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Author: GMax Article source: http://www.articledeshboard.com/. Used with author's permission.
Let's assume that there is an Average John with Bachelor's degree and there is an Average Paul with high school degree. According to the U.S. Census Bureau Average Joe will earn $52,200 per year, and Average Paul will earn $30,400 per year. What does it mean? That means that during 40 years of working Joe will earn around 2,1 million dollars, and Average Paul will earn 1,2 million dollars. The difference between two is $900,000 and that is a lot of money. You could say "Yes, but Average Joe will invest four year of his life in learning, and, in addition to that, he must pay for that".
Let's see how expensive is Bachelor's degree. The average tuition and fees at four-year public colleges for the 2006-07 academic year is $5,836 and with room and board, the average public college tuition for in-state students is $12,796. For four-year private colleges average tuition fee is $22,218 and with room and board that would be $30,367 on average.
We can now calculate what is going on with Average Joe. First of all he will have to pay $120,000 for fees and room and boarding. So we could say that with $120,000 of investment Average Joe will get during 40 years $900,000 giving 5,17% annually. That is not much but it is not that bad also. This calculation was the worst case scenario. Actual cost of Bachelor's degree is much smaller on public college, about $12,796 per year meaning that costs would be about $50,000 giving 7,49% annually. For good students there are scholarships, and he could also work during certain periods of his schooling, so this figure of $50,000 is actually much smaller on average, probably somewhere in area of $30,000 with 8,87% of annual return. But that is not all, you will start getting those $900,000 immediately after receiving Bachelor's degree, and with very moderate investing with return rate of 5% you have total return rate somewhere in 10% area. With average increase on US stock market of 10% you will get about 13% annually. Also, you should consider that increase in education and income results with better health and longer life.
So what you should do? Go to school. If you just came back from school, go for some more school. A person with doctoral degree will earn about $89,000 per year or 3,4 million during 40 years of working. People with professional degree will benefit even more (M.D., J.D., D.D.S., or D.V.M.).
Zoran Maksimovic is a freelance author focused on investing and blogging.
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