What education does to earnings
Module 1 built the cost of a degree and said outright that a cost with no benefit beside it is only half an argument. Here is the other half. This is also the one part of the course built on measured figures collected by somebody else, instead of arithmetic you can check yourself.
First, three from earlier
Answer from memory. Nothing below is gated on getting these right.
Guess before you read on
The median high school graduate earns $930 a week
That is for someone working full time, aged 25 or over. What does the median bachelor's degree holder earn, on the same basis?
The figures
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| Education | Weekly | Annual | Unemployment |
|---|
Source: —. Note: — Annual figures are the weekly median multiplied by 52 weeks, which assumes every week is paid. Everything on this page is in today's dollars, which means treating wages as keeping pace with inflation.
Two things to notice before going further
The table is ordered by schooling. Pay mostly climbs alongside it, and then the two part company at the top, where professional degrees out-earn doctorates. So the number of years you stayed in school does not by itself explain the pay column. What you studied and where it led matter at least as much.
The earnings column counts only people working full time, which for a table like this usually means 35 hours a week or more. Read the unemployment column beside it. One tells you what the job pays; the other tells you your odds of having it.
Compare any two
Turn that on and the gap widens, because the higher level is more likely to be working as well as better paid. It is a crude adjustment and the panel says why underneath.
Does it pay for itself
Module 1 built the cost. This adds the earnings the table measures and asks the question Module 1 refused to answer: at what age does the extra earning catch what the path cost to take?
Push the cost up, or pick a pairing with a small earnings gap, and the answer becomes Never. The calculator is working. It is telling you the extra pay never adds up to what the path cost, the same way a loan payment too small to cover the interest never clears the balance.
The same degree by a cheaper route
Switch the panel above to the transfer route. Two years at a community college, then two years at the four-year school, finishing with the same bachelor's degree.
What makes this worth its own section is that it moves one side of the ledger and not the other. The earnings figure the panel uses is the bachelor's row either way, because the degree at the end is the same degree. Only the cost changes, and the earlier years are the expensive ones to carry, because they compound for longest.
"Community college is cheaper" is true and it is incomplete. The transfer route buys you a large, reliable saving, and in exchange it hands you a risk you have to manage yourself. Find out which of your credits transfer into which program before you enroll, while you can still do something about the answer.
As with everything else on this page, the course has no figures on what either route typically costs or how often transfers succeed, and is not going to invent any. Put your own numbers in.
Why money you do not repay is worth more than it looks
Put a figure into the grants and scholarships box above and watch the break-even age move. It shifts by more than you would expect for the money. Two reasons, and you have already built both of them earlier in this course.
A grant takes cost away. A loan just moves it later. Module 2 covered what happens to a balance that compounds against you. Borrowing $10,000 does not make a degree any cheaper. It changes when you pay, and it adds interest on top of the original amount. A $10,000 grant makes the degree $10,000 cheaper, on the day it lands, for good.
Money you never had to spend early compounds like money you invested early. That is Module 1 and Module 2 describing the same effect from two directions. A dollar you kept at 18 has until you retire to grow. That is why the break-even age above swings so hard on an award that looks small next to a six-figure cost.
This course has no figures on what awards are typically available or how often applications succeed, so it is not going to invent any. The arithmetic above works on whatever number you put in, and the number is yours to find out.
What this data cannot settle
Everything above is real and measured. Here is the boundary of what it supports, which matters more here than anywhere else in this course, because these are the only outside figures in it.
- It cannot tell you what the education caused. The people who finish degrees were already different from the people who do not, in ways that were affecting their pay before anybody enrolled. Some of the gap is the degree doing the work and some of it is who was in each group to begin with. No table can separate those two. So treat the gap as the biggest the degree's own effect could possibly be, and assume the real effect on one person is smaller.
- It is a median, so half of that group earns less. Some of them a great deal less. A median marks the middle of a very wide spread. Nobody promised it to anybody, and plenty of graduates never see it.
- It counts only people working full time. Anyone working part time, working for themselves, or out of the labor force altogether is missing from the earnings column. The unemployment column beside it helps a little. It does not fix this.
- It says nothing about field. The gap between two subjects at the same level is often larger than the gap between two levels, and this table cannot see it.
- It assumes completion. Someone who starts a four year degree and leaves after two has paid two years of cost and moved to the "some college, no degree" row, which pays $90 a week more than a high school diploma.
- It is one year's snapshot. These are —, describing people already in work then, not a forecast of what any path will pay in forty years.
Nine problems
Estimate first, then check. An estimate within 25% counts.
Write it down
A path you are actually considering
Name one. Put its real cost into the panel above, pick the two levels it moves you between, and write down what it says. Then write down which of the six limits above worries you most about applying that number to yourself.
Save or hand in your answers
This writes out your guess, every problem you attempted with the answer beside it, and anything you typed.
Everything here is read out of this browser and written into a file on your own machine. Nothing is uploaded. Clearing removes Module 5's answers only.