Can You Afford Not to Go Back to School?

A degree is one of the safest investments you can make. Housing values may rise and fall, businesses come and go, but your degree will always be a stepping stone to a better job. The funds you invest in your education today will translate into higher earnings tomorrow.

Census data shows dramatic returns at each stage of higher education. Here's a look at what you can expect to gain from going back to school.

Step One: High School Diploma
The biggest leap in earning power happens with a high school diploma or GED. High school dropouts make an average $18,734. Post-graduation, that number leaps to $27,915. That's nearly 70% more, an extra $9000 a year.

The low cost of earning a high school diploma makes that hefty raise well worth pursuing. Online GED and diploma programs allow you to study at your own pace while you work. This flexible format can reduce your educational expense to tuition alone, estimated at $900. Given the low cost and significant income gain of a high school education, the diploma is one of the most valuable qualifications available. Even averaging the $9181 annual gain over a typical work timeline of forty years, the net gain is $182,720 in today's dollars. Average lifetime earnings for high school graduates total at least $1,102,700.

Step Two: Associate Degree
The next step is a two-year college education, leading to an associate degree. Associate degree holders earn an average $8000 more a year than high school graduates. Of course, the degree is more expensive than the high school diploma--all told, average costs of online and campus-based programs come out to about $26,000. But again, that number pales in comparison to the cumulative additional income you'll see over forty years. The net value of an associate degree is estimated at $111,600. And the cumulative future value is at least $785,700 (taking into account unemployment and underemployment); assuming fulltime employment over forty years, that figure is closer to $1.4 million.

Step Three: Bachelor Degree
Stay in college for just two more years, and you could nearly triple that net value. A bachelor degree costs about the same as an associate--$26,400--but the return is twice as much. The net value is $235,200; or, calculated relative the high school level, $346,800.

The considerable increase in earning power with a bachelor degree accounts for its popularity. And the income disparity between high school and college graduates continues to expand as time goes by. In 1980, college grads earned 60 percent more; more than twenty years later, bachelor-level salaries are 88% higher than high school graduate earnings.

At the bachelor level and above, degree programs become more specialized. The ROI of your college degree will depend on which major you choose. The highest post-undergraduate salaries go to engineering, computer science, and business majors; humanities and social science grads average significantly less.

Step Four: Master Degree
At the graduate level, it makes sense to consider academic and professional programs separately. The Master of Business Administration (MBA) degree yields a phenomenal return--it's easy to see why the MBA is the most popular online degree available. Master of Arts (MA), Master of Science (MS), and other academic masters also pay for themselves, but more gradually.

The MBA offers an ROI any business professional can appreciate: MBAs typically experience a 35% increase from their pre-MBA salary (from $56,000 to $76,000, according to the GMAC). The GMAC's Corporate Recruiters Survey also reveals that the average MBA starting salary is 71 percent higher than the undergraduate entry-level salary. MBA programs may cost more than other master degrees, but the payoff is well worth the investment.

Other graduate degrees offer more modest returns, but are also solid investments. The cost of a master's degree averages around $22,000, an estimate based on a dozen representative programs in business, technology, health care administration, psychology, and education. Master programs can take two to four years to complete. Assuming the standard forty year worklife, the average yield of the investment is $216,000.

Step Five: Doctoral Degree
The doctoral degree requires the biggest commitment and delivers the biggest return, provided the degree is in a well-paying profession. Technical and scientific Ph.D.s command six-figure salaries, for example. Across the board, that number may be lower. But even taking into account a more modest salary, the estimated $43,000 cost of a Ph.D. offers an average return of $617,900.

Making the Most of Your Investment
But will you see the same return from your degree? "Ultimately, the value of any degree lies in the hands of the holder," says education advisor Wendy Croix. Your career success will depend on your work history and staying power, choice of major and school, personal motivation, and performance. Education is unique among investments in the predictability of its returns. Vast economic forces can randomly wreak havoc in housing and stock prices, but they have only a secondary impact on earning power. The critical factors in your success are up to you.

The estimates above, moreover, are conservative. They take into account periods of underemployment and unemployment, and an average level of accomplishment. If you land a better than average job and stay with it, you are likely to see considerably higher returns. Assuming full-time employment, associate degree holders could gain $7000 more annually, bachelor degree graduates could take home $9000 more, and advanced degree holders, $10000. Lifetime cumulative gains are even more dramatic: $850,000 more with an associate's degree, $1,000,000 more with a bachelor's, and $1,200,000 with an advanced degree.

Education at any level pays for itself in higher lifetime earnings. No other investment delivers such consistent, dramatic results across the board. The Social Security Administration reports: "Earnings for the group with more education are always higher