Which Education Level has the Highest Return on Investment (ROI)? | 2023 Tips

The value of a college diploma is a hot topic of discussion. Some education advocates recommend that every young person obtain a bachelor’s degree. College, according to some, is a waste of money.

However, you must consider how much more money you can earn throughout your life if you have a college or advanced degree. Is it worthwhile to pursue a two-year, four-year, or graduate degree? Will your tuition, fees, loan interest payments, and room-and-board expenditures provide a sufficient return on your investment (ROI)?

On one level, the answer is straightforward: average wage and lifetime earnings. The more education you have, the more money you will make. However, the picture becomes blurry when you include the hefty expense of further education and the years spent in school.

You should consider which education level has the highest return on investments. This article is an answer to all the questions you could have.

What is Return On Investment in Education Levels?

Return on education investment means assessing how much you spent on your education and comparing it to how much you would earn after graduation. It is a technique for increasing resource efficiency or the impact of your limited resources.

It compares the projected profits (returns) per unit cost (investment) of various prospective actions and is widely employed in the business.

With the expense of a university rising every year and university graduates facing uncertain job prospects, some individuals are questioning if a university education is still worthwhile. Calculating the return on investment (ROI) of each level of education is one technique to see if a credential is worth the money.

Read also: 15 Best Paying Jobs for Investment Managers In 2023

How Do You Calculate The ROI On the Education Level?

In calculating the return on investment in your education, you must consider some factors such as:

#1. Academic Specialization

The value of a college degree has a considerable impact on lifetime wages. According to the Hamilton Project, the highest-earning majors like engineering, computer science, operations and logistics, physics, economics, and finance can earn twice as much as the lowest-earning ones.

Early childhood education, family sciences (home economics), religion, fine arts, social work, and elementary education are all examples of these fields.

#2. Average Earnings by Degree

The Bureau of Labor Statistics (BLS) produces average weekly wage figures depending on educational attainment. The data for the second quarter of 2019 showed the following median weekly earnings: Men with bachelor’s degrees have median lifetime earnings of over $900,000 more than high school graduates as of 2019.

Women with bachelor’s degrees earned $630,000 more on average. Men with graduate degrees earned $1.5 million more throughout their lives than men with only a high school diploma. Women with graduate degrees had a $1.1 million advantage in lifetime earnings.

#3. Earnings Over a Lifetime and Academic Achievement

Examining the average lifetime wages of workers with various levels of educational attainment is another approach to looking at the return on investment of higher education.

According to the Social Security Administration (SSA), each new level of educational attainment results in significant gains in lifetime earnings.

#4. Job Security And Educational Advancement

Another aspect of educational advancement that many workers value is increased job stability. Unemployment causes a lot of stress for both workers and their families. You must calculate employment security and educational advancement to determine the return on investment.

#5. Job Satisfaction at a Higher Level

The professional occupations available to college graduates are more likely to offer variety and stimulation and, thus, better levels of job satisfaction, according to common sense.

Data from the PEW Research Center’s 2016 survey supports this theory: Only 64% of people with less than high school graduation describe themselves as extremely content with their jobs, compared to 75% with at least a bachelor’s degree.

Also read: 15 Online Jobs in Higher Education that Pay Well in 2023

What Are The Education Levels?

Keep in mind that most people go through five levels of education. This return on investment study does not include the preschool and primary school levels. Only the following levels will be discussed:

  • High school diploma
  • Associate degree
  • Bachelor’s degree
  • Master’s degree
  • Doctoral Degree
  • Employee salary based on educational level

#1. High school graduate

Workers with a high school diploma earn an average of $746 per week or $38,792 per year. Unemployment is only 3.7 per cent likely.

High school graduates make $8,000 more annually than workers who did not complete high school. As you’ll see in a moment, as your education rises, so does your earning potential.

#2. Associate degree

A bachelor’s degree is the initial step in a student’s education. It occurs after you have graduated from high school. Students pursue this degree to gain information and technical abilities they may apply in the workplace.

Alternatively, individuals can use this degree as a starting point if they want to pursue further education in their chosen sector. Regarding potential wages, someone with an associate degree is better placed than someone without one.

Your income, however, is slightly lower than someone with a bachelor’s degree. Employees with associate degrees can expect to earn an average of $887 per week, or $46,124 per year.

Meanwhile, the chance of being laid off is only 2.7 per cent. People with an associate’s degree earn $7,300.

Read also: How Much Does Hollister Pay? Average Salaries For Employees

#3. Bachelor’s degree

When you finish a three to six-year study, you can get an undergraduate degree from a university and institution. This is determined by the discipline or institution where the course is taken. The most frequent bachelor’s degrees are Bachelor of Science and Bachelor of Arts.

Workers with a bachelor’s degree earn an average of $1,248 per week or $64,896 per year. Bachelor’s degree holders have a 40 per cent lower jobless rate than high school graduates, at 2.2 per cent.

Those with bachelor’s degrees earn around $18,772 more annually than those with associate’s degrees.

#4. Master’s degree

It is a postgraduate degree given to someone who has completed studies in a specific field. A bachelor’s degree is frequently required as part of the integrated curriculum or as a separate course.

A master’s degree typically takes one to three years to finish and can be pursued full-time or part-time.

Master’s degree holders make an average of $1,497 weekly or $77,844 annually. In the meantime, the jobless rate is merely 2%. For years, the number of people obtaining a master’s degree has steadily increased.

One motivation is the possibility of earning more money at work. Master’s degree holders earn higher salaries than bachelor’s degree holders.

#5. Doctoral Degree

It is the highest level of education you can attain. This degree denotes that you have specialized knowledge in a certain subject of study. You must conduct a considerable study and express the results of your discoveries to earn this degree.

Such results should throw light on a controversial issue or present a remedy to a known problem.

Doctorate holders earn around $1,883 per week or $97,916 per year. Their unemployment rate is the lowest in the industry, at 1.1 per cent. Doctorate holders earn roughly $20,000 more than master’s degree holders.

Doctorates can earn up to $800,000 more throughout a 40-year professional career than individuals with merely a master’s degree.

Read also: 20 Highest Paid Bachelor Degree Job

Cost of studying at the Education Level that has the Highest Return on Investment

The cost of college, like housing, seems to increase constantly. The National Center for Education Statistics keeps track of college costs, such as tuition, fees, and room and board. Every “degree cost” shown below is a total cost based on the exact annual cost and typical completion time.

They include the cost of a necessary degree in the “total cost.” You can’t receive a master’s degree without first earning a bachelor’s degree.

In 2017-2018, attending a two-year public university was $10,598 a year. An average of $26,593 annually is spent at a public four-year university. The average cost of a four-year private college is $41,468 per year.

The average cost of graduate school is $11,617 per year.

Also read: Is Commercial Banking A Good Career Path?

Which education level has the highest return on investment

The Bachelor’s degree (4 years of university) currently is the education level that has the highest return on investment. Other higher education levels would cost you a lot of money and a lot of time, and in the end, you may not even be able to make up for the amount of money you spent to get it.

The salary you earn with your bachelor’s degree will reimburse the cost of college during your career.

Frequently Asked Questions

Which education level has the highest return on investment (ROI)?

Generally, individuals with higher education levels, such as graduate degrees, have a higher ROI than those with lower education levels. However, the ROI also depends on factors such as the field of study, the cost of education, and the individual’s career goals.

Is it worth investing in a graduate degree?

It depends on your career goals and the field you’re interested in. Generally, individuals with graduate degrees have higher earning potential and more career opportunities than those without. However, graduate degrees can also be expensive, so it’s essential to consider the cost of education and the potential ROI before deciding.

What are some fields with high ROI for graduate degrees?

Fields such as medicine, law, and business tend to have high ROI for graduate degrees. STEM fields such as computer science, engineering, and data science are also in high demand and can lead to high-paying careers.

Do undergraduate degrees have a good ROI?

It depends on the field of study and the individual’s career goals. Some undergraduate degrees, such as those in STEM fields or business, can lead to high-paying careers and have a good ROI. However, other fields may not have as high of an ROI.

Is it possible to have a good ROI without a college degree?

Yes, it is possible to have a good ROI without a college degree. Skilled trades such as plumbing, electrician, or carpentry can lead to high-paying careers without requiring a college degree. Additionally, some positions in technology, sales, and marketing do not require a college degree but can still lead to high earning potential.

How can I calculate the ROI of my education?

To calculate the ROI of your education, you can subtract the total cost of your education (including tuition, fees, and living expenses) from the total earnings you expect to make over your career. You can then divide this number by the total cost of your education to determine your ROI. However, this calculation can be complex and should be done on a case-by-case basis.

Conclusion

Knowing your future earnings are essential when deciding which job path to pursue, but it is only one factor to consider. You should consider the occupation you enjoy the most and the possibility of future job demands. Ultimately, what counts most is that you enjoy your work and contribute value to the company and society in your chosen field.

References

  • sbnewsroom.com – Which Education Level Has The Highest Return On Investment (ROI)?
  • businessinsider.com – Which education level has the highest return on investment? We ran the numbers
  • invest2rest.com  – Which Education Level Has The Highest Return on Investment?

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