Whether or not certain degrees are "worth it" has been a topic debated by students, professors, entrepreneurs, financial experts, and personal development gurus. I wanted to see for myself, as well as help peers make decisions about graduate programs, so I built the calculator below.
It's pretty dope.
Seven years and lots of debt (for myself and my parents) later, it turns out Engineering had my back, luckily. I should have done this calculation before, though, so I present this calculator for others to not leave their financial fate to luck.
If you:
- want to go back and get a PhD,
- are just out of high school,
- want to see if that technical college makes sense for you,
- just want to see if your kids are aimlessly spending all your money with no chance of financial success,
this calculator should work for you. Make sure to check out the "Assumptions" section at the end for more info.
The calculator takes pre- and post-education information and calculates the return-on-investment and the cumulative income for both options. You can also see how many years it will take for your income to break even (where the lines cross, if ever).
NOTE: I am not a financial planner, and you should not use this calculator as financial advice, just a rough guide.
Calculator
Background Information
Included
- Student loan payments
- Student loan deferment
Not Included
Happiness factor
While the financial impact of additional schooling is important, it should by no means be the only metric used to decide. Some degrees may not be "a good investment", but if the new education allows you to do more meaningful work, it could be worth it. However, in some cases, the return could be so poor (or negative) that the new degree is a terrible idea no matter how happy it would make you.
Inflation
The values for gross cumulative income do not include an estimate for inflation, thus they will effectively be less as time progresses. Values should only be compared relative to each other.
Other Investing
Even with a very high debt, you may be able to have a decent return. However, this may leave you cash-strapped if some other investment opportunity pops up. You should discuss this with a fiduciary.
Assumptions
- You are not working during the "years in school"
- Constant raises for 40 years (which is unlikely)
- Fixed rate student loans
Please leave interesting trends or discoveries (or bugs) in the comments below!
Non scholae sed vitae discimus!