Is College Worth It?

With my oldest finishing up her first year at the university, I started thinking about the alchemy of converting human capital (i.e. W-2, 1099-contracting, etc.) into investment capital. As I worked out a post, I started looking into the effect of college on increasing one’s human capital.

Entering the Workforce

Many people get jobs during high school. Growing up, I had a paper route just months before I turned 10 years old. When I was thirteen, I partnered with my older brother in a window washing business, canvassing neighborhoods in our small town, giving bids and washing windows. While the money was generally good, it also made me hate door-to-door selling.

When I turned sixteen, I got my first “real” job, a.k.a. a job that came with a W-2 and FICA taxes. I was an evening janitor at the elementary school near my house and during the summers I worked on the school district’s carpet shampooing crew. While there, I met several “lifers”, people who had worked at the local steel mill until it was shuttered, transitioning to full-time janitorial work. By the end of my first summer, I had added another career onto my “never again” list.

Using data from the Bureau of Labor Statistics, in 2017, someone with a high school diploma could expect a median income of $35k[1]. Assuming our grad starts work at age 18 and retires at 65, with an average 2% wage increase each year that keeps track with inflation, total gross lifetime earnings comes to $1.7 million.

Associate’s Degree

I never planned on stopping at high school. Nor would I have been satisfied with an associates degree. However, for many, this is a fine destination. 


  • Enter the workforce two years later than a high school graduate.
  • Tuition: $3,570/year at a local, public community college. Data from here.
  • Unemployment at 3.4%

Median income: $42/k year, $1.9 million lifetime earnings

Nearly $200k is not a bad trade for cheap public community college and forgoing two years worth of earnings.

But what about the late bloomer that works for a few years, then decides to get their associate degree? How late is too late? If you quit work at 51 to go get your associate’s degree, the two years of lost income and tuition payments would make it hard to break even. That’s surprisingly late.

Bachelor’s Degree

Let’s move up the rungs to a bachelor’s degree.


  • Enter the workforce four years later than a high school graduate.
  • Tuition: $8,230/year, in-state at a public university
  • Unemployment at 2.5%

Median income: $59/k year, $2.5 million lifetime earnings

The jump between an associate’s degree and a bachelor’s is even bigger: $640k is not a bad trade for another two years of school.

And the late bloomer high school student, who works for a few years, then decides to get their bachelor’s degree? How late is too late? It’s actually later than our associate degree, with the cut off at 53. Again, surprisingly late.

Master’s Degree

Let’s move up the rungs to a master’s degree.


  • Enter the workforce six years later than a high school graduate.
  • Tuition: $8,670/year, in-state at a public university
  • Unemployment at 2.2%

Median income: $71/k year, $2.9 million lifetime earnings

The jump between a bachelor’s degree and a master’s degree is more modest at $340k. Again, not a bad tradeoff for two more years.

Interestingly enough, the late-blooming high school graduate isn’t as favored here, with a cutoff at 50 years old.

Professional School

How about going on to be a doctor or lawyer? Things are a little more murky here, with tuition varying widely. I’m going with the following assumptions:


  • Enter the workforce nine years later than a high school graduate.
  • Tuition: $22,387/year
  • Unemployment at 1.5%

Median income: $95/k year, $3.4 million lifetime earnings

Putting it all together:


Yes, I’ve made some huge, gross assumptions here. Not all degrees, tuitions, or situations are the same. However, with all of its imperfections and focus on medians, I think this post still shows the value of education.

What level of education do you have? Anything I’m not considering that I should? I’d love to hear about it in the comments.

Hasta, luego!

[1] Actually, the BLS number is $37k but I multiplied it by the unemployment rate of 4.6% to get $35k. I’ve done the same thing for all of the numbers. For those who don’t finish their high school degree, they can expect a median salary of $26k, which factors in 6.5% rate of unemployment. That’s only $1.2 million life earnings. Stay in school, kids!

[2] Here’s the spreadsheet if you want to understand my analysis.

8 thoughts on “Is College Worth It?

  1. Neat analysis!

    Most of the docs I know are lucky to hit a net worth of zero around 30 or a little after. However, they make up for it with elevated income later.

    The odd thing about a progressive tax code is that it penalizes high earners like that. In the face of progressive taxation, the tortoise can paradoxically beat the hare. Especially with the tailwinds of a 14%/year market return for the past decade.

    1. Thanks for the comment!

      I would not be surprised on it taking until 30 for a non-zero net worth. I’m only looking at tuition and ignoring all the living expenses. I suspect there’s also a wide level of variance depending on specialization and other factors that I’m ignoring.

  2. I have an informal rule that for every 2 years of schooling, you should be able to increase your pay by 50% otherwise, think twice about why you are going (e.g. are you really willing to devote a lifetime career in this area of study?). That limits areas of study to a few areas such as BS in engineering, Nursing, MS as NP, PA or MBA from a “top school” (and go into Consulting or Investment Banking) and possible a few others. I can make exceptions to the rule for Medical School and Law School from a “top school” because of the number of years in schooling and the pay/merits of these professions. This is a rule I’m following when I fund my kid’s education.

    1. Thanks for the comment. That’s a great rule of thumb. Not all degrees are equal and some are definitely worse than others. Out of curiosity, how many kids do you have, how soon till they head off to school, and what are you doing to encourage them in the program/degree/school they select to attend?

      1. 2 kids but one is special needs and will likely not go to college. My boy is a sophomore and I encourage him to look at what he wants to do in the future with an eye towards effort vs benefit. We have a 529 and UTMA set up for him to use once he’s in college. He gets to keep anything that isn’t spent so if college isn’t in the cards, the UTMA is his with 529 there for his future use. We have “approved” schools/majors where we will provide supplemental funds if he choose to pursue select areas we encourage him to go into (e.g. bonus incentives). On the non-monetary side, we continue to educate/counsel him on various life career choices so that he can make an informed decision.

        1. I really struggle with how much “guidance” to give to my kids. I know they understand my values and as well as my opinions about degrees that aren’t worth the cost. But ultimately it’s their life and they have to live it and they are going to make decisions that will be hard for me see them make. Wish me luck!

  3. I started with an associates degree, working full time driving trucks for DHL for those two years. It was good money and cheap tuition. I then went to university and still finished in four years since I made sure everything transferred. I got a kick out of the fact that several of my high school friends took/spent 5 full years at university to graduate with their bachelors. I was in and out in two.

    How far did you go?


    1. I worked hard as a high school student and ended up with a full tuition scholarship to college and I maintained the scholarship throughout the whole degree. I got it done in 7 semesters (3 1/2 years) even though they would have paid for 8. In hindsight, I should have take the university up on that last free semester, but I was done with stressing about classes and ready to move on. Having a wife and a child on the way probably had something to do with it.

      As I wrapped up my undergraduate, I considered law school, even taking the LSAT with an okay score. Ultimately, I decided on going for a Phd. Graduate school was great–my tuition 100% covered, plus small living stipend–but after doing a summer internship at Megacorp immediately after my first year, I decided to finish my master’s degree, and then jump ship and go work for Megacorp. Given that I had no interest in teaching or the publish or perish life, I made the right decision.

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