education quoteI often have conversations regarding the value of an education.  As an industry expert, it is easy for me to explicitly know when it is a good idea to further ones education, but for others sometimes it is not quite clear.  Over the years, I have developed a pretty simple formula for those who need some logic to accompany the emotion behind the decision.

It costs money to go to school.  Take some time and explore your options with the skills you have right now.  I recently wrote about how to conduct a personal performance review, so if you decide that change is required, this should help frame your decision.  Do your research.  Ask for help.

Look at school as an investment and keep in mind that with any investment, you should consider the ROI (return on investment).  You don’t want to lose money of course.  Don’t just look at the cost of the program alone because that is only part of the equation, and means debt regardless.  Consider the employment opportunities and how long it would take to make that money back.  I use this as some basic math:

  • Cost (Canadian dollars and resources):
    • For every $10,000 of money borrowed for school,
    • Approximately $109/month repayment over ten years on a student loan
    • See chart below – shows 10, 5, 3 years repayment ( )
Loan Repayment Calculator 10 years 5 years 3 years
Total amount of your loan: $ 10000 $ 10000 $ 10000
Select a fixed or floating interest rate *: Floating Floating Floating
Prime rate to be used for your calculations (%): 2.25 % 2.25 % 2.25 %
Number of months you will need to repay your loan: 114 60 36
Amount of each monthly payment: $ 109.17 $ 187.57 $ 298.59
Total interest payable over the life of your loan: $ 2,444.81 $ 1,254.15 $ 749.16
Total amount payable: $ 12,444.81 $ 11,254.15 $ 10,749.16
  • Income:
    • A dollar an hour (gross),
    • Assume full time work at 37.5 hours per week
    • Multiply by 4 weeks
    • $150(gross)/4 weeks
    • 25% tax
    • $112.5 (net/take-home)/4 weeks

Use these figures in conjunction with each other.

For every $10,000 you spend on education, as long as you make a dollar more per hour than you already do, it gives you break even ROI.

When you do your research on jobs, consider the ROI!

Typically, when I present education in this fashion it removes a major obstacle in going to school – can I afford it?

Of course , the decision does not solely rest on logic alone, but this should help provide some clarity.

If you have any questions about this or similar ideas, please contact me or make comments below.

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by Celestine Chua

Joe Girard
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