How to use this calculator
- Enter or choose total cost of study.
- Enter or choose years of study.
- Enter or choose yearly salary without the qualification.
- Enter or choose yearly salary with the qualification.
- Enter or choose working years afterwards.
- The return on investment updates as you type. Use Copy result or Share to keep it.
Method
Investment = Cost + Salary without × Study years; Premium = Salary with − Salary without; ROI = (Premium × Work years − Investment) ÷ Investment × 100; Payback = Investment ÷ Premium
- Premium
- extra yearly salary from the qualification
- NPV
- Premium × (1 − (1 + d)^−Work years) ÷ d − Investment, d = discount rate
Worked example
- Investment = 80,000 + 30,000 × 4 = 200,000.
- Premium = 50,000 − 30,000 = 20,000 a year; payback = 200,000 ÷ 20,000 = 10 years.
- Gain over 30 years = 600,000 − 200,000 = 400,000, an ROI of 200%.
The degree costs 200,000 including lost pay, pays back in 10 years and returns 400,000 more than it costs over 30 years.
What the result means
A positive NPV at a realistic discount rate (for example the return you could get investing the money instead) is a stronger test than raw ROI, because money earned decades from now is worth less today.
Assumptions and limits
- Salaries are in today’s money and the premium stays the same every year.
- Costs are counted when study starts and are not discounted.
- Salary estimates are yours; actual earnings vary widely by field, institution and person.
- Taxes, loan interest and non-financial benefits are not included.
Questions
Why include earnings given up?
Years spent studying full time are years without a full salary. For many people that is a bigger cost than tuition.
What discount rate should I use?
Commonly 3–7%: roughly what the money could earn if invested instead, after inflation.
Please note: This calculator gives estimates for planning. It is not financial advice, and lenders’ actual terms, fees and rounding may differ.