So given the return on education is the present value of the (average household income – high school income), discounted to inflation over an average 35 year period…the calculation would be:
PV Return on Education: PMT=(100K-85k), I=2%, n=35
PV Return on Education: $ 374,979.29
Average Total Price of Attendance of Undergraduate Education, full time, full year: $22,368 per year (http://www.census.gov/compendia/statab/cats/education.html)
PV of cost of education: PMT=$22,368,n=4,i=2%
PV of cost of education: $85,171.28
Expected Total Net Present Value of Education: $289,808.01 (per household)
My curiosity would be if the expected total net present value to education correlated to enrolment figures in any way…?
So given the return on education is the present value of the (average household income – high school income), discounted to inflation over an average 35 year period…the calculation would be:
PV Return on Education: PMT=(100K-85k), I=2%, n=35
PV Return on Education: $ 374,979.29
Average Total Price of Attendance of Undergraduate Education, full time, full year: $22,368 per year (http://www.census.gov/compendia/statab/cats/education.html)
PV of cost of education: PMT=$22,368,n=4,i=2%
PV of cost of education: $85,171.28
Expected Total Net Present Value of Education: $289,808.01 (per household)
My curiosity would be if the expected total net present value to education correlated to enrolment figures in any way…?
Ben — great calculations! Here is an article from Economist that looks into the economics of higher education and its potential ROI:
http://www.economist.com/news/united-states/21600131-too-many-degrees-are-waste-money-return-higher-education-would-be-much-better