Benefits and Costs of Education

Getting the idea Different occupations require different levels of schooling. The table shows some occupations, their average education costs, and their average yearly salaries. Occupation Average Education Costs Years of College Average Yearly Salary Waiter $0 $18,000 Hairdresser $15,000 $22,000 Teacher $115,000 4 $55,000 Software Developer $200,000 7 Surgeon $300,000 12 $190,000

College Some of these occupations require more post-high school education than others. Paying for a college education can be a challenge. Fortunately, there are ways to make it a bit easier.

College Costs Students who qualify for financial aid get reduced tuition costs. For example: Grants and scholarships award money for college that does not have to be paid back. Federal loans are available at very low interest rates. Work-study programs allow students to work while they are at college to earn money to help pay for education expenses

Example 1 Use the table on average yearly salaries. Suppose Joanne graduated high school at the age of 18. She plans to be a teacher. How much would Joanne earn if she plans to work until she is 60 after paying off her college expenses? Assume Joanne makes the average yearly salary, has average educational costs, and takes no extended absence from her profession.

Strategy: Find the expected earning and subtract education expenses Step 1: find Joanne’s lifetime earnings if she works until age 60. Joanne needs 4 years of college, so she will start working when she is 22. 60-22=38 years as a teacher 38 x $55,000 = 2,090,000 Step 2: subtract the education costs. $2,090,000-$115,000=$1,975,000 Solution: Joanne would earn $1,975,000 after education expenses.

Example 2 Paula graduated high school at age 18. How much would Paula earn (after education expenses) if she worked as a surgeon until age 65, but took an extended leave of 8 years to raise her children?

Strategy: Find the expected earnings and subtract education expenses Step 1: Find Paula’s lifetime earnings if she works until age 65. Paula needs 12 years of post-high school education, so she will start working when she is 30. She will also take 8 years off. 65-30-8=27 years of working as a surgeon 27 x $190,000 = $5,130,000 Step 2: Subtract the education costs. $5,130,000 - $300,000 = $4,830,000 Solution: Paula would earn $4,830,000 after expenses

Example 3 Compare the costs of becoming a teacher to the costs of becoming a lawyer. Also compare the salaries of the two occupations.

Strategy: Use the table Step 1: Compare the average education costs Cost for a teacher: $115,000 Cost for a lawyer: $200,000 $200,000 ÷ $115,000 = 1.7 (rounded) The cost of becoming a lawyer is almost twice the cost of becoming a teacher. Step 2: Compare the salaries. Salary for a teacher: $55,000 Salary for a lawyer: $115,000 $ 115,000 ÷ $55,000 = 2.1 (rounded) The average annual salary of a lawyer is about twice that of a teacher. Solution: The cost of schooling and the three-year delay in beginning work are more than made up for by the salary a lawyer makes.

Example 4 Compare the costs of becoming a hairdresser to the costs of becoming a software developer. Also compare the salaries of the two occupations.

Strategy: Use reasoning Step 1: Compare the average education costs Cost for a hairdresser: $15,000 Cost for a software developer: $115,000 $115,000 ÷ $15,000 = 7.7 (rounded) The cost of becoming a software developer is about 8 times the cost of becoming a hairdresser. Step 2: Compare the salaries. Salary for a hairdresser : $22,000 Salary for a software developer : $93,000 $ 93,000 ÷ 22,000= 4.2 (rounded) The average annual salary of a software developer is about four times that of a hairdresser. Solution: The cost of schooling and the four-year delay in beginning work are more than made up for by the salary a software developer makes.