POWER OF COMPOUNDING (POC)

Private/public college degree or not?

POWER OF COMPOUNDING (POC)
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EARNING AN UNDERGRADUATE OR POSTGRADUATE DEGREE

VS.

GETTING A JOB AND MAKING INVESTMENTS

INTRODUCTION:

"If there's one thing parents think they should save for, it's their children's college education. In 18 years, a degree from a public school will cost around $200,000 and a private university will run closer to $400,000, according to the College Board, which administers the SAT standardized college admissions test."

Saving Early for College Pays Later by Stacey L. Bradford. The Wall Street Journal on line
Wednesday, June 17, 2009

http://finance.yahoo.com/focus-retirement/article/107198/Saving-Early-for-College-Pays-Later?mod=fidelity-buildingwealth

NOTE: In Tables 32 - 44 (the term “postgraduate” is used to indicate any degree that is higher than an undergraduate (bachelor) degree. Examples of postgraduate degrees include:

MA -- Masters of Art
MS -- Masters of Science
MBA -- Masters of Business Administration
PhD -- Doctor of Philosophy
JD -- Juris Doctor (law degree)
MD -- Medical Doctor
DDS -- Doctor of Dental Science
EdD -- Doctor of Education
DVM -- Doctor of Veterinary Medicine

Source: http://answers.yahoo.com/question/index?qid=20061228171727AA1cjOn

Table 32

Table 32 shows the approximate annual cost for both public and private tuition based on the degree program.

Degree Program

Number of Years

of College Attended

Approximate

Annual Tuition

in $

Undergraduate

4

10,000* to 40,000**

*Public college tuition

“The debate over the long-term value of a pricey private-school education is heating up, especially in this tough economy. Sure, everyone knows that by sticker price alone, public schools are a sweet deal, with out-of-state tuition and fees that run about 30 percent less than most of their private rivals—and in-state fees running up to three-quarters less.

Indeed, the math is pretty jarring; the difference, on average, ranges between $7,700 and $18,600 a year, obviously no small matter with stock market woes depleting so many people's savings.”

Reference: Is an Ivy League education worth the money?

The Best Colleges for Making Money. Smartmoney.com

16 December 2008

http://finance.yahoo.com/college-education/article/106319/The-Best-Colleges-for-Making-Money

**Private college tuition

Note: Tuition fees vary greatly, depending on the college attended and the degree sought. The figures in Table 32 above are at the extreme ends of the fees, more or less.

Out-of-state students usually pay double the fees of in-state residents for state colleges. For private colleges, fees are the same for both in-state and out-of-state students.

According to Shelly Banjo, reporter for the Wall Street Journal:

The cost of graduate school has skyrocketed, rising 60% in the past decade according to the Council of Graduate Schools. A one-year master's degree in political management at George Washington University can cost $38,000. Harvard tells law-school students to plan for $62,000 a year for tuition, living and food costs.

Source: Betting on Grad School by Shelly Banjo. Tuesday, April 29, 2008, provided by The Wall Street Journal Online.

http://finance.yahoo.com/college-education/article/104958/Betting-on-Grad-School

OUT OF STATE STUDENTS

In 2007, annual tuition for undergraduate studies at a Maryland state college was approximately $10,000 for in-state residents and $22,000 for out-of-state students (four-year totals of about $40,000 and $88,000, respectively). Based on the above figures, a four-year degree will end up costing an out-of-state student about $48,000 more for the same degree as an in-state resident ($88,000 - $40,000 = $48,000). Plus, out-of-state students have additional expenses, such as the cost to travel home and back to college.

Taking into consideration the significant difference in the cost of tuition, the obvious question a person needs to ask him or herself before making the decision to attend an out-of-state college is: “Does a degree from an out-of-state college have more value than a degree obtained from an in-state college (e.g., University of Maryland at College Park vs. Virginia Tech)?”

To illustrate the difference in the overall cost, suppose an out-of-state student spends $2,000 for travel expenses over a four-year period. The $2,000 added to the $48,000 extra tuition makes the cost of attending an out-of-state college $50,000 more than for an in-state resident, or $12,500 more every year for four years ($50,000 ÷ 4 = $12,500). If the individual had invested $12,500 at 10% interest, compounded monthly, the investment would be worth $64,533.00 at the end of four years. See Table 33.

Table 33 shows the end values of an out-of-state undergraduate student’s extra expenses ($12,500/year*) if the money had been invested at 10% interest, compounded monthly, for 4 years.

Table 33

Year

Out-of-State Student’s

Additional Yearly Expenses

in $

Annual Investment

of Additional Annual Expenses

in $

+

Year-End Value of Previous Year

Year-End Values

in $

at 10% Compounded Monthly

1

12,500

XXXXXXXXX

13,808.91

2

12,500

12,500 + 13,808.91 = 26,308.91

29,063.80

3

12,500

12,500 + 29,063.80= 41,563.80

45,916.07

4

12,500

12,500 + 45,916.07 = 58,416.07

64,533.00

Online Calculator: http://www.moneychimp.com/calculator/compound_interest_calculator.htm

If an individual was to make a one-time investment of $64,533.00 * at 10% interest, compounded monthly, the investment would grow into

$4,672,076.85

by the time the person reaches retirement age 65. This is shown in the Table 44 below.

The extra expense incurred to attend an out-of-state college deserves careful consideration before making a decision about where to attend college. Obviously, the award of a scholarship in an amount greater than the extra costs would negate having to forego going out-of-state. There may also be other compelling reasons to attend an out-of-state college that would negate the extra expense.

Table 34

Table 34 shows the end values of a one-time investment of $64,533.00 (from Table 41 above, extra tuition cost after investment for out of state students ) for various yearly increments, ranging from 0 to 43 years, along with the investor’s corresponding age. The figures below are based on the assumption that the investor graduated from a four-year college at age 22 and that the investment earned 10%, compounded monthly.

Number of Years

To age

End Values of

One-Time Investment

in $

at 10%

compounded monthly

From age 19

22

64,533.00

10 + 22

32

174,693.51

15 + 22

37

287,424.79

20 + 22

43

472,902.58

25 + 22

47

778,070.83

30 + 22

52

1,280,166.89

35 + 22

57

2,106,270.03

40 + 22

62

3,465,464.90

43 + 22

65

4,672,076.85

The extra expense incurred to attend an out-of-state college deserves careful consideration before making a decision about where to attend college. Obviously, the award of a scholarship in an amount greater than the extra costs would negate having to forego going out-of-state. There may also be other compelling reasons to attend an out-of-state college that would negate the extra expense.

Table 35

Table 35 shows the comparative approximate cost of college tuition per year by state residency for public and private education*.

Residency

Public College

Public College

Private College

Private College

Undergraduate Tuition

in $

Graduate Tuition & Beyond

in $

Undergraduate Tuition

in $

Graduate Tuition & Beyond

in $

Resident

10,000

15,000

30,000

40,000

Non-Resident

21,000

30,000

30,000

40,000

* Some private undergraduate just college fees could be close to $40,000 or more

Table 36

Table 36 shows the comparative approximate cost of college tuition for four years by state residency for public and private education.

Residency

Public College

Public College

Private College

Private College

Undergraduate Tuition

in $

Graduate Tuition & Beyond

in $

Undergraduate Tuition

in $

Graduate Tuition & Beyond

in $

Resident

40,000

60,000

120,000

160,000

Non-Resident

84,000

120,000

120,000

160,000

As shown in Tables 35 & 36 above, the combined comparative approximate expense for tuition (undergraduate and graduate & beyond) is $100,000 ($40,000 + $60,000 = $100,000) for state residents in a public college, $204,000 ($84,000 + $120,000 = $204,000) for non-residents in a public college, and $280,000 ($120,000 + $160,000 = $280,000) for students in a private college.

Tuition for medical school varies from $15,000 per year for state colleges to $40,000 per year for private colleges. Total tuition for four years ranges for $60,000 to $160,000.

In addition to the cost of tuition as shown in Tables 45 and 46, there are other expenses to consider, such as housing, transportation, and recreation. As an example, imagine that the extra expenses total $2,000 per month, or $24,000 per year ($2,000 x 12 = $24,000). The total expenses would be $96,000 ($24,000 x 4 = $96,000) in four years and $192,000 ($96,000 x 2 = $192,000) in eight years. For ease of calculation in Table 46 below, the figures in the foregoing calculations have been rounded up to $100,000 and $200,000, respectively.

When the extra expenses are added to the tuition for eight years of college, the approximate total expense for state colleges is $300,000 ($100,000 + $200,000 = $300,000) for state residents and $404,000 ($204,000 + $200,000 = $404,000) for non-residents and $480,000 ($280,000 + $200,000 = $480,000) for private colleges.

Tables 37, 41 and 44 below show the total expenses for a 4-year undergraduate education, a 4-year graduate/postgraduate education, and an 8-year combined undergraduate and graduate/postgraduate education, respectively.

Tables 37, 38, 39, and 40 below show the end values of an investment if the totals from the “average yearly cost” columns in Tables 37 had been invested at 10% interest, compounded monthly, for the number of years shown in the respective tables.

Table 37

Table 37 shows both the total expenses and the average annual cost of a 4-year undergraduate education based on student state residency status.

Student Status

Tuition Expenses

Undergraduate

in $

Living Expenses

in $

Total Expenses

in $

Average

Yearly Cost

in $

Resident

40,000

100,000

140,000

$35,000

Non-Resident

84,000

100,000

184,000

$46,000

Private

120,000

100,000

220,000

$55,000

Table 38

Table 38 is divided into two sections. Section 1 of the table shows the end value of an annual investment of $35,000 (from Table 37) after 4 years at 10% interest, compounded monthly. Section 2 of the table shows the end value of a one-time investment of $180,692.39 (from section 1, Table 48) after 40 years at 10% interest, compounded monthly.

SECTION 1

Year

Annual Deposit

in $

for Resident

Student Status

Annual Investment

in $

Year-End Values

in $

at 10%

Compounded Monthly

1

35,000

-0-

38,664.96

2

35,000

35,000.00

+ 38,664.96=

73,664.96

81,378.64

3

35,000

35,000.00

+ 81,378.64 =

116,378.64

128,565.00

4

35,000

35,000.00

+ 128,565.00 =

163,565.00

180,692.39

SECTION 2

Total

Number of Years

One-Time

Investment

in $

Annual Investment

in $

End Value

in $

at 10%

Compounded Monthly

40

180,692.39

-0-

9,703,301.17

Table 39

Table 39 is divided into two sections. Section 1 of the table shows the end value of an annual investment of $46,000 (from Table 37) after 4 years at 10% interest, compounded monthly. Section 2 of the table shows the end value of a one-time investment of $237,481.43 (from section, Table 39) after 40 years at 10% interest, compounded monthly.

SECTION 1

Year

Annual Deposit

in $

for Resident

Student Status

Annual Investment

in $

Year-End Values

in $

at 10%

Compounded Monthly

1

46,000

-0-

50,816.80

2

46,000

46,000

+ 50,816.80=

96,816.80

106,954.78

3

46,000

46,000

+ 106,954.78

=

152,954.78

168,971.14

4

46,000

46,000

+ 168,971.14

= 214,971.14

237,481.43

SECTION 2

Total

Number of Years

One-Time

Investment

in $

Annual Investment

in $

End Value

in $

at 10%

Compounded Monthly

40

237,481.43

-0-

12,752,910.28

Table 40

Table 40 is divided into two sections. Section 1 of the table shows the end value of an annual investment of $55,000 (from Table 37) after 4 years at 10% interest, compounded monthly. Section 2 of the table shows the end value of a one-time investment of $283,945.20.20 (from section 1, Table 38) after 40 years at 10% interest, compounded monthly.

SECTION 1

Year

Annual Deposit

in $

for Resident

Student Status

Annual Investment

in $

Year-End Values

in $

at 10%

Compounded Monthly

1

55,000

-0-

60,759.22

2

55,000

55,000

+ 60,759.22

= 115,759.22

127,880.72

3

55,000

55,000

+ 127,880.72

= 182,880.72

202,030.72

4

55,000

55,000

+ 202,030.72

= 257,030.72

283,945.20

SECTION 2

Total

Number of Years

One-Time

Investment

in $

Annual Investment

in $

End Value

in $

at 10%

Compounded Monthly

40

283,945.20

-0-

15,248,045.55

Table 41

Table 41 shows both the total expenses and the average yearly costs for a 4-year postgraduate education based on student status.

Student Status

Postgraduate

Tuition Expenses

in $

Living Expenses

in $

Total Expenses

in $

Average

Yearly Costs

in $

Resident

60,000

100,000

160,000

40,000

Non-Resident

120,000

100,000

220,000

55,000

Private

160,000

100,000

260,000

65,000

Table 42

Table 42 shows the values of a yearly investment of $40,000, $55,000, and $65,000 (from Table 41) at the end of four years at 10% interest, compounded monthly.

Student Status

Year 1

Starting Balance

in $

Annual Investment for

Next 3 Years

in $

End Values

After 4 Years

in $

at 10%

Compounded Monthly

Resident

40,000

40,000

246,505.60

Non-Resident

55,000

55,000

338,945.20

Private

65,000

65,000

400,571.60

Table 43

Table 43 shows the approximate annual investment needed to equal the end value after 40 years of the one-time investment of the end value for the respective student status from Table 42 above. For all examples, the interest rate is 10%, compounded monthly.

One-Time Investment

of End Values

from Table 49

in $

Approximate

annual Investment needed in $ for 40 years

End Values After 40 years

in $

at 10%

Compounded monthly

246,505.60

X

13,237,514.20

X

23,766.00

13,237,514.20

338,945.20

X

18,201,582.02

X

32,678.00

18,201,582.02

400,571.60

X

21,510,960.57

X

38,619.00

21,510,960.57

Note: The approximate annual investment amounts needed for 40 years to equal the end values of the “one-time” investment totals would be quite a burden for most people.

Table 44

Table 44 shows both the total expenses and the average yearly costs for an 8-year combined undergraduate and postgraduate education based on student status.

Student Status

Undergraduate & Postgraduate

Tuition Expenses in $

Living Expenses

in $

Total Expenses

in $

Average

Yearly Costs

in $

Resident

100,000

200,000

300,000

37,500

Non-Resident

204,000

200,000

404,000

50,500

Private

280,000

200,000

480,000

60,000

Table 45

Table 45 shows the values of a yearly investment of $37,500, $50,500, and $60,000 (from Table 42 above) at the end of 8 years at 10% interest, compounded monthly.

Student Status

Year 1

Starting Figures

in $

Annual Investment

in $

Values in $

at End of Year 8

at 10%

compounded monthly

Resident

37,500

37,500

519,436.46

Non-Resident

50,500

50,500

692,581.95

Private

60,000

60,000

831,098.34

Table 46

Table 46 shows the approximate annual investment needed to equal the one-time investment of the end value of the respective student status from Table 43 above. For all examples, the length of time of the investment is 36 years, and the interest rate is 10%, compounded monthly.

One-Time Investment

in $

from Table 53

Approximate

Annual Investment needed in $ for 36 years

End Values After 36 Years

in $

at 10%

Compounded monthly

519,436.46

X

18,728,979.50

X

50,503.00

18,728,979.50

692,581.95

X

24,971,972.78

X

67,338.00

24,971,972.78

831,098.34

X

29,966,367.34

X

80,806.00

29,966,367.34

Note: The approximate annual investment amounts needed for 36 years to equal the end values of the “one-time” investment totals would be quite a burden for most people.

A person who attends medical school will graduate at about 26 years of age. Upon graduation, the new doctor must do a medical internship ( low pay), followed by a residency (low pay), which can take another three to four years to complete. On average, residents earn $45,000 per year. If a resident opts to do a fellowship, the residency will last another two years with slightly better pay.

Suggested Reading: Educational Portal. Medical Doctor: Step-By-Step Guide for Becoming a Doctor of Medicine. September 21, 2008.

http://education-portal.com/articles/Medical_Doctor%3A_Step-By-Step_Guide_for_Becoming_a_Doctor_of_Medicine.html

Typically, a medical doctor will be about 35 years old and approximately $150,000 to $200,000 in debt before earning a decent income. If the debt is paid back at $20,000 per year for 10 years (without further compounding of the original principal), the MD will be debt free at about 45 years of age. Realistically, repayment of the debt will probably take longer.

According to Shelly Banjo, reporter for The Wall Street Journal (WSJ):

A medical degree at Northwestern University? About $241,000, including $168,000 for tuition. The typical 2008 medical-school graduate will start her career about $150,000 in debt, says the Virginia-based American Medical Student Association, and will spend 20 to 30 years paying it off.

Source: Betting on Grad School by Shelly Banjo. Tuesday, April 29, 2008, provided by The Wall Street Journal Online.

http://finance.yahoo.com/college-education/article/104958/Betting-on-Grad-School

Table 47 shows the monthly amount required to repay a student loan, depending on the amount borrowed and the length of the loan. In all examples, the interest rate is 7%.

Table 47

Length

of Loan

in Years

$100,000

Monthly

Loan

Repayment

in $

$150,000

Monthly

Loan

Repayment

in $

$200,000

Monthly

Loan

Repayment

in $

$250,000

Monthly

Loan

Repayment

in $

$300,000

Monthly

Loan

Repayment

in $

10

1,161.08

1,741.63

2,322.17

2,902.71

3,483.25

15

898.83

1,348.24

1,797.66

2,247.07

2,696.48

20

775.30

1,162.95

1,550.60

1,938.25

2,325.90

25

706.78

1,060.17

1,413.56

1,766.95

2,120.34

30

665.30

997.95

1,330.60

1,663.26

1,995.91

Online Calculator: http://www.mortgage-calc.com/mortgage/simple.php

Online College Cost Projector: http://www.finaid.org/calculators/costprojector.phtml

Note: Mark Kantrowitz, publisher of the finaid.org Website recommends that student loan payments should not take more than 10% to 15% of one’s income.

Michelle Obama, wife of Democratic presidential contender Barack Obama, made headlines while accompanying her husband on the 2008 campaign trail by complaining about how difficult student loans are to pay back. Mrs. Obama, a Princeton graduate who attended Harvard Law School, told an audience of working mothers at a daycare center in Zanesville, Ohio:

College isn’t worth it and you should stay out of corporate America…The salaries don’t keep up with the cost of paying off the debt, so you’re in your 40s, still paying off your debt at a time when you have to save for your kids...Barack and I were in that position…The only reason we’re not in that position is that Barack wrote two best-selling books… (1-3)

Mrs. Obama also told the women:

…that she’d prefer they not follow in her upwardly mobile footsteps. Better if they stay in their place, back in “the community.” You know, become teachers. Work for the community. Be social workers. Be a nurse. Those are the carriers that we need, and we’re encouraging our young people to do that. (3)


Source:

1. NRO (national review online). the corner. Friday, February 29, 2008. Michelle Obama: "Don't Go Into Corporate America" [Byron York]

http://corner.nationalreview.com/post/?q=OTViZjhhNGI1Y2QxYjE0ZDc0YmMwMjJiNmUyZjQ3MmU

2. Michelle Obama in spotlight's glare. By Robin Abcarian, Los Angeles Times Staff Writer, February 21, 2008.
http://www.latimes.com/news/politics/la-na-michelleobama21feb21,0,5061497.story

3. Michelle Obama Urges The Poors To Stay That Way By Avoiding
College And Corporate America. Posted by John Carney, Mar 03, 2008. http://www.dealbreaker.com/2008/03/michelle_obama_urges_the_poors.php

As a comparison, assume that a young man leaves school at age 18 and gets a job earning $24,000 per year (plus some overtime income). Further, assume two separate scenarios about the young man as he was growing up. In the first scenario, the young man earned a salary from his parents working in the home-based business or doing home chore, from the time he was five until he turned fourteen. From age 14 to 18, the young man worked a part time job outside the home. During his childhood and adolescence, the young man earned $5,000 and invested the savings. In the second scenario, the young man did not work as a child or adolescent and did not start investing until he left school at age 18 and started working. Tables 58 and 59 below illustrate the two scenarios.

Table 48

Table 48 shows the difference in the end values of an investment of the 18-year-old described in the two scenarios above (after 17 years, or at age 35). A comparison is made between beginning balances of zero and $5,000 and corresponding deposits of $100 to $500 per month. In both examples, the interest rate is 10%, compounded monthly.

Monthly

Deposit

in $

Beginning Balance

in $

End Values

in $

After 17 Years

(Age 35)

at 10%

Compounded Monthly

Beginning

Balance

in $

End Values

in $

After 17 Years

(Age 35)

at 10%

Compounded Monthly

100

0

60,056.32

5,000

90,079.79

200

0

120,112.64

5,000

150,136.11

300

0

180,168.96

5,000

210,192.43

400

0

240,225.29

5,000

270,248.75

500

0

300,281.61

5,000

330,305.08

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Table 49

Table 49 is a continuation of Table 48. The end values in the table below are based on the assumption that the monthly deposits and the interest rate remain the same as above for the next 30 years, or from age 35 to age 65.

Monthly

Deposit

in $

Beginning Balance

in $

End Values

in $

After 30 Years

(Age 35 to 65)

at 10%

Compounded Monthly

Beginning

Balance

in $

End Values

in $

After 30 Years

(Age 35 to 65)

at 10%

Compounded Monthly

100

60,056.32

1,417,410.00

90,079.79

2,012,997.56

200

120,112.64

2,834,819.99

150,136.11

3,430,407.56

300

180,168.96

4,252,229.99

210,192.43

4,847,817.56

400

240,225.29

5,669,640.19

270,248.75

6,265,227.55

500

300,281.61

7,087,050.18

330,305.08

7,682,637.75

The earning power of the 18-year-old in the above example should increase with age, thereby providing more income in which to invest. Further, if the young man earns a college degree while working, the potential to earn more and the ability to invest more is very likely.

The importance of starting to invest at a young age is something not many young people often think about. Thoughts about having enough money to retire comfortably, contributing to company pension funds and social security, and having adequate healthcare coverage in old age are distant concerns for a great number of young adults. One way for young people to secure their financial future is to have a mentor who will help them to understand that TIME is the most important factor in the investment equation. Money needs time to grow…The longer the time…the greater the growth.

Tables 48 and 49 above show the wealth that an 18-year-old without a college education would accumulate in 30 years by making investments on which the interest is compounded. Question is: Is this practical or just a theory?

Table 50 below shows the wealth that a 35-year-old doctor (without medical school debt) would accumulate in comparison.

The example below is based on the assumption that the doctor is earning $150,000 to $200,000 per year ($12,500 to $16,666 per month before taxes, or approximately $9,000 to $12,000 net per month). Further, assume two separate scenarios about the doctor’s beginning balance. In the first scenario, the doctor starts with a zero balance. In the second scenario, the doctor starts with $10,000, which he/she has saved during the last 17 years (from age 18).

Table 50

Table 50 shows the difference in the end values of an investment of the doctor described in the two scenarios above. A comparison is made between beginning balances of zero and $10,000 and corresponding deposits of $1,000 to $10,000 per month. In both examples, the interest rate is 10%, compounded monthly, and the length of time is 30 years.

Monthly

Deposit

in $

Beginning Balance

in $

End Values

in $

After 30 Years

(Age 35 to 65)

at 10%

Compounded Monthly

Beginning

Balance

in $

End Values

in $

After 30 Years

(Age 35 to 65)

at 10%

Compounded Monthly

1,000

0

2,260,487.92

10,000

2,458,861.92

2,000

0

4,520,975.85

10,000

4,719,349.84

3,000

0

6,781,463.77

10,000

6,979,837.77

4,000

0

9,041,951.70

10,000

9,240,325.69

5,000

0

11,302,439.62

10,000

11,500,813.62

6,000

0

13,562,927.55

10,000

13,761,301.54

7,000

0

15,823,415.47

10,000

16,021,789.47

8,000

0

18,083,903.40

10,000

18,282,277.39

9,000

0

20,344,391.32

10,000

20,542,765.32

10,000

0

22,604,879.25

10,000

22,803,253.24

Summary of Expense for Private Education vs. Value if Invested

The comparison examples below (Tables 51& 52) include the cost of tuition for private education, plus living expenses where applicable (during college education).

Example #1

Preschool to Grade 12: Age 3 to 18, Tuition $10,000/Year (from Table 35)

Undergraduate: Age 19 to 22, Tuition $55,000/Year (from Table 37)

Graduate/Postgraduate: Age 23 to 26, Tuition $65,000/Year (from Table 41)

vs.

Value if Invested at 10% Interest, Compounded Monthly

During the school years (Preschool to Grade 12), only the cost of tuition of $10,000/year is included in the calculations, not living expenses. For undergraduate (Age 19 to 22) and graduate/postgraduate (Age 23 to 26) education, combined tuition and living expenses of $55,000/year and $65,000/year, respectively, are included in the calculations. From Age 27 until Age 65, the end value of a one-time investment is shown in Table 61 below. All calculations are based on 10% interest, compounded monthly. All investment deposits are made in the beginning of the year.

Table 51

Age Groups

with Corresponding

Years of School

Yearly

Private School

Tuition

in $

Yearly Private

Undergraduate

College Tuition in $

Yearly Private

Graduate/Post-graduate

College Tuition in $

Investment Values

in $

for the Corresponding Years of Education

at 10%

Compounded Monthly

Age 3 to 18 =

15 Years of School

10,000/Year

for 15 Years

X

X

334,067.85

Age 19 to 22 =

4 Years Undergraduate

X

55,000/Year

for 4 Years

X

264,795.20

Age 23 to 26 =

4 Years

Graduate/

Postgraduate

X

X

65,000/Year

for 4 Years

312,939.78

Balance in $

from

Investment Value of

15 Years of School

(Age 3 to 18)

Age 3 to 22 =

19 Years

(15 Years of School + 4 Years of Undergraduate College Tuition)

334,067.85

55,000/Year

for 4 Years

X

754,576.05

Balance in $

from

Investment Value of

15 Years of School

+ 4 Years of Undergraduate College Tuition

Age 3 to 26 =

23 Years

(15 Years of School + 4 Years Undergraduate +

4 Years Graduate/Post-graduate)

754,576.05

X

65,000/Year

For 4 Years

1,427,594.51

Balance in $

from

20 Years of

Private Education Investment

No Additional Investment After Age 26

No Additional Investment After Age 26

Investment Value in $

at the End

of 38 Years

at 10% Compounded Monthly

Age 27 to 65 = 38 Years

1,427,594.51

0

0

62,818,206.92

Example #2

The information for Example #2 below (Table 52) is the same as for Example #1 above (Table 51) with the exception that the school tuition has been increased from $10,000/year to $20,000/year.

============================

Preschool to Grade 12: Age 3 to 18, Tuition $20,000/Year (from Table 25)

Undergraduate: Age 19 to 22, Tuition $55,000/Year (from Table 37)

Graduate/Postgraduate: Age 23 to 26, Tuition $65,000/Year (from Table 51)

vs.

Value if Invested at 10% Interest, Compounded Monthly

During the school years (Preschool to Grade 12), only the cost of tuition of $20,000/year is included in the calculations, not living expenses. For undergraduate (Age 19 to 22) and postgraduate (Age 23 to 26) education, combined tuition and living expenses of $55,000/year and $65,000/year, respectively, are included in the calculations. From Age 27 until Age 65, the end value of a one-time investment is shown in Table 52 below. All calculations are based on 10% interest, compounded monthly. All investment deposits are made in the beginning of the year.

Table 52

Age Groups

with Corresponding

Years of School

Yearly

Private School

Tuition

in $

Yearly Private

Undergraduate

College Tuition in $

Yearly Private

Postgraduate

College Tuition in $

Investment Values

in $

for the Corresponding Years of Education

at 10%

Compounded Monthly

Age Groups

with Corresponding

Years of School

20,000/Year

for 15 Years

X

X

668,135.69

Age 3 to 18 =

15 Years of School

X

55,000/Year

for 4 Years

X

264,795.20

Age 19 to 22 =

4 Years Undergraduate

X

X

65,000/Year

for 4 Years

312,939.78

Balance in $

from

Investment Value of

15 Years of School

(Age 3 to 18)

Age 23 to 26 =

4 Years

Graduate/

Postgraduate

668,135.69

55,000/Year

for 4 Years

X

1,252,121.35

Balance in $

from

Investment Value of

15 Years of School

+ 4 Years of Undergraduate College Tuition

Age 3 to 22 =

19 Years

(15 Years of School + 4 Years of Undergraduate College Tuition)

1,252,121.35

X

65,000/Year

For 4 Years

2,168,615.65

Balance in $

from

20 Years of

Private Education Investment

No Additional Investment After Age 26

No Additional Investment After Age 26

Investment Value in $

at the End

of 38 Years

at 10% Compounded Monthly

Age 3 to 26 =

23 Years

(15 Years of School + 4 Years Undergraduate +

4 Years Graduate/Post-graduate)

2,168,615.65

0

0

95,425,238.52

Example #3

The information for Example #3 below (Table 53 is the same as for Example #1 above (Table 51) with the exception that the school age group is 6 to 18 years (total of 12 years), not 3 to 18 years.

Grade 1 to 12: Age 6 to 18, Tuition $10,000/Year (from Table 25)

Undergraduate: Age 19 to 22, Tuition $55,000/Year (from Table 37)

Graduate/Postgraduate: Age 23 to 26, Tuition $65,000/Year (from Table 41)

vs.

Value if Invested at 10% Interest, Compounded Monthly

During the school years (Grade 1 to 12), only the cost of tuition of $10,000/year is included in the calculations, not living expenses. For undergraduate (Age 19 to 22) and graduate/postgraduate (Age 23 to 26) education, combined tuition and living expenses of $55,000/year and $65,000/year, respectively, are included in the calculations. From Age 27 until Age 65, the end value of a one-time investment is shown in Table 53 below. All calculations are based on 10% interest, compounded monthly. All investment deposits are made in the beginning of the year.

Table 53

Age Groups

with Corresponding

Years of School

Yearly

Private School

Tuition

in $

Yearly Private

Undergraduate

College Tuition in $

Yearly Private

Graduate/Post-graduate

College Tuition in $

Investment Values

in $

for the Corresponding Years of Education

at 10%

Compounded Monthly

Age 6 to 18 =

12 Years of School

10,000/Year

for 12 Years

X

X

223,127.77

Age 19 to 22 =

4 Years Undergraduate

X

55,000/Year

for 4 Years

X

264,795.20

Age 23 to 26 =

4 Years

Graduate/

Postgraduate

X

X

65,000/Year

for 4 Years

312,939.78

Balance in $

from

Investment Value of

12 Years of School

(Age 6 to 18)

Age 6 to 22 =

16 Years

(12 Years of School + 4 Years of Undergraduate College Tuition)

223,127.77

55,000/Year

for 4 Years

X

589,346.98

Balance in $

from

Investment Value of

12 Years of School

+ 4 Years of Undergraduate College Tuition

Age 6 to 26 =

20 Years

(12 Years of School + 4 Years Undergraduate +

4 Years Graduate/Post-graduate)

589,346.98

X

65,000/Year

For 4 Years

1,181,509.92

Balance in $

from

20 Years of

Private Education Investment

No Additional Investment After Age 26

No Additional Investment After Age 26

Investment Value in $

at the End

of 38 Years

at 10% Compounded Monthly

Age 27 to 65 = 38 Years

1,181,509.92

0

0

51,989,787.09

Example #4

The information for Example #4 below Table 54 is the same as for Example #3 above (Table 53) with the exception that the school tuition has been increased to $20,000/year.

Grade 1 to 12: Age 6 to 18, Tuition $210,000/Year (from Table 25)

Undergraduate: Age 19 to 22, Tuition $55,000/Year (from Table 37)

Graduate/Postgraduate: Age 23 to 26, Tuition $65,000/Year (from Table 41)

vs.

Value if Invested at 10% Interest, Compounded Monthly

During the school years (Grade 1 to 12), only the cost of tuition of $20,000/year is included in the calculations, not living expenses. For undergraduate (Age 19 to 22) and graduate/postgraduate (Age 23 to 26) education, combined tuition and living expenses of $55,000/year and $65,000/year, respectively, are included in the calculations. From Age 27 until Age 65, the end value of a one-time investment is shown in Table 64 below. All calculations are based on 10% interest, compounded monthly. All investment deposits are made in the beginning of the year.

Table 54

Age Groups

with Corresponding

Years of School

Yearly

Private School

Tuition

in $

Yearly Private

Undergraduate

College Tuition in $

Yearly Private

Graduate/Post-graduate

College Tuition in $

Investment Values

in $

for the Corresponding Years of Education

at 10%

Compounded Monthly

Age 6 to 18 =

12 Years of School

20,000/Year

for 12 Years

X

X

446,255.54

Age 19 to 22 =

4 Years Undergraduate

X

55,000/Year

for 4 Years

X

264,795.20

Age 23 to 26 =

4 Years

Graduate/

Postgraduate

X

X

65,000/Year

for 4 Years

312,939.78

Balance in $

from

Investment Value of

12 Years of School

(Age 6 to 18)

Age 6 to 22 =

16 Years

(12 Years of School + 4 Years of Undergraduate College Tuition)

264,795.20

55,000/Year

for 4 Years

X

921,663.25

Balance in $

from

Investment Value of

12 Years of School

+ 4 Years of Undergraduate College Tuition

Age 6 to 26 =

20 Years

(12 Years of School + 4 Years Undergraduate +

4 Years Graduate/Post-graduate)

921,663.25

X

65,000/Year

For 4 Years

1,676,446.53

Balance in $

from

20 Years of

Private Education Investment

No Additional Investment After Age 26

No Additional Investment After Age 26

Investment Value in $

at the End

of 38 Years

at 10% Compounded Monthly

Age 27 to 65 = 38 Years

1,676,446.53

0

0

73,768,401.51

Notes:

In Tables 51 to 54, no new investments were added to the Age Group “27 to 65 = 38 years” as all schooling had been completed.

In regard to the interest rate, even if the interest earned was in the range of 7% to 9%, compounded monthly, the monetary gain from an investment equal to the cost of tuition for 23 years of private education would still have been huge.

Table 55

Table 55 is a recap of the end values found in Tables 51 to 54 to emphasize the enormous amount of money that could be generated through investing vs. paying tuition for private school/college education.

Table #

Age Groups

and

Years to Retirement

Balance in $

from

20 Years of

Private Education Investment

No Additional Investment After Age 26

Investment Value in $

at the End

of 38 Years

at 10% Compounded Monthly

61

Age 27 to 65 = 38 Years

1,427,594.51

0

62,818,206.92

62

Age 27 to 65 = 38 Years

2,168,615.65

0

95,425,238.52

63

Age 27 to 65 = 38 Years

1,181,509.92

0

51,989,787.09

64

Age 27 to 65 = 38 Years

1,676,446.53

0

73,768,401.51

Note: The end values in the above table are sizable by any standard and reinforce the concept that POC is the most powerful wealth creation force in the world!Note: There is a rationale for adding “living expenses” to college education and not to school education. At age 18, a young adult is capable of being self-sufficient. Hypothetically, the person could take a job earning $2,000 per month and, after deducting living expenses, still have some money left to investment.

An example of actual cost of medical school education for four years. This is not including fours years of under graduate college cost.

This excerpt is from:

The NEWS HOURS

Jim Leherer Jan., 6,2009

Massachusetts Faces Primary Care Doctor Shortage

Betty Ann Bowser reports on the lack of primary care doctors in Massachusetts, which has instituted universal health care.

“ Family Medicine doctors frequently are on the bottom of the pay scale making an average $185,000 a year. Specialists like radiologist and cardiologists with two to seven years of more training, make two times that much.

A primary care physician spending 30 minutes with a patient, talking to them about their health care need would get paid about a third of what a gastroenterologist (bowel specialist) would get paid for spending 30 minutes to do endoscopic procedure.

Reporter: Almost all of them will graduate from medical school with college loans that could take decades to pay off.

“…. Christine Higum and Ashley are typical of medical students at BU.

Every year I take between 65 -$70,000. It is going to be $200,000 before you it count interest

If I take the full-time to paying, I could pay half a million dollars.

Reporter: Vow!.

It is a fair chunk of change . It does not seem possible for me to go into primary care.

Which is sad.

But I want to have a family, I want to be able to provide for my family. I want to pay off loans quickly.

I don’t want to have them for 30 years.”

http://video.aol.com/video-detail/massachusetts-faces-primary-care-doctor-shortage/2582195818/?icid=VIDLRVNWS04

http://vvi.onstreammedia.com/cgi-bin/visearch?user=pbs-newshour&template=play220asf_noprefs_ws.html&query=+ClipCategory%3AClipCategory%3Ahealth&squery=%2BClipID%3A3+%2BVideoAsset%3Apbsnh010609&inputField=undefined&ccstart=2281141&ccend=2821813&videoID=pbsnh010609

Is College Worth the Cost?

According to Anya Kamenetz’s* article, Is College Worth the Cost? Part 1, posted on finance.yahoo.com on August 28, 2007, there are important intangible benefits of going to college, such as widening cultural horizons and developing critical thinking, civic participation, healthier living, and stronger relationships.

In the article, Kamenetz fails to mention that all of the above benefits may be acquired freely or inexpensively by reading books, attending seminars, volunteering one’s time for civic causes, traveling near and far for pleasure or for a job-related purpose, and developing strong, loving relationships with family and friends.

Kamenetz further states that it takes self-knowledge to determine if college is going to be worth the cost; therefore, she suggests that “…before enrolling in any higher education program, ask yourself the following questions: What do I want to do? Where can I get in? How much can I pay for it? How well am I prepared to do? [How will I] Make It Pay Off?”

In Is College Worth the Cost? Part 2, posted on September 11, 2007 on finance.yahoo.com, Kamenetz addresses the question of whether graduate school pays off, and she provides a discipline-by-discipline breakdown of graduate programs (Business school Medical school, Master’s programs, Law school, Advanced degrees in the humanities, and Advanced degrees from art, culinary, and journalism schools) to make her point. Ultimately, Kamenetz advises prospective students to “choose a program that will widen their options without saddling them with debt.”

"Do Elite Colleges Produce the Best-Paid Graduates?"

It is understandable that there are many other considerations beside future earnings, as one considers before going to a college to study. One should read the whole article. One can get some idea from the paragraphs below.

"According to research from Alan B. Krueger, a Princeton professor and Treasury official who used to contribute to Economix, and Stacey B. Dale at Mathematica Policy Research, attending one relatively elite college (like Harvey Mudd) rather than another (like Harvard) doesn't much affect a student's future income. Rather, it's the student who matters. Hard-working, ambitious students will do well wherever they go. The opposite applies to mediocre or lazy students."

The data cover only respondents alumni who had a bachelor degree only. Doctors, lawyers and others in high-paying jobs are not included in the study.

"The reason for this, according to Al Lee, PayScale's director of quantitative analysis, is that PayScale is trying to determine which undergraduate educations are the "best investment."

According to Mr. Lee, one example is those of alumni teachers with advanced degrees. The teachers get primarily a master's degrees in order to teach. Teachers generally earn less than their classmates. Of the other reasons, the graduates of philosophy major of an elite school may earn less than the graduates of information technology of a less elite school.

Reference:

"Do Elite Colleges Produce the Best-Paid Graduates?" by Catherine Rampell
Tuesday, July 21, 2009

http://finance.yahoo.com/college-education/article/107374/do-elite-colleges-produce-the-best-paid-graduates.html;_ylt=AinO.sX2LU7w3H37_8vsT5S7YWsA?mod=edu-collegeprep

From Yahoo Finance section provided by The New Yorks Times.

============

“Is an Ivy League education worth the money?

…..70 percent of college students said making more money after graduation was a major reason for going to school…….Along with that diploma comes an average debt of $22,000 (more than double that of 10 years ago),..Indeed, according to a study published in the Harvard Business Review, nearly half the top executives at Fortune 100 companies now hail from public schools.”

Reference: The Best Colleges for Making Money by Neil Parmar
Tuesday, December 16, 2008
provided by Smartmoney.com

Sources and Suggested Reading:

Is College Worth the Cost? Part 2 by Anya Kamenetz. Posted on Tuesday, September 11, 2007, 12:00AM

http://finance.yahoo.com/expert/article/generationdebt/44474;_ylt=Ao5zaFFx.0JTIFBNdzQ7lf67YWsA

Anya Kamenetz Generation Debt. Is College Worth the Cost? Part 1 by Anya Kamenetz.

Posted on Tuesday, August 28, 2007, 12:00AM

http://finance.yahoo.com/expert/article/generationdebt/43193

* Anya Kamenetz is a journalist, author, blogger, and staff writer at Fast Company magazine, and a Pulitzer Prize nominee.

 

 

 

=========================

READERS RESPOND: Unanswered questions on health reform. Barry M. Weiner. The Baltimore Sun. Friday, August 7, 2009.

" ...You advocate that all physicians should be salaried based on the Mayo Clinic/Cleveland Clinic model. Where does that leave the rural, private practice doctor who is usually on call for his patients 24/7? Will the salary be enough to compensate the doctors for the six to 10 years of extra schooling they need following four years of college when they have little or no income? Will they be paid enough to repay the average $200,000 to $400,000 in debt incurred to pay for their medical education?..."

91

Edit Text

This section shows cost to students to get educated at in state and out of state public education at different universities and colleges.
Why should one go for out of sate public education?
Why consider going out of sate institution if same education available in an in state institution?
Is it worthy for similar education to go out of state and spend double, if not more money for education?
Is the financial return from an "out of state education" will pay off more quickly, if similar education received in an in state institution?
How much money one will save if studies in an in state institution, and just invest in S&P 500 Index Fund, what will be the return?
From: Back to school survey;
Parade's College A-List: Sunday, 22 August 2010'
Fore the full list: parade.com/colleges
"This list is based on the recommendations of 43 top high school guidance counselors across the country. Some entries include comments from the panel."
The following high school counselors participated in PARADE's survey of
A-List Colleges.
Christopher Newport University, Newport News, Va.
Newport News, Va.
Fall Tuition and Fees and Refund Policy 2010
Includes tuition, full-time undergraduate, comprehensive fee, technology fee and capital fee. All expenses are in $

State Residency

Tuition

Room

9 months

Meal/

semester

Teleco/

semester

Total

In state

4625

3111

1560

100

9395

Out of state

8996

3111

1560

100

13766

====================

The College of William & Mary

Williamsburg, Va.

"....U.S. News and World Report ranked us sixth among all public universities"

Tuition & Fees

http://www.wm.edu/admission/financialaid/tuition/index.php

Estimated costs per semester* for the 2010–2011 academic year and vary based on undergraduate/graduate, full-time/part-time, residency and meal plan, housing and course of study. Detailed tuition and fees and room and board rates.

UNDERGRADUATE In-State Out-of-State
Tuition and Fees
Room
Board
Books, travel and incidentals
Total (per semester)
6,094
2,600
1,700
1,375
$11,769
16,882
2,600
1,700
1,375
$22,557

GRADUATE (Arts &
Sciences, Education
and Marine Science)
In-State Out-of-State
Tuition and Fees
Living Allowance
Books & Supplies
Total (per semester)
5,384
6,825
650

$12,859
12,319
6,825
650
$19,794

LAW
In-State Out-of-State
Tuition and Fees
Living Allowance
Books & Supplies
Total (per semester)
11,900
6,825
650
$19,375
16,900
6,825
650
$24,375

BUSINESS In-State Out-of-State
Tuition and Fees
Living Allowance
Books & Supplies
Computer
Total (per semester)
12,500
6,825
800
1,500
$21,625
18,250
6,825
800
1,500
$27,375

PART-TIME TUITION
(per credit hour)
In-State Out-of-State
Undergraduate
Graduate
Law
Gessraduate Busin
260.00
345.00
630.00
650.00
920.00
920.00
1,050.00
1,050.00

*Room, board and other incidental expenses have been averaged to provide a general estimate of costs.

===============================================

OTHER STATE SMALL PUBLIC SCHOOLS

Name & Location

Undergrad. Student Enrollment

Annual Tuition Fee in $

In State / Out of State

College of Charleston

Charleston, SC

10,147

10,314/23/172

The College of New Jersey

Ewing, NJ

6153

13,549/22.935

New College of Florida

Sarasota, FL

825

5,347/27.598

St. Mary’s College of Maryland

St. Mary’s City, MD

2000

13,630/25,023

SUNY Geneseo

Geneseo, NY

5000

6,400/14,300

University of Mary Washington

Fredericksburg, VA

4397

7,862/19,590

University of NC-Ashville

Asheville, NC

3700

4,722/17,544

=================================================

LARGE PUBLIC SCHOOL

Name & Location

Undergrad. Student Enrollment

Annual Tuition Fee in $

In State / Out of State

Miami University of Ohio

Oxford, OH

14,671

12,198/26,988

SUNY Stony Brook

Stony Brook, NY

16,395

6,488/14,388

University of Georgia

Athens, GA

26,142

8,736/26,946

University of Oregon

Eugene, OR

18,514

8,190/25,830

University of Texas at Austin

Austin, TX

39,000

8.986/29,916

University of Virginia

Charlottesville, VA

14,297

10,836/33,782

University of Wisconsin-Madison

Madison, WI

28,690

9,050/24,300

=======================================

ARTS PROGRAM

Here one example is cited below.

Seven more examples in the publication: Tuition fee varies from $26,100 to $$43,990. Same fee for all.

Name & Location

Specialty

Undergraduate Enrollment

Annual Tuition Fee

In Sate/ Out of State

Alfred University

Alfred, NY

Ceramics

1909

14,762/20,314

=======================================

COMBINED BACHELOR’S/GRADUATE DEGREE

Here one example is cited below.

Seven more examples in the publication: Tuition fee varies from $17,100 to $$40,282. Same fee for all.

Name & Location

Undergrad. Enrollment

Annual Tuition Fee in $

In State/ Out of State

Univ. Alabama at Birmingham

10,646

11,612/26,396

=================================

BUSINESS & ACCOUNTING

Here one example is cited below.

Seven more examples in the publication: Tuition fee varies from $33.040 to $$40.514 Same fee for all.

Name & Location

Undergrad. Enrollment

Annual Tuition Fee in $

In State/ Out of State

Ohio State University

Columbus, OH

49,195

8,706/22,278

========================================

FLEXIBLE SCHEDULING

( Fulltime or Par time, can change status semester by semester)

Name & Location

Undergrad. Enrollment

Annual Tuition Fee in $

In State/ Out of State

Georgia State University

Atlanta, GE

22,384

8,698/26,908

University of Houston

Houston, TX

28,056

16,418/21,994

University of Maryland, Baltimore County

Baltimore, MD

9947

9,171/19,108

"Do Elite Colleges Produce the Best-Paid Graduates?" by Catherine Rampell
Tuesday, July 21, 2009

http://finance.yahoo.com/college-education/article/107374/do-elite-colleges-produce-the-best-paid-graduates.html;_ylt=AinO.sX2LU7w3H37_8vsT5S7YWsA?mod=edu-collegeprep

From Yahoo Finance section provided by The New Yorks Times.

-------------------------------------------------



 

 


 

 

 

 

 

 

 

 

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