Cost of an Education
On special request, and in tandem with our post on opportunity costs, this posts takes a looks at the full cost of a college education.
The Direct Costs
The direct costs of attending college are generally fairly simple to calculate. Tuition, books, fees, etc are all examples of the direct costs. Just sum up your tuition for each semester, the amount you spend on books, your school fees, and any other cost directly associated with going to school and you know the direct costs of a college education. Anyone who’s been to college understands that these direct costs can be quite substantial.
The Opportunity Costs
Surprisingly, as costly as the direct costs can be, the opportunity costs of going to college almost always outweigh them; in fact, opportunity costs usually dwarf the direct costs by a huge margin.
How is that possible?
Think again about what opportunity costs are; they are the gain that you could have had. In the case of college, the largest cost is the lost opportunity to work full-time for several years. Suppose a young woman could get a job paying $13/hour working full-time. In 4 years, she could have earned $108,000 (before taxes). If she had gone to college, she would not have been able to work full-time, and would probably have had to settle on a very part-time job with poor pay. So, in this case, the opportunity cost of college is $108,000 minus the wages she could earn working part-time. So if you are going to college, or thinking about it, remember the opportunity costs. Don’t just try to avoid the direct costs; try to avoid the opportunity costs as well. Work full-time through the summer, or go to school through the summer to reduce the time you are out of work, etc. You will save yourself more in opportunity losses than you will in tuition.
The cost of NOT getting an education
Okay, so now that everyone is convinced that hey cannot afford to go to college, let’s look at the costs of not getting a college education. Basically, not going to school doesn’t really have any direct costs. No one charges tuition to people who are not enrolled in their school. However, there is an opportunity cost to not going to college. According to recent U.S. census findings, the average American who graduated high school but did not go to college earned approximately $25,000 a year less than the average college graduate. Over a typical working lifetime of about 45 years, that comes to about $1,125,000 in lost wages for the non-college worker (and that’s WITHOUT and interest!) So, you can see how it is far more expensive to not go to college than it is to go to college, in the long run.
Posted on 24 Dec 2007