Figure 1: Return on Investment Calculated Over 5 Years

In order to compare our degrees we must determine what ultimate metric to use.  Throughout this series we have been using the term Return on Investment.  This equation can be seen in Figure 1.  You may notice a flaw in this metric.  ROI does not consider the cost of living where you will be earning your salary.

Pay-Off Period Equation
Figure 2: The pay-off period metric considers the cost of living where your salary is being earned

An $80k/yr job in San Fransisco is not the same as an $80k/yr job in Macon, Georgia.  This is why we will use the pay-off period metric; which takes the cost of living into consideration.

Determine the Parameters

To solve for the pay-off period, we must solve for the variables.  Lets walk through them below:

Annual Cost of Attendance

We determined this in Part III of our series.  We simply go to the university’s website and look for the annual “Cost of Attendance” page.  It is important to understand this number assumes you will be living on campus and that you will buy books from the campus book store.  Both of these options are overpriced.  You can use craigslist find off campus housing and determine the cost of attendance for the later half of your college career.

Years of Attendance

Most degrees are 4 year programs.  An engineering degree will commonly take 4-5 years.  Many trade schools have 2 year programs.  All degree programs will have a curriculum that shows the course load.  This will give you an idea for how you will want to pace your courses and how long you will take to earn your degree.


This is the fun part.  How much are you going to make when you graduate?  There is a great tool out there called www.glassdoor.com.  This website lists employment opportunities and employee benefits for nearly every company.  Any Fortune 500 company will have enough of data on Glassdoor to give you a good snapshot of what the company is like.  We can use the salary data to find income estimates for your career choice.  Don’t forget to correct for income taxes.

Living Expenses

We will break living expenses down into three categories:

  • Housing & Utilities
    • Housing and utilities can be found on the IRS website. Here we have a link to the “Housing & Utilities” standards for the IRS.  You can find a pretty good estimate of the cost of living for every county in the United States.
  • Food, Clothing, & Other Items
    • We will use the IRS website again, but a different source.  This link will detail the national average for staple items.  It is safe to use these numbers no matter your location, as they are much less location dependent than housing & utilities.  If you wish to correct for cost of living you can multiply the “Food, Clothing, & Other Items” cost by the cost of living index.  The cost of living index for a city can be found on, www.bestplaces.net.  Just search for a city and navigate to its cost of living details.
  • Fuel & Transportation
    • This category is dependent on many things including lifestyle & geographic location.  If you live and work in a city you may have the opportunity to walk, bike, or use public transportation.  If you work in a remote location, you may have a long commute and high gas bills.  Gas prices are very dependent on geographic location and state taxes.  A great resource for gas prices is www.gasbuddy.com.

Pay-Off Period Examples

Now lets get to the meat and potatoes of this series.  How long will it take to pay off your degree?  Lets say you used the Frustration Flowchart and you first decided to go to the same school as all of your high school friends.  This university has an annual cost of attendance of $28,000.  In the middle of your Sophomore year, you decide you want to pursue a philosophy degree.  Unfortunately, before you graduate, the philosophy plant in Green Bay closes down.

Starbucks Pay-Off Period
Figure 3: Pay-Off Period for an Philosophy Degree

You are forced to work as a Starbucks Barista while you pay off your student loans.  At $13.50/hr, 40hrs/wk, and 50wks/yr, you make $27,000/yr.  Your expenses are $26,000/yr.  We have 112 years as a pay-off period.  This is a pretty poor investment.

Accounting Pay-Off Period
Figure 4: Pay-off Period for an Accounting Degree

If we took the Success Circle, we haven’t committed to a philosophy degree yet.  We can recalculate another scenario.  Lets try an Accounting Degree.  Glassdoor lists entry level accounting positions at roughly $50,000 per year.  We will assume the same cost of living and the same university.  This gives us a pay-off period of 4.7 years.  This is a pretty manageable investment.  Can we do better?

Engineering Pay-Off Period
Figure 5: The Pay-Off Period for an Engineering Degree

Lets try an engineering degree.  Since the curriculum is a bit more intense we will assume this is a 5 year degree.  An entry level engineering degree can pay about $70,000/yr.  We will assume all other parameters are the same.  This give us a pay-off period of 3.2 years.  This is a little better.

Now that you know how to skip the Frustration Flowchart and take the Success Circle calculate the pay-off period for a degree and location that fits your lifestyle.

Did you calculate a good pay-off period?  Share it below in the comments!