How Long Will It Take a Degree to Pay For Itself?
"Before & After" Salary Scenarios That Show When That Degree Will Pay Off
It's difficult to ignore the headlines about the soaring cost of college tuition. Many people, especially those who have children who will soon be attending college, simply feel that going back to school is too expensive.
Don't let money be the reason that you turn your back on your degree! Often times, what these folks have failed to do is to take into account the increased earnings that can result from attaining that credential. That bump in pay essentially speeds up the time it takes for that degree to pay for itself!
Here are some scenarios to help persuade you to see that you can afford to go back to school!
Assumptions about Price
Average total tuition and fees in 2006-07:
- Two-year public schools: $2,272
- Four-year public schools: $5,836
- Four-year private, not-for-profit schools: $22,218
Note: Private, for-profit schools are usually competitively priced in between four-year, public and four-year private, not-for-profits.
Assumptions about Time
- Associate's degree requires 2 years of study.
- Bachelor's degree requires 4 years of study.
- Master's degree requires 2 years of study.
Note: This is used to roughly calculate the total overall cost of a degree; it will likely take you more time to complete your studies, unless you choose an accelerated program.
Huh?
Don't have any idea what the difference is between public, private, not-for-profit, and private, for-profit schools are? See our helpful "Comparison of Online Education Providers."
Example #1: From a High School Diploma to Associate's Degree in Business
An Administrative Assistant with her High School diploma earns about $32,000 per year. There's an opening for an Office Manager at her company, but to be competitive for the job, she needs an associate's degree.
The average pay for an Office Manager holding an associate's degree is about $40,000.
Moving up from being an Administrative Assistant to an Office Manager, thanks to having her associate's degree, means $8,000 more per year (about $667 more per month) in increased earnings.
- Two-year public school: The sticker price of an associate's degree is $4,544 ($4,544 = $2,272 per year x 2 years). The associate's degree pays for itself after only 0.568 years or 6.813 months!
- Bottom Line: That associate degree goes to work fast and could pays for itself in less than seven short months.
Example #2: From High School Diploma to Bachelor's Degree in Information Technology
A Computer or Network Support Technician with his High School diploma makes about $35,000 per year. While he's very good at troubleshooting, he's found that he's even better working with working with If he earns a bachelor's degree, he's a shoo-in to become Technical Support Manager.
On average, the pay of a Technical Support Manager with any kind of bachelor's degree is around $68,000.
A bachelor's degree and a promotion to Technical Support Manager will bring in a cool $33,000 more each year (or about $2,750 more per month).
- Four-year public school: The sticker price of an bachelor's degree is $23,344 ($23,344 = $5,836 per year x 4 years). This means that it takes less than 1 year - 8.49 months - for the bachelor's degree to pay for itself.
- Four-year private school: The sticker price of an bachelor's degree is
$88,872 ($88,872 = $22,218 per year x 4 years). But, this still means that it only takes 32.32 months, or about 2.69 years, for the bachelor's degree to pay for itself! - Bottom Line: A bachelor's degree can pay for itself anywhere from less than 9 months to less than three years!
Example #3: From High School Diploma to Bachelor's Degree in Business
A bank teller at a local community bank with a high school diploma makes about $22,000 per year. She's engaged to be married next year and has her eye on more responsibilities and a new title as Bank Branch Manager. Bank Branch Managers earn, on average, twice as much - about $48,000 or so.
Getting her bachelor's degree and upgrading to Branch Manager means an extra $26,000 more each year (or an additional $2,166 more per month).
- Four-year public school: The sticker price of an bachelor's degree is $23,344 ($23,344 = $5,836 per year x 4 years). This means that it takes less than a year - 10.78 short months - for the bachelor's degree to pay for itself.
- Four-year private school: The sticker price of an bachelor's degree is
$88,872 ($88,872 = $22,218 per year x 4 years). But, this still means that it only takes 41 months, or about 3.42 years, for the bachelor's degree to pay for itself! - Bottom Line: The bachelor's degree can pay for itself anywhere from less than 11 months to less than three and a half years!
Example #4: From a Bachelor's Degree to Master's Degree in Education
A third grade teacher in New York state with a bachelor's degree has his initial teaching certification in literacy. Though he earns about $35,000, he loves his job and "his" kids dearly.
By earning his master's degree, which he must do within five years of receiving his initial teacher certification anyway, he can earn approximately $42,000, $7,000 in increased earnings per year ($583 more a month).
- Four-year public school: The sticker price of a master's degree is $10,772 ($10,772 = $5,836 per year x 2 years). This means that it takes just 1.54 years or 18.47 months for the master's degree to pay for itself.
- Four-year private school: The sticker price of an master's degree is
$44,436 ($44,436 = $22,218 per year x 2 years). This means that it takes Only 76.22 months, or about 6.35 years, for the advanced degree to pay for itself! - Bottom Line: You can expect a master's degree to pay for itself anywhere between 1.5 and 6.35 years!
Example #5: From Bachelor's Degree to Master of Business Administration (MBA)
A Marketing Coordinator at a full service interactive marketing agency with a bachelor's degree makes about $37,000 per year. She has about six years of experience under her belt and is looking for a new challenge.
A master's degree is generally "preferred" in order to be considered for most Marketing Manager positions. Marketing Managers holding an MBA degree earn upwards of $79,000.
M.B.A. Degree = $42,000 increased earnings per year or $3,500 more each month.
- Four-year public school: The sticker price of a master's degree is $10,772 ($10,772 = $5,836 per year x 2 years). This means that it takes just 3.08 months for the MBA to pay for itself!
- Four-year private school: The sticker price of an master's degree is $44,436 ($44,436 = $22,218 per year x 2 years). This means that it takes only 12.70 months, or just over one year, for an advanced degree to pay for itself!
- Bottom Line: Who says you can't afford an MBA? That MBA can pay for itself anywhere between 3 months and a year!
Also see this great article by James T. Berger from the Wall Street Journal's Career Journal, "Will Earning An M.B.A. Pay Off Later in Life."
