How to Calculate the Break Even Point of a College Degree

When going to college, it may seem the large costs of college outweigh the benefits of the education. You can perform a calculation to see how long it will take you to earn back the expenses. After mastering the basic payback period function, you can then add different principles into the equation, such as time value of money. However, a basic payback period gives you a general idea of the break even point of your college education.

Instructions

    • 1

      Subtract the average salary of a high school graduate from your salary. This is the amount you are making additionally due to education. In 2008, the average salary was $25,000 for a high school graduate. For example, assume you make $60,000 a year, so $60,000 minus $25,000 equals $35,000.

    • 2

      Add together your total cost to go to college. In the example, assume college cost $100,000.

    • 3

      Divide the cost to go to college by the amount you make above the level of a high school graduate to calculate your payback period. In the example, $100,000 divided by $35,000 equals 2.85 years.

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