Free Degree ROI calculator with clear step-by-step results.
The real cost of a degree is tuition plus the salary you did not earn while studying, which is frequently the larger of the two. The salary premium is then discounted back to today across your remaining career, because a pay gap thirty years out is worth far less than one next year.
Total investment
Investment = tuition and fees + salary without degree x years studying
Net present value
NPV = sum over career years of (salary gap / (1 + discount rate)^(year + study years)) - investment
Money received later is worth less than money now. Without discounting, any positive salary gap looks attractive because it is summed over decades at face value.
It rarely does - graduate premiums usually widen with seniority, which would improve the result. Holding it flat is the conservative assumption.