Invest in Yourself. College Pays Off!

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What is Return on Investment (ROI)?

ROI is a cost-benefit calculation:

Future earnings minus High School Graduate Earnings minus College Costs = Economic Value of College

How much ROI do typical college-goers get?

While there are costs associated with college, those are later recovered with higher earnings. After about 7 years for community college students and 12 years for students at four-year colleges, ROI exceeds that of a high school diploma alone. Due to better employment prospects and higher wages, over 40 years, community college students accumulate nearly $900,000 in ROI, and four-year students more than $1,000,000.

Table: Return on Investment by Education Level in Texas

Year Since Entry Community College Four-Year College High School, No College
1 -$7,000 -$19,000 $4,000
2 -$13,000 -$37,000 $12,000
3 -$20,000 -$56,000 $23,000
4 $6,000 -$73,000 $36,000
5 $33,000 -$91,000 $50,000
6 $61,000 -$52,000 $66,000
7 $90,000 -$13,000 $82,000
8 $120,000 $28,000 $100,000
9 $151,000 $70,000 $118,000
10 $182,000 $112,000 $137,000
11 $213,000 $154,000 $155,000
12 $243,000 $194,000 $174,000
13 $272,000 $234,000 $194,000
14 $301,000 $273,000 $214,000
15 $329,000 $312,000 $233,000
16 $357,000 $349,000 $252,000
17 $384,000 $386,000 $271,000
18 $411,000 $422,000 $291,000
19 $437,000 $458,000 $312,000
20 $463,000 $493,000 $331,000
21 $488,000 $527,000 $352,000
22 $513,000 $560,000 $373,000
23 $537,000 $593,000 $392,000
24 $561,000 $625,000 $412,000
25 $584,000 $656,000 $431,000
26 $607,000 $687,000 $451,000
27 $629,000 $717,000 $470,000
28 $651,000 $747,000 $490,000
29 $672,000 $776,000 $508,000
30 $693,000 $805,000 $528,000
31 $714,000 $832,000 $545,000
32 $734,000 $860,000 $562,000
33 $754,000 $887,000 $580,000
34 $774,000 $913,000 $597,000
35 $793,000 $939,000 $613,000
36 $811,000 $964,000 $630,000
37 $830,000 $989,000 $646,000
38 $848,000 $1,013,000 $661,000
39 $865,000 $1,037,000 $676,000
40 $883,000 $1,061,000 $690,000

Where do we go from here?

ROI calculations show a clear value proposition for a college credential versus high school alone. Both community and four-year colleges provide students with hundreds of thousands of dollars in additional income over the long run. Actual ROI for a particular student depends heavily on factors like major, completion or non-completion, time to credential, and starting age, among others. Forthcoming work from the Research Institute further analyzes these factors in order to provide the most accurate tools for calculating ROI.

Notes: ROI calculations are based on completers and non-completers; Assumed that students enter college immediately after high school graduation, net price is constant and paid while attending, the discount rate is 2%, and earnings are constant 10 years after college entry.

Sources: College Scorecard, U.S. Department of Education; Georgetown University Center on Education and the Workforce; American Community Survey, U.S. Census Bureau; Research Institute calculations. The Research Institute at Dallas College