Skip to content
ENExplore Calculators

Degree Payback Period Calculator

Work out degree payback period instantly with clear inputs, formula shown and shareable results.

About Degree Payback Period Calculator

The true cost of a full-time degree is tuition plus the earnings given up while studying, and the foregone element often exceeds the fees. Discounting the salary premium is essential over a payback period measured in years rather than months.

Formulas

Total investment

Investment = Degree cost + Foregone earnings

Discounted payback

The year in which cumulative discounted salary premium equals the total investment

Worked example

With the default values below, Degree Payback Period Calculator returns Discounted payback period of 10.94. Change any input above and every figure here is recalculated in your browser.

Inputs used

Total degree cost
4,000,000
Earnings foregone while studying
2,400,000
Annual salary premium after graduating
900,000
Discount rate
8

Results

Discounted payback period
10.94
Simple payback period
7.11
Total investment including foregone earnings
$6,400,000.00
Foregone earnings as % of investment
37.50%

Step by step

  1. 1Values used
  2. 2Total investment
  3. 3Discounted payback
  4. 4Discounted payback period= 10.94
  5. 5Simple payback period= 7.11
  6. 6Total investment including foregone earnings= 6,400,000.00
  7. 7Foregone earnings as % of investment= 37.50

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation or tax into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Why include foregone earnings?

Because two years out of the labour market is a real cost that shows up in lifetime earnings, and ignoring it makes every degree look better than it is.

Is a long payback a reason not to study?

Not necessarily. Non-financial returns — career optionality, network, sector switch — are frequently the actual reason and are not captured here.

Related Calculators

Degree Payback Period Calculator | Calcrivo