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How To Calculate The ROI Of Your College Choice

Robert Farrington, Feb 23, 2021

Student loan debt has become a $1.7 trillion dollar problem according to Federal Reserve data, and it’s one with enormous economic costs. After all, the average borrower with crushing student debt often has trouble saving up for their first home or investing for retirement due to their monthly loan obligation, which will likely last a decade or longer. And of course, the problem is magnified for those who have six figures in debt and a career that pays $30,000 or $40,000, which is actually a lot more common than one might think.

In situations like those, it makes you wonder how people will ever “get ahead” and enjoy the type of lifestyle they hoped for when they applied for college in the first place. For many, the only answer is hoping and praying for some kind of student loan forgiveness plan, applying for existing plans like Public Service Loan Forgiveness (PSLF), or making payments on an income-driven repayment plan for 20 to 25 years before having their remaining loan balances forgiven.

Fortunately, future college students don’t have to create a lifestyle where student debt crushes their dreams and hinders all their future plans. If you take the time to calculate the return-on-investment (ROI) of your college and degree choice ahead of time, you will wind up significantly better off. Given students around the country are making that choice right now, here’s how to think about the math of paying for college.

Calculating College Costs The first step in calculating the ROI of your college career is figuring out which school you’re going to attend and how much it will cost. You will need to fill out the Free Application for Federal Student Aid (FAFSA) to find out your Expected Family Contribution (EFC) for college as well, but you can make the process easier by researching college tuition and fees ahead of time.

Most of the time, attending a public college or university is going to give you the best bang for your buck. And once you have earned your degree and entered the working world, nobody cares whether you got it from a prestigious private institution or your state university system.

Of course, you’ll also want to take into account any scholarships you might have qualified for, as well as grants or planned participation in a work-study program. Either way, you should run some basic numbers to see how much you might pay for school.

Let’s say you live in the state of New York and you plan to pursue a career in education. In that case, you could attend a State University of New York (SUNY) institution for $7,070 per year in tuition and $1,740 in student fees. However, in-state residents who qualify for an Excelsior Scholarship can see their tuition costs drop to $0.

On the flip side, you can earn an education degree at a private school like Ithaca College instead and plan for a sticker price of $46,610 in tuition per year. While you might get more aid to attend, you should take the time to determine the actual cost of earning your degree at different institutions you’re considering. In almost every case, a public, in-state college will leave you with lower costs overall. The numbers don’t lie. According to figures from CollegeBoard, the average tuition and fees for a public, in-state institution worked out to $10,560 nationwide for the 2020-21 academic year. Meanwhile, tuition and fees at private nonprofit four-year institutions worked out to $37,650. Also consider the prospect of attending community college first then transferring to a public, fouryear school. Doing so can help you pay less than half while you take basic classes toward your degree, and you might be able to attend in-person or online while you live at home, thus cutting your costs even further.

While community college tuition and fees can vary, the average cost according to CollegeBoard worked out to $3,770 for public, two-year institutions for the 2020-21 school year.

Compare Potential Careers And Salaries Ahead Of Time Next, you’ll want to compare how much you’ll pay for school to how much you’ll earn. Fortunately, the internet is a treasure trove when it comes to researching average salaries for careers around the country.

For example, the Bureau of Labor Statistics offers an Occupational Outlook Handbook with career and salary data for almost all major professions. Using this tool, you can find out how much the average worker earns in any profession you’re considering, and you can even dig one level deeper to find salary data for different regions of the country.

For example, you can find out that graphic designers earned a median annual wage of $52,110 nationally as of May 2019, compared to the median annual wage of $39,810 nationally for all occupations combined.

However, you can also find that the bottom 10% of earners in this career brought in just $30,810 in 2019, and that the top 10% of earners received an average annual wage of $89,210.

Look even closer and you’ll find the top paying states and districts for this profession were Washington D.C. ($79,450), Washington ($72,200), and Massachusetts ($68,170) at last count. The Occupational Employment Statistics component of the BLS even lets you break down average wages by metropolitan area.