What is the purpose of higher education? While a minority of college students have enough wealth to study as a hobby, college students generally view college as a step towards a career, with higher earnings potential as one motivation. But while a four-year college education generally has the same price tag regardless of degree, an individual’s future earnings potential vary widely depending on the degree chosen. Here is a partial ranking of careers, ranked by NPV and rate of return (details on the methodology at bottom):
Career ROI Rankings:
| Career | Average Salary | NPV | After-tax earnings (lifetime) | Rate of Return |
| 1. Law | $124,230 | $188,000 | $4,825,000 | 15% |
| Attorneys rank high on the list since their education is complete just three years after college, and they can step right into six-figure salaries. | ||||
| 2. Computer Science | $83,160 | $184,000 | $3,534,000 | 19% |
| Computer science grads start work immediately after college with salaries above 50k, giving them the fastest payback on their investment. Lifetime earnings potential is lower than in some professional fields, however. | ||||
| 3. Pharmacy | $98,960 | $168,000 | $3,885,000 | 16.2% |
| Pharmacists typically must complete a six year program before starting work, but high demand for pharmacists enables them to move directly into $90k per year positions upon graduation. | ||||
| 4. Medicine | $179,000 | $151,000 | $5,908,000 | 12.9% |
| Doctors have always enjoyed good incomes, but their educational investment is so high that it reduces their educational ROI more than is commonly realized. | ||||
| 5. Accounting | $69,500 | $148,600 | $3,151,000 | 17.9% |
| Accountants can start work right after college, and their pay increases considerably once they’ve completed their CPA certification. | ||||
| 6. Airline Pilot | $148,410 | $125,000 | $3,578,000 | 14.25% |
| Airline pilots must work for years at low paying regional air or charter jobs before making it to a major carrier, but the final payoff is a relatively high salary and reasonable working hours. | ||||
| 7. Nursing (RN) | $62,480 | $100,000 | $2,633,000 | 16.3% |
| Nurses can finish training in as little as three years, and earn relatively good salaries right from the start, with job prospects virtually anywhere in the country. | ||||
| 8. Architecture | $73,650 | $54,000 | $2,839,000 | 12.3% |
| Architects have decent salaries in the long run, but they must first complete a five year Bachelor’s program, and then spend several years as interns before becoming full-fledged architects. | ||||
| 9. Graphic Design | $45,340 | $24,850 | $2,125,000 | 11.6% |
| Graphic Designers can start work right after finishing college, but competition for positions is high, keeping salaries down. | ||||
| 10. Teaching (K-12) | $52,450 | -$10,100 | $1,986,000 | 9.4% |
| Teachers are not particularly well compensated in the US, and since their starting salaries are particularly low, the NPV of an investment in a teaching career is actually negative. | ||||
| 11. English (PhD) | $60,000 | -$14,000 | $2,301,000 | 9.3% |
| At the bottom of the rankings are Humanities majors. If an English or Humanities PhD candidate tells you that they didn’t go into it for the money, they’re not lying: this career path has a negative return on investment in income terms. | ||||
Annotated spreadsheet with all calculations: HTML | XLS with formulas
Law, Computer Science, and Pharmacy majors take top honors in terms of career ROI, while (perhaps not surprisingly) artists, teachers, and Humanities professors come out on bottom. Doctors and airline pilots are further down the list than one might suspect, principally because they spend so many years in training before achieving high compensation.
Definition of Terms:
NPV: This is the Net Present Value of the student’s investment in education, based on a 10% discount rate. 10% is a common rate of return expected for long-term investments, and it helps provides a fair benchmark of the value of each career path.
IRR: This is the Internal Rate of Return of the educational investment. IRR tends to favor shorter time horizons, so shorter educational paths like computer science are rewarded when measured via IRR.
Lifetime Earnings: This is a simple sum of the lifetime after-tax earnings of each career path from age 18 through age 65.
More info on Methodology:
All salary data was taken from the BLS May 2007 Occupation Employment and Wages Estimates. College was assumed to cost $20,000 per year (this sounds low, but is an average for public and private colleges, after all scholarships, grants, and student work are taken into account). Professional school costs, and graduate and resident stipend data were sourced variously, and are noted in the spreadsheet. Inflation at 2% and progressive taxation were also accounted for in the calculations.
The rate of return for each field was calculated by determining the IRR for each field, taking into account the cost of college and measuring total after-tax gains from age 22 to age 65. The NPV of each career path was also calculated with a discount rate of 10%. Finally, lifetime after-tax earnings were calculated as a simple sum to provide another measure of earnings potential.
True Cost - Analyzing our economy, government policy, and society through the lens of cost-benefit 