1 / 13

Is College Education Worthwhile? Present Value Analysis of Different Education Levels

This study uses present value analysis to compare various education levels and their impacts. It explores the question of whether college is worth it, considering stable economy, wage increases, job security, and retirement at age 65. The analysis is based on assumptions such as starting school at 18, attending a representative college, frozen tuition, and obtaining a bachelor's degree in 4 years. The present value equation includes starting wage, wage increase, inflation, and number of years. Results consider external benefits, maximizing utility, opportunity costs, and various other factors like scholarships, social status, job security, and the overall college experience. Additionally, it discusses pursuing education beyond a bachelor's degree, including factors like completing a master's degree in two years, credit hours, rates, and age range considerations. The conclusion suggests that from a financial perspective, college education is worthwhile, but the final decision rests with the individual.

zlata
Download Presentation

Is College Education Worthwhile? Present Value Analysis of Different Education Levels

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Is college Education Worthwhile? Using Present Value to compare different levels of education and their relative effects

  2. The Question: • Is College Worth it? • Are they better off? • Present value.

  3. Limitations And Assumptions • A Stable Economy • Constant CPI/Inflation. • Constant Wage Increases. • No major recessions. • Job Security • Always employed. • Job availability out of college. • Retirement at age 65.

  4. Limitations Continued • College Assumptions: • Starting school at 18 years of age. • University of Akron representative of average college. • Tuition frozen. • 4 Years of college for BS degree.

  5. Present Value Equation • W0 = Average Starting Wage • g = Average Wage Increase • d = Average Inflation • n = Number of years

  6. Data • Calculation of starting wage. • Calculation of wage increases. • Calculation of inflation. • Number of years used.

  7. Results

  8. Results • Externality • External Benefit • Preferences of the Consumer • Maximizing Utility • Opportunity Costs • Implicit Costs • Explicit Costs

  9. Other Considerations • Greater understanding of world around them • Scholarships • Company’s Expense • Social Status • Job security • College Experience

  10. Beyond the Bachelor’s • Assumptions: • Two years to complete Master’s Degree • Took average of 12-15 credit hours • University of Akron rates • Assumed age was 25-34 (Under 24 a Master’s is rare)

  11. Beyond the Bachelor’s

  12. Conclusion

  13. Conclusion • Money POV: it is worthwhile, however: • The ultimate decision lies with the consumer.

More Related