Degree ROI
Free Degree ROI calculator with clear step-by-step results.
About Degree ROI
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.
Formulas
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
Worked example
With the default values below, Degree ROI returns Net present value of the degree of $131,640.10. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Total cost of the degreeminimum 0 $
- 60,000 $
- Years spent studyingaccepts 0.5–12
- 4
- Salary without the degreeminimum 0 $
- 38,000 $
- Starting salary with the degreeminimum 0 $
- 56,000 $
- Years of career after graduatingaccepts 1–50
- 35
- Discount rateaccepts 0–15 %
- 3 %
Results
- Net present value of the degree
- $131,640.10
- Total investment including forgone pay
- $212,000.00
- Years to recover the investment
- 11.78 years
- Return on investment
- 62.09% %
Step by step
- 1Values used
- 2Total investment
- 3Net present value
- 4Net present value of the degree= $131,640.10
- 5Total investment including forgone pay= $212,000.00
- 6Years to recover the investment= 11.78 years
- 7Return on investment= 62.09 %
Assumptions and limits
- The result is derived only from the 6 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation, tax or compounding frequency 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 discount future earnings?
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.
Should the salary gap stay constant?
It rarely does - graduate premiums usually widen with seniority, which would improve the result. Holding it flat is the conservative assumption.