Education and Return on Investment

Thoughts on a Free Market Economy…

“Education and Return on Investment”

By Phyllis Hunsinger

September 1, 2015

September is generally thought of as “Back-to-School” time; although some schools are now beginning classes earlier.  At any rate by September, the hallways and classrooms are filled with students needing to be taught and teachers wanting to teach.    The benefits of a good education are legendary in the literature, but let’s look at only one facet of these benefits:  economics.

In the study of economics there exists a profitability measure that evaluates the performance of a business or activity by dividing the net profit by the net worth.  This is called the return on investment, or the acronym, ROI.

A basic K-12 education is critical to a functioning citizenry.  Students who graduate from high school are much more likely to find employment and many years ago this level of education served the majority of citizens well.  In 2015 there are always some exceptions, however, the high school graduate generally finds him/herself in the lower ranks of employment compensation.

Lifetime earnings are significantly higher for individuals with college degrees, especially if those degrees are in fields of study where there exists a need for those specializations.  The following hyperlink is a full examination of the impact higher education has on future earnings:

http://www.collegeboard.com/prod_downloads/about/news_info/trends/ed_pays_2007.pdf

 

Another economic consideration, however, is the value of a vocational or trade school education.  Very often a career in trades satisfies specific needs of the individual who prefers to work with their hands, perhaps being unchained from a desk job, or a variety of other reasons.  The resulting indebtedness to the student attending a vocational school is considerably less than that of a typical four year college student. The following hyperlink is an examination of the economic benefits to a trade school:

http://www.thesimpledollar.com/why-you-should-consider-trade-school-instead-of-college/

 

Careful consideration must be given when choosing a field of study or a specialized trade.

Answer the questions:  Will there be a need for this field?  Will I enjoy this type of work?  Do I have the temperament or ability to work in this field?  Can I afford the educational costs?  Will there be opportunities for advancement?

A student who wisely chooses an appropriate career path for him/her will have a good ROI.

 

 

 

 

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