College Value Calculator
Calculate the return on investment (ROI) of a college education by comparing costs and potential future earnings.
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Table of Contents
College Value Formula
The College Value Calculator helps you determine the return on investment (ROI) of a college education by comparing the total cost of education with the present value of future earnings.
Where:
- PV of Future Earnings = Present value of all future earnings
- Total Cost = Total cost of education (tuition, fees, etc.)
- ROI = Return on Investment
How to Calculate College Value
To calculate the value of a college education, follow these steps:
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1Calculate the total cost of education
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2Estimate your expected starting salary
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3Project future earnings with growth rate
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4Calculate the present value of future earnings
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5Determine the ROI by comparing costs and benefits
College Value - Practical Examples
Example 1 Engineering Degree
Annual Tuition: $25,000
Years of Study: 4
Starting Salary: $65,000
Salary Growth: 4%
Years of Work: 40
Discount Rate: 5%
ROI ≈ 350%
NPV ≈ $1,200,000
Example 2 Business Degree
Annual Tuition: $30,000
Years of Study: 4
Starting Salary: $55,000
Salary Growth: 3%
Years of Work: 40
Discount Rate: 5%
ROI ≈ 280%
NPV ≈ $900,000
Example 3 Liberal Arts Degree
Annual Tuition: $20,000
Years of Study: 4
Starting Salary: $45,000
Salary Growth: 2%
Years of Work: 40
Discount Rate: 5%
ROI ≈ 200%
NPV ≈ $600,000