OK Frank Money here, your very effective money detective – Listen up! We need to know the R-O-I of that higher education your pursuing?
What’s ROI you ask? That’s RETURN ON INVESTMENT.
Whether it be college, trade or vocational schools you INVEST your time as well as money to get an education. The end result is a career you hopefully will love with yearly earnings being the RETURN.
It’s important to ask yourself – what is the payoff for all your blood, sweat and tears…and cost. It’s time to do the math.
QUESTION 1 – What is the cost of your higher education.
QUESTION 2 – What is the average starting salary of a job in your area of study?
The blog fivethirtyeight.com has a great chart of understanding what the average median earning is for your degree and future job.
QUESTION 3 – Now look the first two questions – how many years will you have to work to equal the cost of higher education. In other words, how many years of working will it take you to break even in paying back that cost of education.
That’s your ROI.
Life is about pursuing interests that you love, but it’s equally important to consider the path you take and whether the return will be worth it.
Student loan debt is a big issue. It is the most common way of funding your college and graduate school education – but doing so has become a ‘Game of Loans’. And since money is my game, you’ll also note it’s my name…. Frank Money that is!…See what I did there?
Before you start to think that getting a student loan is like an alliance with the House Lannister, understanding what you are getting into is an important first step.
In the U.S., the total outstanding student loan debt is around $1.2 trillion dollars with the average student debt for a grad being around $33.000 (2014 figures).
Come off of graduation day with $33,000 in debt that begins to require monthly payments shortly thereafter can definitely take the wind out of your sails – and prevent you from being able to purchase other things you might want, like a car or home.
Perhaps the biggest question you need to ask yourself is what is the return on my investment for the education you are financing. Will the degree you earned ‘pay off’ in giving you enough income over your working life to afford paying off the loan it required -and- prove you with enough remaining $$$ to actually live the life you want?
As a general rule – try to avoid student loans as much as possible. Look for other monies, some of which is available for little cost to you in scholarships.
It’s sometimes daunting to understand all the facets of the ‘Game of Loans’ – but taking steps to investigate the rules of the game will prevent you from ending up with the dragons.