Is College Worth It? Here’s How to Do the Math

Is College Worth It? Here’s How to Do the Math

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For many students, attending college is viewed as the logical next step after completing high school. College is seen as a means to a better future, offering the opportunity to acquire knowledge and skills, and increase one’s earning potential. However, with the rising cost of tuition fees and an uncertain job market, the question of whether college is worth the investment has become more prevalent. In this blog, we will explore how to determine whether college is worth it in India.

Costs of Attending College in India 

The cost of attending college in India varies significantly depending on the institution and program type. Private colleges are typically more expensive than public colleges, and professional courses such as engineering or medicine are more costly than courses in the arts or humanities. Attending college in India entails tuition fees, accommodation expenses, and other living expenses.

The average annual tuition fee for an engineering course in a private college in India is around INR 1.5 lakhs, while the same course in a government college is around INR 50,000. For a medical course, the average annual tuition fee in a private college is around INR 5 lakhs, while the same course in a government college is around INR 25,000. Accommodation expenses can range from INR 50,000 to INR 2 lakhs per year, depending on the location and type of accommodation.

Earning Potential of College Graduates 

The primary reason for attending college is to increase earning potential. The assumption is that obtaining a college degree can secure a job with a higher salary than if one had not gone to college. However, earning potential varies significantly depending on the field of study and level of education.

According to the India Skills Report 2022, the median salary for a fresh graduate in India is around INR 3.6 lakhs per annum. Graduates with degrees in engineering, management, and computer applications tend to have higher earning potential than graduates in other fields. The median salary for an engineering graduate is around INR 4.5 lakhs per annum, while the median salary for a management graduate is around INR 5 lakhs per annum.

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Calculating the Return on Investment (ROI) 

To determine whether college is a worthwhile investment, we must calculate the return on investment (ROI). The ROI is calculated by comparing college costs with the potential earnings from the degree.

Let’s take the example of an engineering course in a private college that costs INR 1.5 lakhs annually. Assuming the student takes four years to complete the degree, the total cost of attending college would be INR 6 lakhs. If the student graduates with a median salary of INR 4.5 lakhs per annum, the total earnings over ten years would be around INR 45 lakhs. Subtracting the cost of attending college from the total earnings gives us a net return of INR 39 lakhs.

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Comparison with High School Graduates 

On the other hand, if the student had chosen not to attend college and started working right after high school, the potential earnings over the same 10-year period would be significantly lower. According to the India Skills Report 2022, the median salary for a high school graduate in India is around INR 2.4 lakhs per annum. Assuming a 5% annual increase in salary, the total earnings over the same 10-year period would be around INR 31 lakhs. Subtracting the potential earnings of a high school graduate from the net return of attending college gives us a difference of INR 8 lakhs.

This means that the student who attends college and graduates with a degree in engineering from a private college would have a net return of INR 39 lakhs over ten years, while a high school graduate who starts working immediately after high school would have a net return of INR 31 lakhs over the same period.

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Factors to Consider 

While the ROI calculation gives us a rough estimate of whether college is worth the investment, several other factors should be considered. For example, the type of institution, the field of study, and the location can all impact the ROI. In addition, the job market is constantly changing, and a degree is not guaranteed to lead to a job in the same field. The individual’s circumstances, such as family responsibilities and financial obligations, must also be considered.

College can be a worthwhile investment if it leads to a higher earning potential over the long term. However, it is essential to do the math and calculate the ROI before deciding. While the costs of attending college in India can be high, the potential earnings from a degree can also be significant. It is crucial to weigh the costs and benefits carefully and consider all factors before deciding. Ultimately, the decision to attend college should be based on an individual’s goals, values, and circumstances.

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