plus education. Online education may be ideal since you can remain in the work force while getting your degree.

Sources: The Value of a College Degree, ERIC digest, ERIC identifier ED470038; Bureau of Labor Statistics