Which education level has the highest return on investment? We ran the numbers

The education level with the highest return on investment is an associate’s degree. Klaus Vedfelt/Getty Images
  • People often argue about the value of a college degree, but the numbers prove that someone with a higher level of education will typically earn more than someone with less education.
  • An associate’s degree has the highest ROI overall, though other degrees will earn you much more over time.
  • Remember that each degree major or concentration leads to different job opportunities with different income prospects.
  • Read more personal finance coverage.

There’s a big debate over the value of a college degree. Some education advocates urge every young person to earn at least a bachelor’s degree. Detractors call college a waste of money.

Rather than listen to opinion, here’s an objective look at the cost of college and the most likely return on your investment.

Average income by education level

The Bureau of Labour Statistics tracks income by education level, which makes it easy to figure out how much you’ll make with a good degree.

As the education level goes up, the unemployment rate goes down until you reach the professional degree and doctorate level.

Here’s how much the average worker earned per week based on education level in 2018 according to data from the Bureau of Labour Statistics.

Education data

The correlation here is very clear: More education means you make more money. The only exception is among people with a doctoral degree. Going to the top of the education ranks likely means you will become a teacher or professor. They tend to earn a bit less than someone with a professional degree, but not much.

Medical school, dental school, pharmacy school, and law school have different time and cost commitments. We are going to skip the ROI for these programs because they all look so different. The same is true of PhD programs. And, in those cases, the student also works as a student-teacher at the same time, further blurring the true cost of attendance.

Also, keep in mind that these are averages. Your own personal abilities and skills, the college you attend, your chosen major or concentration, where you live, your industry, and other factors will all play a role in your income.

The average cost of a college degree

The cost of college, like the cost of housing, always seems to be rising. The National Centre for Education Statistics tracks the cost of college, including tuition, fees, room, and board.

The “degree cost” noted in the chart below is a total cost, assuming the same annual cost and the typical number of years to complete. “Total cost” includes the cost of a required prerequisite degree. You can’t get a master’s degree without an undergraduate degree first.

The cost per year at a two-year public institution was $US10,598 per year for 2017-2018. At a public four-year institution, you would pay an average of $US26,593 per year. A four-year private college charges an average of $US41,468 per year.

For graduate school, you would pay an average of $US11,617 per year at a public institution or $US26,551 at a private institution.

Education data

Here we assume that graduate students went to a four-year public institution first for a bachelor’s degree. Estimating the cost of professional and doctoral degrees is a bit trickier, as the types of degrees and how they work vary widely.

Which education level has the highest return on investment?

So, which degree offers the best return on investment? Here are the numbers:

Which education level has the highest return on investment

Given there are many variables and we used a lot of assumptions, I was surprised to see that the education level with the highest ROI is an associate’s degree. The very low cost, despite a much lower lifetime income, gives you a higher ROI.

A bachelor’s or master’s degree from a public college or university are the next best in terms of ROI, but both give you a much higher lifetime income, too.

In absolute terms where you look at the difference in cost versus what you’ll make, a higher education level is better no matter how you look at it.

Results can vary widely

For this analysis, we treated the incomes of public and private school graduates as the same. Results may vary based on the reputation of the school, career office quality, engagement of alumni networks, and other factors.

At the end of the day, your college experience is only as good as what you make of it. You also have to look at the specific degree, as a fine arts major isn’t going to start a career with the same job and income prospects as an accounting major.

But when it comes to the cost of education, on average, it will pay off very well.

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