The Opportunity Cost of Going to College

When you decide to go to college, you’re not just paying tuition - you’re also giving up potential earnings from working. This is called the opportunity cost of college. Let’s explore what this means and how to make an informed decision.

What is Opportunity Cost?

Opportunity cost is the value of the next best alternative that you give up when you make a choice. In the case of college, the opportunity cost includes:

1. The money you could have earned by working instead of going to school
2. The time you could have spent gaining work experience
3. The potential for career advancement without a degree

Applying Opportunity Cost to College

Let’s look at a hypothetical example:

Scenario 1: Going to College

• Tuition and fees: $20,000 per year
• Room and board: $10,000 per year
• Books and supplies: $1,000 per year
• Total cost per year: $31,000
• Years in college: 4
• Total cost: $124,000

Scenario 2: Working Instead

• Starting salary: $30,000 per year
• Potential raises: 3% per year
• Years working: 4
• Total earnings: $125,484

In this example, the opportunity cost of going to college is not just the $124,000 in tuition and expenses, but also the $125,484 you could have earned by working instead.

Long-Term Benefits of College

However, it’s important to consider the long-term benefits of a college education:

1. Higher earning potential over your lifetime
2. Better job opportunities and career advancement
3. Personal growth and development
4. Networking opportunities
5. Access to resources and knowledge

Making an Informed Decision

When deciding whether to go to college, consider:

1. Your career goals and whether they require a degree
2. The cost of college at your chosen institution
3. Your ability to pay for college (grants, scholarships, loans)
4. The potential return on investment for your chosen major
5. Your personal circumstances and priorities

Resources for Decision Making

There are many resources available to help you make an informed decision:

• College cost calculators
• Salary data for different careers
• Information about financial aid and scholarships
• Career counseling services
• Alumni networks and professional associations

Want to learn more about the ROI of different college majors? Check out our College ROI Calculator!