Taking Notes: Eye on Education – PSE an Investment

This column focuses on a wide range of issues affecting post-secondary students. Students are encouraged to submit suggestions and educational topics they are concerned about, or personal experiences with courses or university situations they feel other students should know about. If suggest a topic or a course alert for Taking Notes, contact djabbour@ausu.org

PSE an Investment

A recent TD Bank Financial Group report measured the rate of return on a university degree over the past decade. Calculations compared lifetime earnings of a post secondary graduate with those of a high school graduate, factoring in cost of tuition and loss of income while attending school. The good news? A university degree showed an investment rate ranging from 12 to 20 percent annually; a college degree 15 to 28 percent annually. Compared with other financial portfolio investments that average six to eight percent, post secondary education is excellent value for the money!

A further breakdown of the statistics revealed further items of interest. College degrees had higher returns overall due to lower tuition outlay and shorter degree achievement time, meaning a reduced loss of income and quicker return to the work force.

Returns were higher for women than men, with university degrees returning 12 to 17 percent for men, 16 to 20 percent for women; college degrees returning 15 to 28 percent for men, 18 to 28 percent for women. Looking at wages, the report found that “weekly earnings of a university and college-educated worker are 61 percent and 21 percent higher respectively than those of a high school graduate.”

Best results were for degrees in engineering, natural science, health science and commerce. Degrees in social science, education and humanities were all below average, but reported a much higher rate of academic satisfaction. The rate of return was less for graduate degrees, due to the higher investment and longer absence from the workforce during study completion.

Although the financial return on PSE is large, the payoff is a long time coming and requires a significant initial outlay of funds. In the report, economist Craig Alexander noted that the cost of tuition and academic fees has doubled in the past decade, requiring a large upfront investment – and predictions are that by 2020 a four year undergraduate degree will cost $85,000. The authors of the study, however, concluded that “even with the increase in costs” a university degree “represents an unambiguously sound investment”.

The report also verified that a degree is a necessity – 25 percent of all jobs require a university degree, and 70 percent of all jobs require some sort of post secondary education – something most of us already are aware of. But it’s nice to know that, in addition to helping us achieve a satisfactory career, our degree is also good value for our investment dollar.

Post-secondary education offers big returns. Ray Turchansky, Your Money, Edmonton Journal, February 11, 2004.