Investment Return of a College Education

I am a firm believer in the statistics that support the claim that obtaining a college degree increases a person’s lifetime earning potential. From that perspective, one would think that every person is better off going to college. That cannot be a viable claim because everyone is not suited or does not want to attend college.

I don’t believe that every person should go to college. People have different career goals and not all people have the same ambitions. Also, going into an immense amount of debt to attend college is probably not a wise choice in this economy.

If a person wants to go to college, does not have to go into significant debt, and wants to financially improve their lives, college can provide a great return on investment. From a pure investment standpoint, a college education may be the best and least risky investment a young person can make. Lets look at the numbers. A writer for the New York Times, David Leonhardt comments on the returns of education by commenting:

The Hamilton Project, a research group in Washington, has just finished a comparison of college with other investments. It found that college tuition in recent decades has delivered an inflation-adjusted annual return of more than 15 percent. For stocks, the historical return is 7 percent. For real estate, it’s less than 1 percent.

The statistical research by the group highlights that education may be the best investment in the current market. Not only do you get the experience of learning new concepts, but also your money works for you while you get to experience college.

Equity investments are risky and can drain excess cash reserves in a matter of months. If you are looking for the best investment for your cash, invest in yourself with an education and your lifetime earnings will pay dividends.